Extreme wealth inequality is inevitable in a free market: numbers can prove it, but we can fix it

Today’s free-market economies are founded on a doctrine whose roots go deep into the Austrian and Chicago schools. Such a doctrine postulates how wealth is eventually going to be distributed in the fairest possible way with minimal State intervention or no intervention at all. It includes Adam Smith’s invisible hand dogma, which states that a laissez-faire market where agents are free of trading wealth without any government intervention eventually converges towards a state where demand and supply are balanced and goods and services converge towards a state where their market price matches their real value. The “meritocracy” dogma states instead that the wealth of the agents in such a market will naturally converge towards a state of “fairness”, where each agent will own as much wealth as he/she has worked for.

While the liberal and neoliberal models that have spawned on the basis of such a doctrine have partly contributed to the rise of overall wealth and experienced by the Western world after World War II, more and more forces across the whole political spectrum (not only left-leaning parties) start to worryingly point at the increasing levels of inequality that would arguably be fueled by such models, and risk tearing apart the very fabric of our societies. Are such concerns founded? Let’s take a look at how wealth distribution has changed over the last 120 years — particularly how big the share of total income owned by the top 1% has evolved: