Volume 6, No. 2, February 2024
Editor: Rashed Rahman
Capital in the Twenty-First Century
translated by Arthur Goldhammer (Harvard University Press, 2013).
Capital and Ideology
translated by Arthur Goldhammer (Harvard University Press, 2020).
Time for Socialism: Dispatches from a World on Fire
translated by Kristin Couper (Yale University Press, 2021), originally published as Vivement le Socialisme! Chroniques, 2016-2020 (Éditions du Seuil, 2020).
Saint Domingue was the crown jewel of the French empire in the Caribbean when its slaves rebelled in 1791. They formed the independent republic of Haiti in 1804, but the terms of the island’s separation from France was contested long thereafter, and French reconquest loomed. In 1825, in order to secure their sovereignty, the Haitians were forced (in the words of Charles X’s decree) “to compensate the former colonists who may claim an indemnity” for the human property that had been lost. The total sum of these reparations was 150 million golden francs, which the new Caribbean nation funded through a massive loan, paid back slowly over decades. Generations of Haitians – deep into the twentieth century – contributed a significant portion of their livelihood to support the descendants of those who had kidnapped their ancestors from Africa in the hundreds of thousands and forced them to labour under genocidal conditions.
The French aristocrat and intellectual Alexis De Tocqueville is best remembered for his prophetic insights into US democracy, but in 1843 he turned his attention to Haiti. When the indemnity arrangement was again debated in France, Tocqueville declared his unqualified support for the deal, calling it “fair to all participating parties”. Not only would it compensate slaveholders for their lost property, he argued, and restore the social order that had been badly undermined by the rebellion, it would also inculcate much needed labour discipline among the emancipated population. In place of the whip, which kept things in check under slavery, a new instrument – a debt repayment schedule – would coerce the population to return to plantation work and resume sugar exports.
The agreement helped shore up the French banking system while pushing Haiti into an escalating spiral of poverty. It also exacerbated inequality within France itself, given that interest revenues from this debt were funneled into the pockets of a narrow upper class of wealthy Parisians. The legacy of slavery thus reverberated through the French economy in the aftermath of the Revolution. In the new social order that had emerged, property became sanctified. Reparations illustrated that sanctity: no property, not even human chattel, could be confiscated.
The debate over reparations for slaveholders – and Tocqueville’s endorsement of the idea – has been marginalised in many histories of the west. But it has received detailed attention in the work of another French thinker, Thomas Piketty, a professor of economics at École des Hautes Études en Sciences Sociales. Over the last decade, Piketty’s name has become synonymous with the problem of inequality. Even more remarkable has been his self-reinvention. The barefoot empiricist – a massive dataset builder charting quantitative shifts in inequality over time – would become a theorist seeking the root causes of these shifts, and more recently a pointed political voice, with a sense of the long historical durée. He now calls for the end of neoliberalism and a renewal of socialism worldwide.
Piketty memorably broke into wide consciousness in 2013 with Capital in the Twenty-First Century, which became required reading for ‘Occupy Wall Street’ and the other protest movements that had proliferated in cities around the world in the wake of the global financial crisis of 2008. It gave academic and empirical backing to what grassroots activists had intuited, namely that levels of inequality had reached levels not seen since the early twentieth century. Piketty’s bulkier follow-up to that unlikely bestseller, Capital and Ideology (2020), was more ambitious and powerful, and yet it was greeted with less fanfare. Time for Socialism (2021) gathers his political columns from Le Monde, many in English translation for the first time.
Capital in the Twenty-First Century was a feat of data collection, mapping inequality in Europe and the US over the last 200 years. Using historical records such as tax returns, probate records and government reports, Piketty and his team showed that the era of relative equality in the middle decades of the twentieth century, from the 1930s to the 1980s, was a historical anomaly. The longer historical perspective revealed that market economies tended to deepen rather than alleviate inequality. Wealth carried over generations. The return on capital surpassed the rate of economic growth, which Piketty distilled into the pithy formula ‘r>g’. The “apparently small gap between the return on capital and the rate of growth,” he argued, had “powerful and destabilising effects on the structure and dynamics of social inequality”. This gap allowed a small segment of wealth owners to gain possession of ever-growing swathes of the economy.
