As a reader based in Europe, I’d like to offer a regional nuance to your wealth pump model. In countries like Spain, the erosion of the middle class and frustration with the state are evident. Yet unlike in the U.S., the elite does not always enrich itself through visible personal wealth. Instead, the extraction appears institutional: the middle class bears a high tax burden, while much of the redistributed wealth is absorbed by an extraordinarily complex, inefficient, and often clientelist state apparatus.
This state is, in turn, heavily influenced by entrenched corporate interests, unions, and semi-public entities that block reform and reproduce privilege. It forms a closed system of elite overproduction and immobility, without requiring conspicuous individual enrichment.
Could it be that, in this context, raising taxes further might not stop the wealth pump, but rather accelerate the draining of middle-class resources into an unaccountable institutional machine?
Also the problem in Europe is that there are national élites and supra national élites (European élites, or even international oligarchs and international corporations that have more powers than states, like Blackrock).
What happened in Greece is a good example. People wanted change but the troika blocked all possible path to change and immiseration accelerated.
The most probable outcome in Europe is that the supranational élites will clash with some national counter élites that will use popular discontent to organise a nationalist revolution.
I think (given your second reply) you're missing the big picture. What you consider the middle class is actually part of the working classes.
The problem is the taxes not paid by HNIs and the actual middle class, which are the professional managerial class (c-suite professionals and high earners).
This is a big problem across Europe. What used to be the middle class is actually the stratified working classes.
So the wealth pump refers to those who gain wealth from the system.
You could argue that home ownership and its rising nominal value insulates a portion of the former middle class from the wealth inequality, but again, look at those who own multiple homes vis-a-vis single homes.
Seen in this light, the tax burden is skewed and disproportionately affects workers, while disproportionately helping those able to accumulate assets (real estate or financial).
I’d like to offer some clarifications regarding how the wealth pump operates in Spain.
First, taxes don’t automatically return to the middle class. A large share is absorbed by an extraordinarily complex, inefficient, and often clientelist bureaucracy. What the middle class receives in return often comes as underperforming public services, while much of the wealth gets trapped within the institutional machinery.
Second, in Spain it’s mainly the middle class that bears the tax burden. There are few ultra-wealthy individuals, and large corporations often use legal loopholes to minimize taxation. In contrast, salaried workers are hit hard by both income and consumption taxes. The actual system is not as progressive as it may seem.
Third, studies show that much of the public spending benefits higher-income groups. For example, flight subsidies in the island territories are universal — but wealthier individuals, who travel more and spend more, benefit the most. This results in a regressive flow of public funds.
In short, raising taxes under these conditions may not curb the wealth pump — it might simply intensify the drain from the middle class into a poorly accountable state apparatus.
One of your comments contains the answer. Corporations find tax loopholes. That is the how the elite controls the wealth pump, and a target for reformers.
The state apparatus provides jobs for those who might otherwise be unemployed. So even the fact that it is large can play a positive role. If the state apparatus is inefficient, the task is to reform it. After all, if it is large, it has the ability to effectively collect taxes from everyone and redistribute them fairly and correctly. The same applies to tickets as an example. If it is seen as a vacation trip, then maybe they can give everyone discounts for, say, two trips? That is, again, reforming the state apparatus, if all the troubles are from it.
After all, it is a strong state apparatus that is able to resist this very rich elite. If you have a small, weak state apparatus that collects small taxes, then there will be nothing standing in the way of this elite.
“the perverse wealth pump that takes from the common people and gives to the elites”
—I think it is misguided to refer to a natural phenomenon like this in moralising terms as “perverse”. How can something so natural, that it is ubiquitous to every society, be considered “perverse”? The perversion is the arrogant idea that we have magically transcended our nature in such a way that we can avoid it. No, let us bandage up our bleeding hearts and approach the question as scientists.
“Since an external conquest of the US (or European Union) is unlikely”
—North America and Europe are already being conquered in the same way the Western Roman Empire was conquered: not by state actors in the Westphalian sense but by the invasive movement of masses of foreign peoples. There are fewer pitched battles in this kind of conquest, but it is a conquest all the same. Again, let us dispense with liberal moralising and speak plainly about what the material facts of the situation are.
