Are we witnessing the birth of a new global hereditary aristocracy of wealth? All the trend lines have pointed that way since the 1970s, according to over a decade of painstaking research by French economist Thomas Piketty. In his groundbreaking 2014 book Capital in the 21st Century, Piketty showed that the era of relative income equality from 1945 to 1975 was a historical exception. Since then, societies around the world have been returning to a historical norm in which a tiny handful own almost everything, and the rest of us spend our lives working for them and paying them rent.
This year Piketty published a 1,000-page sequel, Capital and Ideology, in which he expands his previous analysis to regions of the world where new data has become available. He applies the same rigorous data-crunching to decades of election exit polling, discovering that left parties around the world have moved away from being parties of the working class and are now parties of the educated. He also surveys what premodern, slave, and colonial societies told themselves to justify extreme inequality. He concludes the book by laying out the kinds of policies we’ll need to enact in order to prevent the dystopian future of extreme inequality that we’re currently headed for.
Piketty makes clear that the growth of inequality he described in his 2014 book isn’t the outcome of some mysterious law of economics; it’s the predictable result of specific policies that were enacted when a particular ideology took hold. But a surging egalitarian ideology called socialism could prove to be the motor force of a counter-trend. A lifelong commitment by tens of thousands of socialists to patient, strategic organizing will make that more probable.
Piketty spoke with me by Skype July 24 about his new book.
Why did you decide to write Capital and Ideology? My previous book, Capital in the 21st Century, contributed to a rise of public interest in inequality. But Capital in the 21st Century is very centered on Western Europe, North America, on rich countries. This new book puts inequality and the history of “inequality regimes” into a much broader comparative perspective, looking at India, China, colonial periods, and Brazil and Russia. And this book proposes ideology as a true driving force behind inequality. Hopefully I’m moving in the right direction.
You write that major crises—wars and financial crashes—sometimes become “switch points” in which society changes course. Could the coronavirus epidemic be such a switch point? Yeah, I think it could. You can see the political impact already of the crisis in many countries. But you know, crises will happen again. What I want to say is this: We need to take ideas about the ideal society we would like to have more seriously. And that’s the main message of my book: Ideas and ideologies are important, so if we care about moving toward a different economic system, then we have to articulate a view of the ideal economic system we want. Which does not imply that we will get there next week, but if we don’t even know where we would like to go ideally in the long run, then we’re not going to go anywhere. So at the end of the book, based on the lessons of the 20th century and what worked and what didn’t work, I try to articulate a view for a decentralized, participatory socialism, based on the circulation of property and power—through voting rights for workers in corporations, and through more progressive taxation of income, wealth, and inheritance—in order to allow everybody to access a minimal amount of property. It’s not instead of the welfare state but together with a pretty ambitious welfare state in terms of public health and basic income and public pension and public education, etc. One of the problems of recent decades is that there was a very clear market agenda, articulated by Friedrich Hayek, by Milton Friedman, which was taken up by Ronald Reagan and Margaret Thatcher and across the world in recent decades. But there has never been sufficient attention by the other side to articulate where we want to go.
Things of course have started to change, particularly in the West, where we’ve seen some candidates on the left side of the Democratic Party trying to promote a much more ambitious agenda. I’m very happy with this evolution. But I think this is only the beginning. It’s important to talk about the plan for different economic systems that are more sustainable, more equitable. This is why this book is different from the previous one. This book is much more ambitious in its socialist perspective. And you know, I call it socialism because this is the best word we have to describe an economic system that is different from capitalism. If people come up with a better term, I would be happy to change it. In the end what matters is the content. And I add “participatory” to it, by which I want to stress a decentralized nature and also a reliance on small-scale private property. I think socialists historically have had difficulties with this, but I think it’s important to start advocating voting rights for workers — I propose 50% voting rights in corporate boards for worker representatives, including in small companies. This is what you have in large companies in Germany and Sweden now. I also propose that the other 50% for shareholders be capped, for large companies, so that one large shareholder can not have more than 10% of the voting rights going to shareholders. This is a better balance of power between workers and shareholders, and between small shareholders and large shareholders. In addition, I think private property of reasonable scale, small-scale private property, is part of the solution. I think this is important because in the past, socialist thinkers fought a lot about “Should we have any private property? Should it all be collective, cooperative, worker-based?” And I think small-scale private property is part of what we want in a decentralized, fair society. Maybe in the very long run we’ll manage to do away with it, but I think as long as it comes with power for workers, including in small companies, and as long as it comes with a strict limit on how much power shareholders can have, I think small-scale private property is part of the solution.
So anyway, the pandemic, it’s very important in 2020, but the pandemic is not going to solve these big intellectual problems for us. At some point we have to stop talking only about the pandemic.
