Is Inequality Inevitable in Society? Income Distribution as a Consequence of Resource Flow in Hierarchical Organizations

Abstract

Almost all societies, once they attain a certain level of complexity, exhibit inequality in the income of its members. Hierarchical stratification of social classes may be a major contributor to such unequal distribution of income, with intra-class variation often being negligible compared to inter-class differences. In this paper, examples from different historical periods, such as 10th century Byzantium and the Mughal empire of India in the 15th century, and different kinds of organizations, such as a criminal gang in the USA and Manufacturing & IT Services companies in India, are shown to suggest a causal relation between the hierarchical structure of social organization and the observed income inequality in societies. Proceeding from the assumption that income inequality may be a consequence of resource flow in a hierarchically structured social network, we present a model to show that empirically observed long-tailed income distribution can be explained through a process of division of assets at various levels in a hierarchical organization.