1. I would happily give up the word "perverse". But it IS however a social trap. A social trap is a situation where everybody try to improve his own situation but only achieve the immiseration of all. Including the elites, since they will probably ruin themselves in the effort.
And that IS perverse, I think.
2. And concerning the "masses of foreign peoples" wouldn't be a problem, cf the invasive movement of the US ca 1800-1950. It is only when the economy can't accommodate them it becomes a problem. And the problem would be there whatever if the economy is shrinking.
Ah yes, the old "invasive movement of masses of foreign peoples" canard as THE singular explanation of state collapse. Peter Turchin has repeatedly demonstrated the nexus of popular immiseration and intra-elite over production as a consistent driver of internal state destabilization, yet you fall back on the external invasion trope that illustrates your willful resistance to the historic events and data.
If you are so sure of your analysis, then explain the historic examples of long-term state destabilization from the English Civil Wars, the French Wars of Religion, and the late 18th through late 19th century France. None of these situations involved mass movements of outside demographics into these nation states. All were consistently driven by the declining fortunes of the lower classes and intensifying power competition of different power centers. If anything, your own example of the Western Roman Empire's downfall includes extended battles and maneuvering among various political elites among the patrician and military classes trying to seize power between themselves.
If there is any moralizing here, it's utilizing the lazy, one-track ideology of blaming external migration as the only generative cause of state breakdown. Mass migration can correlate with state collapse but has shown little consistency with causing state breakdown. Peter has cross-referenced a set of multiple interlocking societal factors that point to a repeated historic pattern. His analyses are far more analytical and compelling than relying on a simplistic explanation that not even basic history or current events can back up.
“Ah yes, the old "invasive movement of masses of foreign peoples" canard as THE singular explanation of state collapse.”
It's amazing what can be achieved when you simply put words into other people's mouths that they never said and would never say. You can “win” any argument thereby. Truly, a model for us all.
Perhaps a minor point, but as I understand it, the Iron Law of Oligarchy (first coined by Michels) just says that power is always concentrated in the hands of an elite and is never widely distributed. It does not say that the elite must use its power to its own selfish ends. Even if the elite is public-minded, it is en elite and it is it, rather than the people, that wield power.
The claim that power corrupts and that elites tend to be self-serving is separate, although it is of course the combination of these two phenomena that is the perennial problem of large group politics.
Can you provide a specific citation? I was not able to find a paper that seemed relevant.
As for the substance: Every person or group has a worldview - values and interests - that it tries to promote. Expecting one group to promote the values and interests of another seems not only unrealistic, but also unreasonable.
I'd be curious to know what you think about Robert Shiller's proposal to curb inequality (winner of the Nobel memorial prize from the Swedish central bank) https://www.nytimes.com/2014/04/13/business/better-insurance-against-inequality.html?smid=tw-share . He's written a whole book on this, but one key idea is to automatically raise the income tax rate on the rich as the inequality index rises. [I understand your post was strictly about how to get out of end times rather than how to avoid getting into them, but it still seems relevant.]
Why would the élites impose this on themselves? Your comment seems to imply that there can be some beneficent, rational government apparatus not controlled by those in power—surely a contradiction in terms?
thank you for the reply, which raises a fair objection. Dr. Turchin's post said that change requires two things: "1) the ability to gain and hold power in competition against other power networks and 2) implementing a program of reforms that reverse the structural-demographic trends". Shiller has proposed a program of reforms to adress 2) so I was curious if it would be sufficient in Dr. Turchin's view. I agree with you and Dr. Turchin that you also need 1).
As Acemoglu and Robinson say in "why nations fail", economists like Shiller tend to assume that political problems are solved and the remaining questions are technocratic. I can't speak for Shiller but he considers the politics probably more than economists usually do. For example, he says that the indexing of income tax to inequality would be phased in so it would not immediately affect current wealth.
This is a very one dimensional view of how civilisations collapse as it takes no account at all of moral or psychological factors which many historians have documented and as such its a waste of time. There are many things in human life and culture that are not approachable , let alone understandable by mere data.
I think that we need to better define integrative and disintegrative periods. These often seem arbitrary.
Although Ancient, Medieval and early Modern history is fascinating in its own right, the Industrial Revolution changed society and politics in such a radical way that data from pre-industrial times is of little relevance to understanding the current world. And statistics become much better with the Industrial Revolution.
