To understand the origin of inequality among Man, Rousseau says, you must first understand Man - which is difficult to do. In Part One of the "Discourse", Rousseau seeks what Man was in his "natural state" rather than what he is after he's been influenced by society, a state which need not be historical but merely hypothetical. Interestingly, Rousseau also tries to imagine Man without reason, as he thinks that reason is a divine gift rather than an attribute of nature; an idea I agree with.
Once stripped of rationality and society, Man is driven by a desire for self-preservation and pity for others. Unlike Hobbes, who pictured humanity as being entirely self-centred, Rousseau left room in human nature for genuine compassion. In general Rousseau goes relatively easy on human nature, attributing much of our ills to society. I found Rousseau's picture of the Man in his "natural state" very interesting and like Marx's vision of utopia, I was alternately drawn and repelled by it. Part of me likes the idea of a simpler life in the forest, with no politics, no inequality, no mundane tasks like a nine-to-five job or income tax. However, another part of me, and the louder of the two, is horrified at the idea of a life without reason or language (one can't exist without the other). There would be no philosophy, no stories, no complex ideas or conversations. I spend so much time in my head, I would probably be unrecognizable without the gifts of reason or language... not to mention an impractical fellow like myself would probably die pretty quickly in the "state of nature". Then again, if I didn't have reason, maybe I wouldn't daydream or drift off into abstract thought so much and I wouldn't be so impractical. Hmm. No, even with all the ills inherent in it, I would still take the life humans now lead to life in the "state of nature".
In the second section, Rousseau takes his picture of Man in his natural state and outlines the how inequality originated. According to Rousseau, the first man to say, "This is mine" about a piece of land was the founder of civil society. When people started living together in man-made huts on this land, the concept of the family was created, which is interesting because Marx wanted to abolish not only private property, but the traditional understanding of the family as well. In these communities, which eventually became nations, the people began to compare themselves with each other, noticing the natural inequalities (strength, beauty, wisdom etc.) among themselves and creating feelings of jealousy and desires of public attention or esteem which hitherto hadn't been a concern for Man. The next stage of inequality came with the agricultural (and metallurgical) revolutions, because of the division of land and labour and the ownership of goods. Conflicts broke out over what belonged to who and soon chaos reigned. To bring order out of chaos, the people created states and laws. Under these states the inequalities among men were institutionalized into classes or castes.
Rousseau said that the type of government established depended on the state of the people at the time of the formation. If one person possessed more power, virtue, riches and/or influence, a monarchy would form. If a group of people had more power than the others, an aristocracy. If the formation of the government happened closer to when the group of people were in their natural state and had less time to develop the inequalities of other societies, a democracy would form.