Equality, Participation, Transition: Essays in Honour of Branko Horvat

household. 33 Almost all of the data refer to the 1980s (Annex Table 1,
see note 31).
Notes
Branko Milanović 73
1 Historically, probably the first explicit formulation of the hypothesis of the
inverted U-shape of inequality may be that of Tocqueville presented in his
1835 Memoir on pauperism shortly after the author completed his famous
Democracy in America. Tocqueville writes, ‘If one looks closely at what has
happened to the world since the beginning of society, it is easy to see that
equality is prevalent only at the historical poles of civilization. Savages are
equal because they are equally weak and ignorant. Very civilized men can all
become equal because they all have at their disposal similar means of attaining
comfort and happiness. Between these two extremes is found inequality
of conditions, wealth, knowledge – the power of the few, the poverty, ignorance,
and weakness of all the rest.’ (1997, pp. 42–3).
2 Reviews of theory and evidence on the Kuznets curve are numerous. A particularly
useful subset would include Lindert and Williamson (1985), Kaelble
and Thomas (1991), Williamson (1991a), Polak and Williamson (1993),
Paukert (1973), and Lecaillon et al. (1984). Williamson (1991) provides a useful
summary of the country studies and tries to determine if there is historical
evidence for the Kuznets’ curve in Great Britain; Dumke (1991),
Soderberg (1991), and Thomas (1991) in the same volume do the same thing
respectively for Germany, Sweden, and Australia. Ram (1991) applies the
Kuznets hypothesis to the US.
3 See, for example, recent criticism by Atkinson and Micklewright (1992: 35).
4 For the denial of its validity in Asia, see Oshima (1991: 121); for the absence
of the Kuznets curve in Japan, see Lindert and Williamson (1985: 354).
5 I use the qualifier ‘at centre stage’ because Kuznets was indeed aware, as the
earlier quotation makes clear, of the role of institutional factors in income
distribution.
6 See also Phelps-Brown (1977: 286) and Lydall (1968). Atkinson and
Micklewright (1992: 81ff.) show that Czechoslovakia, Hungary and Poland
have consistently lower earnings inequality than the UK. The USSR and the
UK have about the same level of inequality of earnings; the former is, however,
regionally much more heterogeneous. Comparisons are, of course,
strewn with many problems. State-sector wages in socialism are almost
always on net basis, wages in capitalism are gross. This imparts an upward
bias to income inequality in market economies. The opposite bias, however,
has to do with the absence of unemployment in socialist countries. This
means that even those with low productivity, often unemployed in market
economies, will be wage earners in socialist economies.
7 Disposable income is equal to market income (that is income before government
benefits and taxes) plus government cash transfers minus direct personal
taxes. In cases when most direct taxation is through payroll taxes,
market income already includes payroll taxes. Market income also includes
consumption in kind. I use disposable income as a measure of inequality
because it includes government cash transfers (a key requirement given my