What about "panem et circensis"? That seems to work pretty well. If the masses are happy at their level... Of course, the elites may be too stupid to see that, but I don't actually think they are. Revolutions may now be a thing of the past.
I agree that generally panem et circenses works. I think that in the cyclical theory of Peter Turchin's theory, the wealth pump leaves less and less pan over time until even the breadcrumbs from the table of the rich are not enough.
Where do you see Turkey in terms of its cycles? It seems like the end times, but judgments are subjective and everywhere all the time seems like end times. So, is it indeed in end times? If so, what are the possible trajectories it might follow? Should we interpret and look at the lifecycle of the Republic, or the entirety of the Turkish presence in Anatolia starting from Sultanate of Rum?
I would really like to hear your opinions about this.
In the USA, the wealth pump is more accurately labeled as Asset price increases. Which occur because govt prints money, but the elite and most working folk have an adequate amount of consumable goods, so they inflate house prices & share prices, while CPI inflation remains low.
Deficit spending is the root cause—but most folk get a little, so oppose ending the system. Why is there no End Times for Japan with a debt/GNP ratio over 250%?
Let's consider the example of the Roman Empire. The rise of economic inequality during the Late Republic was associated with the expansion of Rome, not its collapse. Was this an integrative phase or a disintegrative phase?
Was the crisis of the 3rd century caused by economic inequality or the instability of a kratocratic government where any general can be emperor.
Unfortunately, as much as it would be better to hope for outcomes minimizing civil strife and upheavals, across the USA and EU, we're experiencing a very novel context (I'm currently reading your book on Elites and haven't reached ch. 9 yet).
As per my reply to the first commenter at the top, the hyper-financialization of our societies, coupled with the hyper-media-narrative mental conditioning and our historical bias, means we're unable to recognize the problem outside the intelligentsia (sorry to be so provocative ;-) until the crisis awakens either the equivalent of class consciousness or the animal spirits. I've lived in several European countries and currently am in Italy, and my impression of those outside what we could consider as the intelligentsia is that the social safety net is a double edged sword which has created a great deal of complacency; the lives of people literally revolve around getting their pensions. In the USA it's different, but the narrative of the land of opportunity has been etched into a mythos and most Americans on the right of the political spectrum are unable to critically appraise the defects of "capitalism" and thus are blindsided by the creeping feudal oligarchic business practices.
So stopping the wealth pump... I've been repeating that the problem is our relationship with money, in the sense we're addicted, and whereas in the examples you cited before, societies were both less complex (and so more resilient to endogenous and exogenous shocks) and social bonds (comunity, family, etc) had not been reduced to where they are now.
And today the wealthy and powerful have the media to influence opinions and narratives, which is not comparable to any preceding period of history.
Unfortunately I think we're being a tad too optimistic on not having deleterious outcomes.
I'll read your book(s) and follow your work. Thank you
So Bernie Saunders and AOC basically? The problem is, wealth redistribution and anti oligarchic policies seem to play less well - much less well - with the electorate than anti immigration and culture war demagoguery.
Fairness is a better way to phrase anti-oligarchy. If one allows for the term "wealth pump" than one has bought into the notion of wealth redistribution. It just depends on which way it is pumping.
Peter. As is so often the case with your work, this feels like a homework assignment for the rest of us. I'm going to be pondering this one for a while now.
Clark argues that downward mobility of the elites spreads their beneficial genes/traits throughout the middle/lower class. Essentially it's self correcting
As a reader based in Europe, I’d like to offer a regional nuance to your wealth pump model. In countries like Spain, the erosion of the middle class and frustration with the state are evident. Yet unlike in the U.S., the elite does not always enrich itself through visible personal wealth. Instead, the extraction appears institutional: the middle class bears a high tax burden, while much of the redistributed wealth is absorbed by an extraordinarily complex, inefficient, and often clientelist state apparatus.
This state is, in turn, heavily influenced by entrenched corporate interests, unions, and semi-public entities that block reform and reproduce privilege. It forms a closed system of elite overproduction and immobility, without requiring conspicuous individual enrichment.
