The West has democratised wealth

The well-known narrative goes like this: the market economy leads to ever-increasing inequality in the distribution of wealth amongst the population. However, a new analysis of economic history yields a surprisingly different conclusion: in the Western world, people have become both wealthier and more equal over the past hundred years.

Munich, 12 June 2026. Property ownership and retirement provision are the key drivers of growing and more equitably distributed prosperity in society. This is the argument put forward by Professor Daniel Waldenström of the Stockholm Research Institute of Industrial Economics. It is not a reduction in the number of wealthy people in the country that leads to greater wealth equality, but rather increased wealth accumulation amongst ordinary people – made possible by economic growth and rising prosperity for all. And this accumulation of wealth, in turn, boosts the economy.

The Swedish economist not only examines the history of wealth accumulation but also draws lessons from it for the future: wealth creation across broad sections of society ensures greater fairness and should be supported by the state – through easier access to home loans, incentives for private investment and, not least, lower taxes on earned income. The Foundation for Family Businesses is publishing his essay on this subject amidst a wider social debate on fair taxation and the appropriate reform of social security systems.

According to Waldenström’s data, wealth has become more widely distributed since the end of the 19th century. Through two world wars, and later with technological advancement, deregulation and globalisation, the wealth of the less wealthy grew more rapidly in the 20th century than that of the very wealthy. As a result, the concentration of wealth in Western Europe and the USA has fallen sharply, including in Germany.

Germany has some catching up to do

However, home ownership in Germany (49 percent) is less widespread than in France, Sweden or the USA. Private pension provision via the capital market also lags behind in Germany due to a lack of incentives. The reason for this is the old-age benefits provided by the pay-as-you-go pension scheme, which Germany has retained to this day. (According to Waldenström, these pension entitlements must always be taken into account when considering fair wealth distribution.)

Waldenström also addresses the issue of inheritance. He does not deny that inheritances can influence equality of opportunity, for example in the field of education. However, he considers investment in early childhood education to be more effective than inheritance tax, which has, in fact, not existed in his home country of Sweden since 2005.

He considers such taxes on assets – which would include a wealth tax – to be not particularly effective: due to the difficulty of valuation, the complicated structure of the taxes combined with low revenue, and the detrimental effects on investment and succession in family businesses. If capital is to be taxed sensibly, this can be achieved more clearly and fairly through the taxation of corporate profits, dividends and realised capital gains.

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