In Capital and Ideology you show that parties of the Left that historically got support from those with the lowest incomes now get their support from those with the highest education. Why do you think parties of the Left lost the support of working people? Because they were unable or unwilling in the end to renew their political platform. After World War II they had a platform based on a policy of redistribution, which came with more workers’ rights, with setting up the welfare state, with promoting universal access to primary and then secondary schooling. And then after this huge egalitarian push was achieved, the Left was not really able to renew itself. Partly because it’s not so simple. There are big intellectual issues about how you design an equitable system. In the era of higher education, it’s more difficult to define what equality means. You cannot just say we want 100% of a generation to get a Ph.D. You have to accept that there’s going to be some diversity in educational outcome, and at the same time, you want the system to be fair. Left parties have become what I describe in my book as the “Brahmin Left,” the parties of the winners of the educational game. Left parties historically promoted education and emancipation through education. So in a way, the people who were the most successful in this education competition remained faithful to the Left, whereas the people who were left behind were less and less attached. But I think the biggest responsibility is with the parties themselves. They gradually developed an attachment to their high-education voting base and did not care about those who were lagging behind.
There is also the general lack of conviction about how you transform the capitalist system of property relations. I think for a long time, especially in Europe, the left parties like the Labour Party in Britain or the Socialist Party in France, they wanted to nationalize a very large part of the economy, and then after the 1980s and after the fall of the Soviet Union, they dropped the nationalization policy and they did not replace it with anything. They dropped, in effect, any ambition to transform the system of property relations. In social democratic countries like Germany and Sweden, at least they kept workers’ rights and voting rights in corporations that they had put in place—which is not a perfect system at all. I’m not trying to idealize it. But at least it’s an interesting starting point that can be radicalized, improved, by giving workers 50% voting rights, and putting a cap on the voting rights of individual shareholders. If you look at the Socialist Party in France or the Labour Party in Britain, or the Democratic Party in the United States, it’s only very recently that they’ve started to promote this kind of policy — giving workers voting rights in corporations. I’m very happy that today we have bills on the floor of the U.S. Congress, also in the House of Commons in Britain or in the French parliament, where parties on the left are actually discussing this. But it took a very long time. There was a long period between the fall of the Soviet Union until the 2008 financial crisis, or even more recently, where left parties just stopped thinking about the property regime and trying to go beyond the capitalist property system.
And the third limitation of the Left is the attitude toward globalization, which I think is probably the most important mistake. In many countries at the time of Tony Blair or Bill Clinton, the Left basically was promoting pure free trade, free circulation of capital flows—without any common taxation, without any common regulation. At some point we have to trust democratic deliberation about limiting the free circulation of trade and capital flows. This must be based on principles of economic justice and fiscal justice. On the basis of historical experience about what’s a fair tax system, you can put limits. You can put sanctions on a country that wants to benefit from free trade but has zero corporate tax, zero tax on carbon emissions. There are countries like this in Europe right now, and we should not continue to have free trade and free capital flows with countries which do that. So the left needs a new way of dealing with globalization if they want to regain some support in the socially less advantaged voters. If the Left continues to appear as pro-globalization, and we leave it to Donald Trump to complain about globalization, that’s not going to work. We know what’s going to happen.
Do you have any particular message to convey to members of DSA? Well, first I want to congratulate DSA for using this name—Democratic Socialists of America—and promoting the agenda. I’m aware it’s more complicated to use the word socialist in the United States than it is in Europe. So I think it’s very important for all of us in Europe and across the world that we have people like DSA in the United States to promote an agenda for replacing capitalism as an economic system with a different, socialist, economic system. I hope that DSA will be even more influential in the coming years. Of course I was disappointed that Bernie Sanders was not more successful than he was. But I think the battle of ideas is even more important.
I have made some proposals in my book, in particular in the last chapter of my book Capital and Ideology, and I’d be very curious to hear reactions from people at DSA and have further discussion about this. I don’t pretend that all of these proposals are anywhere close to being final. It’s just a basis for discussion.
In the United States we’re used to thinking in national terms. We assume that the currents of change are a result of dynamics in our own national community, yet in your books we find the same patterns over and over again globally: Increased inequality, decline of unions, increasing capital share of the national income, disillusionment of the working class toward left parties. Do you have any sort of master theory to explain why these patterns repeat in so many nations?
I think the main characteristic of our world today is we are still living in a sort of post-communist, post-colonial world.
The failure of communism was a huge victory for the capitalist side and for pro-market, pro-business discourse. And the Left, and the socialist movement in particular, still have to compensate for the gigantic historical failures of state communism.
And we live in a post-colonial world: You have the rise of post-colonial identity conflict within the U.S., within Europe. In Europe, for the first time in history, you have people from different origins and religion starting to live together in the same democratic political community, which in itself is fantastic news as compared to the situation in the previous decades. Until the 1960s, the only relation between the peoples of Europe and the people of Africa or South Asia was through colonization and military domination. So the fact of living in the same society, in the same political community, is a huge improvement as compared to that. But it’s also created tensions that have been used by xenophobic parties emphasizing identity issues. In the United States the cohabitation between European-Americans and African-Americans was much older, but as you know, it’s only after the 1960s that there was an end to segregation and that there was a truly equal basis at least from the formal legal viewpoint, making a single political community. And as you know better than me, this has also been used and exploited by all sorts of xenophobic leaders, to try to divide the working class between Black and white.