Could it be that, in this context, raising taxes further might not stop the wealth pump, but rather accelerate the draining of middle-class resources into an unaccountable institutional machine?
Very similar situation in France.
Also the problem in Europe is that there are national élites and supra national élites (European élites, or even international oligarchs and international corporations that have more powers than states, like Blackrock).
What happened in Greece is a good example. People wanted change but the troika blocked all possible path to change and immiseration accelerated.
The most probable outcome in Europe is that the supranational élites will clash with some national counter élites that will use popular discontent to organise a nationalist revolution.
I think (given your second reply) you're missing the big picture. What you consider the middle class is actually part of the working classes.
The problem is the taxes not paid by HNIs and the actual middle class, which are the professional managerial class (c-suite professionals and high earners).
This is a big problem across Europe. What used to be the middle class is actually the stratified working classes.
So the wealth pump refers to those who gain wealth from the system.
You could argue that home ownership and its rising nominal value insulates a portion of the former middle class from the wealth inequality, but again, look at those who own multiple homes vis-a-vis single homes.
Seen in this light, the tax burden is skewed and disproportionately affects workers, while disproportionately helping those able to accumulate assets (real estate or financial).
We have the same problems in Italy (and France).
Taxes on the middle class may be high, but if the wealth is returning to them through unions and public services then the wealth pump is not meaningful. Is the Palma ratio high or rising? (See https://theconversation.com/is-canada-heading-down-a-path-that-has-caused-the-collapse-of-mighty-civilizations-in-the-past-254378 .) Whether a rise in taxes strengthens or weakens the wealth pump depends on how progressive or regressive it is.
I’d like to offer some clarifications regarding how the wealth pump operates in Spain.
First, taxes don’t automatically return to the middle class. A large share is absorbed by an extraordinarily complex, inefficient, and often clientelist bureaucracy. What the middle class receives in return often comes as underperforming public services, while much of the wealth gets trapped within the institutional machinery.
Second, in Spain it’s mainly the middle class that bears the tax burden. There are few ultra-wealthy individuals, and large corporations often use legal loopholes to minimize taxation. In contrast, salaried workers are hit hard by both income and consumption taxes. The actual system is not as progressive as it may seem.
Third, studies show that much of the public spending benefits higher-income groups. For example, flight subsidies in the island territories are universal — but wealthier individuals, who travel more and spend more, benefit the most. This results in a regressive flow of public funds.
In short, raising taxes under these conditions may not curb the wealth pump — it might simply intensify the drain from the middle class into a poorly accountable state apparatus.
One of your comments contains the answer. Corporations find tax loopholes. That is the how the elite controls the wealth pump, and a target for reformers.
The state apparatus provides jobs for those who might otherwise be unemployed. So even the fact that it is large can play a positive role. If the state apparatus is inefficient, the task is to reform it. After all, if it is large, it has the ability to effectively collect taxes from everyone and redistribute them fairly and correctly. The same applies to tickets as an example. If it is seen as a vacation trip, then maybe they can give everyone discounts for, say, two trips? That is, again, reforming the state apparatus, if all the troubles are from it.
After all, it is a strong state apparatus that is able to resist this very rich elite. If you have a small, weak state apparatus that collects small taxes, then there will be nothing standing in the way of this elite.
“the perverse wealth pump that takes from the common people and gives to the elites”
—I think it is misguided to refer to a natural phenomenon like this in moralising terms as “perverse”. How can something so natural, that it is ubiquitous to every society, be considered “perverse”? The perversion is the arrogant idea that we have magically transcended our nature in such a way that we can avoid it. No, let us bandage up our bleeding hearts and approach the question as scientists.
“Since an external conquest of the US (or European Union) is unlikely”
—North America and Europe are already being conquered in the same way the Western Roman Empire was conquered: not by state actors in the Westphalian sense but by the invasive movement of masses of foreign peoples. There are fewer pitched battles in this kind of conquest, but it is a conquest all the same. Again, let us dispense with liberal moralising and speak plainly about what the material facts of the situation are.
1. I would happily give up the word "perverse". But it IS however a social trap. A social trap is a situation where everybody try to improve his own situation but only achieve the immiseration of all. Including the elites, since they will probably ruin themselves in the effort.
And that IS perverse, I think.
