This paper aims at contributing to explain the observed high persistence of cross country differences in inequality and levels of redistribution. It focusses on the interactions between inequality and the predominance of either horizontal coalitions (i.e. among individuals of similar economic status) or vertical ones (among individuals with different economic status). The paper shows that the interactions between inequality and the type of coalition formed in a society can give rise to self-sustained social contracts where inequality persists: because the poor take time to organize, when inequality is high, the poor are particularly vulnerable to consumption fluctuations and are willing to give up substantial redistribution in order to be protected from these. For the rich, this 'traditional social contract' is an investment. If the rate of return to alternative investments rises substantially or the elite becomes weakened, this traditional social contract may break, paving the way for working class organization and a permanent decrease in inequality. Differences in inequality between Latin America (and the Middle East) and contemporary Western Europe are discussed in the light of the model. The European transformation in inequality, redistribubtion and social relations in Modern times is also discussed focusing on England.