So at the same time that the agenda for another economic system was being weakened by the fall of communism, you have this other, post-colonial challenge. And the two together make it a very difficult time for the Left and the socialist movement, and in the end explain why unfortunately a large part of the white working class stopped voting for the socialists (which in effect didn’t have any project to change capitalism), and started voting for the xenophobic party, which looked like the only anti-globalization party. And this is where we still are today, both in Europe and the United States. Also India: The fact that the Congress Party was very much at some point a neoliberal party pushing for market liberalization explains the rise of the Hindu nationalist movement. It’s not only Europe and the United States, but at a global level, the lack of ambition of the Left to change the economic system contributed to the rise to the type of identity politics that we have today.
But what I know from history is that this historical phase is not going to last forever, because this agenda, and in particular the xenophobic agenda, has its own contradictions. It’s not going to deliver. Maybe we’re already starting to see it in the United States with Trump. So this is not the end of history. I think there will be a growing demand for economic justice in the time to come. The notion of economic justice is very important. People are attached to a view of justice that is sometimes a bit vague and not sufficiently articulated, but I think this is part of the responsibility of collective organization, and books, and public discussion—to try to articulate a view of justice that corresponds to this growing demand for a different kind of economic system.
Your work is often compared to the work of Karl Marx, and of course the names you chose for your books do resemble Marx’s works. There’s been a revival of interest recently in Karl Marx, and some DSA members are reading him. What do you think of Marx and of Marxism? What’s your relationship to that tradition? If Marx was still alive today, I would love to discuss with him. And I don’t know what he would think of my book, but I think we would probably have a very interesting discussion. I would certainly learn a lot by his reaction.
Marx died 150 years ago, so he couldn’t see the Bolshevik revolution, the Great Depression, the rise of Nazism, World War II, the social democratic agenda of the post-war period. He could not see the fall of the Soviet Union; he could not see how a country which tried to entirely abolish private property then became the kingdom of oligarchs and tax havens. And I’m sure he would have liked the irony of this, the contradiction of all of this.
But today we know what happened in the last 150 years. So we cannot just repeat what Karl Marx said, because if we want to be serious (and this is what he would have wanted us to do), you have to take into account these 150 years, and what didn’t work, what worked, and try to build on this, to build a new kind of socialist agenda. The main limitation of Marx—but you know I don’t want to blame him for it—is that he spent more time analyzing the capitalist system of his century, the 19th century, than he spent thinking about the socialist systems that would be built after that.
And then some people took power, and some people are still in power today in China, and claim that they follow Marxism. I don’t think that the Soviet leadership or the Chinese leadership today follow Marxism in any meaningful way. But the fact that Marx was not very explicit about the way power relations would be organized in a socialist society, how the state would be organized in a socialist society, is a limitation.
The texts of Marx that I prefer are those where he talks about the 1848 revolution in France, the abolition of slavery, the situation of China, of colonial exploitation in the 1850s, 1860s. He is the best when he talks about his time, which he understood very well. The problem is that he has been used by bureaucrats in Moscow or in Beijing to pretend that what they were doing to keep power is a continuation of Marx. I think the way to respond to this kind of misinterpretation of Marx is to be very explicit about the kind of socialism that we would like to build.
The ideas outlined in his two major volumes don’t fit easily on picket signs, but here are Piketty’s five core proposals to reverse extreme concentration of wealth and enable a new era of participatory socialism:
- Tax income In the 1950s, 90% top tax rates on the highest incomes prevented runaway executive pay. We must return to that, with high taxes of up to 90% not just on salaries but on all income, including capital gains, dividends, and rents.
- Tax wealth We tax wealth today—the property tax–but it’s a “flat” tax averaging 1% on only one kind of wealth. To restrain the largest fortunes that are now growing at up to 10% a year, we must make the annual property tax “progressive” too. That means higher rates for those with larger holdings, and it means taxing wealth in all its forms, not just land and buildings.
- Tax inheritance Invent an app or star in a movie that makes you a fortune? Good for you. But no just society can let that result in opulence for all time among your descendants. We must return to the 80% tax rates we had in the ‘50s and ‘60s on the biggest inheritances.
- Give workers a say It’s unjust when those who own have all the say and those who labor have none. In all but the smallest firms, workers should elect half the board members, as they do in the largest firms in Germany today.
- Capital for all Ever heard of land reform—redistributing large estates to smallholders who’d work the land? Proceeds from the wealth and inheritance taxes could be used in a similar way—to give a universal capital endowment of $140,000 to every citizen when they turn 25.