2. And concerning the "masses of foreign peoples" wouldn't be a problem, cf the invasive movement of the US ca 1800-1950. It is only when the economy can't accommodate them it becomes a problem. And the problem would be there whatever if the economy is shrinking.
Ah yes, the old "invasive movement of masses of foreign peoples" canard as THE singular explanation of state collapse. Peter Turchin has repeatedly demonstrated the nexus of popular immiseration and intra-elite over production as a consistent driver of internal state destabilization, yet you fall back on the external invasion trope that illustrates your willful resistance to the historic events and data.
If you are so sure of your analysis, then explain the historic examples of long-term state destabilization from the English Civil Wars, the French Wars of Religion, and the late 18th through late 19th century France. None of these situations involved mass movements of outside demographics into these nation states. All were consistently driven by the declining fortunes of the lower classes and intensifying power competition of different power centers. If anything, your own example of the Western Roman Empire's downfall includes extended battles and maneuvering among various political elites among the patrician and military classes trying to seize power between themselves.
If there is any moralizing here, it's utilizing the lazy, one-track ideology of blaming external migration as the only generative cause of state breakdown. Mass migration can correlate with state collapse but has shown little consistency with causing state breakdown. Peter has cross-referenced a set of multiple interlocking societal factors that point to a repeated historic pattern. His analyses are far more analytical and compelling than relying on a simplistic explanation that not even basic history or current events can back up.
“Ah yes, the old "invasive movement of masses of foreign peoples" canard as THE singular explanation of state collapse.”
It's amazing what can be achieved when you simply put words into other people's mouths that they never said and would never say. You can “win” any argument thereby. Truly, a model for us all.
I’m doing my own informal testing by living in 2 places; China and the US…about 8 months in Wuhan and summers in Chicago….and taking lots of notes.
I’ll report back…
you got a follower right there; I'll be watching! All the best!
Perhaps a minor point, but as I understand it, the Iron Law of Oligarchy (first coined by Michels) just says that power is always concentrated in the hands of an elite and is never widely distributed. It does not say that the elite must use its power to its own selfish ends. Even if the elite is public-minded, it is en elite and it is it, rather than the people, that wield power.
The claim that power corrupts and that elites tend to be self-serving is separate, although it is of course the combination of these two phenomena that is the perennial problem of large group politics.
China's elite has been non-hereditary and intellectual for 2000 years. We could start there..
The dynasties were structured around hereditary succession.
Didn't prevent regular conquests by whoever learned horseback riding properly.
Research does not support the maxim that all power corrupts. See Deborah Gruenfeld's and others' work.
Can you provide a specific citation? I was not able to find a paper that seemed relevant.
As for the substance: Every person or group has a worldview - values and interests - that it tries to promote. Expecting one group to promote the values and interests of another seems not only unrealistic, but also unreasonable.
I'd be curious to know what you think about Robert Shiller's proposal to curb inequality (winner of the Nobel memorial prize from the Swedish central bank) https://www.nytimes.com/2014/04/13/business/better-insurance-against-inequality.html?smid=tw-share . He's written a whole book on this, but one key idea is to automatically raise the income tax rate on the rich as the inequality index rises. [I understand your post was strictly about how to get out of end times rather than how to avoid getting into them, but it still seems relevant.]
Why would the élites impose this on themselves? Your comment seems to imply that there can be some beneficent, rational government apparatus not controlled by those in power—surely a contradiction in terms?
thank you for the reply, which raises a fair objection. Dr. Turchin's post said that change requires two things: "1) the ability to gain and hold power in competition against other power networks and 2) implementing a program of reforms that reverse the structural-demographic trends". Shiller has proposed a program of reforms to adress 2) so I was curious if it would be sufficient in Dr. Turchin's view. I agree with you and Dr. Turchin that you also need 1).
As Acemoglu and Robinson say in "why nations fail", economists like Shiller tend to assume that political problems are solved and the remaining questions are technocratic. I can't speak for Shiller but he considers the politics probably more than economists usually do. For example, he says that the indexing of income tax to inequality would be phased in so it would not immediately affect current wealth.
This is a very one dimensional view of how civilisations collapse as it takes no account at all of moral or psychological factors which many historians have documented and as such its a waste of time. There are many things in human life and culture that are not approachable , let alone understandable by mere data.
