Here we see two models of the social structure: the Marxist pyramid of 1850 and the turnip of Ammon of 1900. If the first corresponds well to the hierarchical structure of social control, the second corresponds to a statistical description of the stratification of the population since the 19th century.
Marxist social pyramid: class conscience
The image of the pyramid corresponds well to the hierarchical structure of human societies. Modern populists oppose the 1% with the base of the pyramid, the 99%. This visualization is old and helps the adoption of a "class-consciousness" and "workers' condition" throughout the 19th and 20th centuries:
It promotes the image popularized by the extreme left, then by the extreme right, according to which legitimate violence serves the interest of an elite in power while the mass is exploited. French sociologist Pierre Bourdieu is an excellent advocate of this theme.
The social turnip of Ammon
Otto Amman published in 1900 an alternative visualization of the social structure in "some social applications of the doctrine of probabilities" in its "social order and its natural applications". After a few discussions of the binomial law and the reversion to the Galton average, he obtains that the distribution of qualities in a population follows a normal law:
He calibrates his results in income distribution in Germany in Lower Saxony and London:
These show that 52% of the population lives comfortably, 22% is poor, and finally, 2% of the population is unable to earn a living honestly and is reduced to a vagabond or semi-criminal existence. There are 25% of the rich. The populations are comparable in different European countries. He compares the interpretations of these social distributions:
Finally, he observes a larger distribution tail for high incomes, a turnip shoot (a Pareto law makes it possible to model high incomes better than normal law):
As always in the social sciences, ordering individuals following an axis is an arbitrary operation. We assign here to individuals a value depending only on a financial measure. Rather than discussing the limits of a measure that ignores the social utility of cultural, social, and scientific aspects. We will recall that it is not given to anyone to give a holistic measurement of the value of human life. Such a projection is nevertheless useful for economic analysis because it is reductive.
These figures indicate that in 1900, the "lumpenproletariat" of Marx was still marginal and distinct from the middle class, which invalidates the Marxist prophecy of 1850 of the impoverishment of the majority. If Marxists today say that the middle class is a myth introduced by socio-democrats to prevent the proletarian revolution, it seems that this debate originated in 1899 with the revisionist theses of Eduard Bernstein (a companion of Marx and Hegel, and German socialist) and that this middle class existed in 1900, before the advent of mass production and consumerism.
Technological variability of the economic utility limit
The figures of 1900 therefore show a class of 2% of beggars and semi-criminals, 22% of poor, 53% of people living comfortably, and 30% of rich. These are proportions in an industrial company where there is not yet a petrol, electricity or telephone engine, the technological progress of the 20th century will increase the size of the middle class. The economic importance of the middle class in the 20ᵉ century confirms the relevance of the Ammon model compared to the pyramid model.
A priori, the Ammon productivity and social utility threshold according to William Rees-Mogg, Times editor and Lord Liberal, depends on the technological level:
In Pre-industrial society, it is difficult to arrive at self-sufficiency. Absolute poverty (the risk of not being able to eat or heat) is raised. The feudal company had a more pyramidal structure than the company of 1900 or the year 2000.
In an industrial society. The level of knowledge required for a worker is low. Industrial production gives economic utility to less productive people. The unions are negotiating good conditions for their member. The proportion of poor people naturally decreases.
In a post-industrial company where there are more robots and fewer workers. The economic utility threshold goes back.
It is difficult to confirm these theories in practice. The development of industrial society is accompanied by unprecedented cognitive development. The literacy rate goes from 40% to 90% between 1800 and 1880.
Economic utility is not an end in itself. The industrial organization of production is a great equalizer: it extended wage earners 5 years old in textile factories before the law of 1841. This equalization brought more uniformity to the population, which enabled the development of socialism on a democratic basis.
The concept of "social security", providence, and central administration
The initial social security idea is to protect against "life accidents". In industrialized countries in 1900, 2% of the population needed care by public assistance, while 22% needed additional income to avoid misery. Statistics were likely similar before these measures became available. The sickness insurance law of 1883, the accident insurance law of 1884, and the old age insurance of 1889 voted in Germany under Bismark were the first examples of welfare States.
The Beveridge reports (1942-1944) offer social security to overcome the 5 giants: misery, illness, ignorance, unsanitary conditions, and apathy. Social devices are not conditioned on resources so as not to create poverty traps and preserve incitement to work.
When life expectancy was 60 years, a pension after 70 years was an "old-age insurance" which took charge of the most vulnerable population, old age was a "life accident", and the cost of taking the lower part of the turnip was limited to a few percent of GDP.
Whether the pyramid or turnip model is chosen has consequences on the most important systemic expenditure in states. The pyramid vision views all workers in the same class: the 99%. This legitimizes uncapped contributions and universal cover: public pensions avoid poverty but also pay ministers, deputies, and senators’ retirement.
Life beyond 62 years for a population whose life expectancy is 76 years is no longer an accident, retirement becomes a claimed "right" all the more jealously since the disputed contributions have become exorbitant as “Pay As You Go” policies do not adapt to demography.
Between 1880 and 1914, governments took responsibility for taking care of 2% of the most needy population. For this, they got 2% additional GDP by new taxes (Wilson in the United States in 1913, Lloyd George and Churchill in England in 1911).
As part of the pyramid vision, unemployment insurance takes on a systemic social shock absorber for 99% which allows recovery by consumption. These mechanisms explained by Mr Keynes legitimize an increased weight of the State to go far beyond the role of social security for the most precarious population.
This gives governments the possibility of administering and planning the economy and correcting market failures. Keynesians appreciate these theories because they seem valid to them and also because they give them more importance.
A pyramid vision of the economic structure of society allows legitimizing a centralized decision-making structure of the economy. The economic action of the State introduces systemic risks due to the centralization of decisions and encourages rent-seeking for the whole population.