I think that we need to better define integrative and disintegrative periods. These often seem arbitrary.
Although Ancient, Medieval and early Modern history is fascinating in its own right, the Industrial Revolution changed society and politics in such a radical way that data from pre-industrial times is of little relevance to understanding the current world. And statistics become much better with the Industrial Revolution.
War and Peace and War (Turchin) goes over this stuff.
What about "panem et circensis"? That seems to work pretty well. If the masses are happy at their level... Of course, the elites may be too stupid to see that, but I don't actually think they are. Revolutions may now be a thing of the past.
I agree that generally panem et circenses works. I think that in the cyclical theory of Peter Turchin's theory, the wealth pump leaves less and less pan over time until even the breadcrumbs from the table of the rich are not enough.
Bread in the form of Universal Basic Income got us thru the pandemic. That would be an easy way to stave off revolution.
Dear Mr. Turhcin,
Where do you see Turkey in terms of its cycles? It seems like the end times, but judgments are subjective and everywhere all the time seems like end times. So, is it indeed in end times? If so, what are the possible trajectories it might follow? Should we interpret and look at the lifecycle of the Republic, or the entirety of the Turkish presence in Anatolia starting from Sultanate of Rum?
I would really like to hear your opinions about this.
Kind regards,
E Dincer
As always, thank you Peter, for your insights into what is going on around us in the U.S. They definitely inform my planning.
In the USA, the wealth pump is more accurately labeled as Asset price increases. Which occur because govt prints money, but the elite and most working folk have an adequate amount of consumable goods, so they inflate house prices & share prices, while CPI inflation remains low.
Deficit spending is the root cause—but most folk get a little, so oppose ending the system. Why is there no End Times for Japan with a debt/GNP ratio over 250%?
Let's consider the example of the Roman Empire. The rise of economic inequality during the Late Republic was associated with the expansion of Rome, not its collapse. Was this an integrative phase or a disintegrative phase?
Was the crisis of the 3rd century caused by economic inequality or the instability of a kratocratic government where any general can be emperor.
Unfortunately, as much as it would be better to hope for outcomes minimizing civil strife and upheavals, across the USA and EU, we're experiencing a very novel context (I'm currently reading your book on Elites and haven't reached ch. 9 yet).
As per my reply to the first commenter at the top, the hyper-financialization of our societies, coupled with the hyper-media-narrative mental conditioning and our historical bias, means we're unable to recognize the problem outside the intelligentsia (sorry to be so provocative ;-) until the crisis awakens either the equivalent of class consciousness or the animal spirits. I've lived in several European countries and currently am in Italy, and my impression of those outside what we could consider as the intelligentsia is that the social safety net is a double edged sword which has created a great deal of complacency; the lives of people literally revolve around getting their pensions. In the USA it's different, but the narrative of the land of opportunity has been etched into a mythos and most Americans on the right of the political spectrum are unable to critically appraise the defects of "capitalism" and thus are blindsided by the creeping feudal oligarchic business practices.
So stopping the wealth pump... I've been repeating that the problem is our relationship with money, in the sense we're addicted, and whereas in the examples you cited before, societies were both less complex (and so more resilient to endogenous and exogenous shocks) and social bonds (comunity, family, etc) had not been reduced to where they are now.
And today the wealthy and powerful have the media to influence opinions and narratives, which is not comparable to any preceding period of history.
Unfortunately I think we're being a tad too optimistic on not having deleterious outcomes.
I'll read your book(s) and follow your work. Thank you
So Bernie Saunders and AOC basically? The problem is, wealth redistribution and anti oligarchic policies seem to play less well - much less well - with the electorate than anti immigration and culture war demagoguery.
Fairness is a better way to phrase anti-oligarchy. If one allows for the term "wealth pump" than one has bought into the notion of wealth redistribution. It just depends on which way it is pumping.
Peter. As is so often the case with your work, this feels like a homework assignment for the rest of us. I'm going to be pondering this one for a while now.
Clark argues that downward mobility of the elites spreads their beneficial genes/traits throughout the middle/lower class. Essentially it's self correcting
https://www.pbs.org/newshour/nation/key-englands-economic-growth-rich-outlived-poor