Much modern economic thought emerged during that midcentury anomaly and was inflected by it. Thus US economists such as Simon Kuznets and Robert Solow assumed that industrial societies matured in ways that diminished income disparities over time. Extrapolating from limited data on US society in the postwar years, they announced that capitalism, in its more developed “stage”, generated “balanced growth” where profits and wages increased in tandem. The same data also downplayed the significance of inherited wealth and wealth inequality more generally versus inequality of income. These were attractive propositions in the context of the Cold War, both for Americans at home and for developing countries that the US wanted to keep within its orbit. Piketty’s boatload of data demolished these propositions. And his findings reversed another familiar conception of capitalism that emerged in the postwar period but gained greater currency in recent decades: the one theorised by Joseph Schumpeter, for whom capitalism was defined by a relentless process of “creative destruction”. Piketty’s capitalism is emphatically not a perennial rebellion of entrepreneurs and disrupters against the established order, but a highly hierarchical system governed by a tiny propertied class, in which the past “devoured the future”. The tendency of capitalism to compound inequality was temporarily reversed in the aftermath of the Great Depression, enabling the creation of a broad middle class in many countries, but it returned with a vengeance in the age of globalisation.
Capital in the Twenty-First Century meticulously documented the shifting patterns of wealth and income distribution, but it lacked a theoretical framework that could explain these historical shifts. It was indeed “a grand statistical compendium”, as anthropologist Anush Kapadia cynically put it, treating it more as a reference work than a model of social scientific inquiry. Yes, the French Revolution and the aspiration for liberty, fraternity and equality led to vast inequalities between rich and poor – but why? And why was this trajectory reversed in the twentieth century? And why did relative equality again give way to deepening inequality? In that analytical sense, r>g was a dead end. The formula posited a trans-historical economic law, temporarily punctured by the external mid-century shock of world war. But was r>g an empirical observation about the past or a predictive statement about the future? How were capitalists able to sustain high returns on their investment so consistently across time, despite vast economic and technological transformations? Was the devastation of war really an exogenous event, unrelated to economic trajectories, and to what extent were such events necessary for radical change to distribution to in fact occur? Piketty conceded that economic methods would go only so far. He called on fellow economists to “set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy”, urging more “historical research and greater collaboration with the other social sciences”. This show of humility was itself a sharp cognitive departure after several decades of triumphalism among economists.
Only interdisciplinary work, in other words, could explain. Hence Capital and Ideology, which delivered an underappreciated analytical and methodological breakthrough: a comparative political history of the modern age framed around the question of inequality. The analysis shifted from quantitative description to an apprehension of the forces that generated and sustained inequality. It abandoned timeless historical regularities, mathematically conceived, and sharpened a more robust interrogation of what Piketty now labelled “inequality regimes”. It offered, that is to say, a history, with characters, legislative battles, political pivots, and intellectual debates. Capital and Ideology found the fundamental levers of causation not in market measurements or technological shifts, but in social orders and political institutions. This was in fact Piketty’s main argument: inequality did not simply emerge from economic reality, from technological change or the organisation of production, nor from inherent disparities in individual talent, ability, or effort. Rather, inequality is determined through struggles that take place in the political sphere. These struggles dictate the terms of engagement in the market and, by extension, the market’s distributional outcomes. Why do some groups in society accumulate wealth over time? Not because they are more deserving in any objective-economic or natural-Darwinian sense – but because they were able to write the political rules in ways that have benefited them at the expense of others.
Property rights themselves have a history. Here Piketty followed the lead of theorists such as the midcentury Austrian sociologist Karl Polanyi, who underscored the political foundations of private property. Private property, in this view, has always been an arbitrarily devised bundle of legal privileges. Could a person have property in another person? Could property transfer across generations? Would a political regime recognise property that had been acquired, at times through violence, in the past? Could a person own a natural resource, land, or technological knowledge? And if so, for how long? What are the rules within the labour market that define the balance of power and by extension the distribution of resources between employers and workers? What about the terms of engagement in the world economy? In what currency is trade conducted and who controls this currency? The answers to these questions are never obvious or straightforward; they are rather the subject of ongoing struggle and forever rest on political underpinnings. They are different across societies and across time. They also change, at times in radical and surprising fashion, in ways that expose the illusion that any particular distribution of resources reflects some objective or natural order.
Piketty arrived, that is to say, at a concept that economists have long loathed but that humanists have long loved: Ideology. For Piketty, ideology means the assumed logic behind any given inequality regime. It is not simply a set of ideas or a dogmatic commitment to certain values. It is, in ways reminiscent of Antonio Gramsci’s concept of hegemony, a worldview enshrined in the existing social order and shored up in public policy: in the tax system (an example Piketty uses again and again), in the legal system, in political institutions, and in actual practice. Ideology not only bolsters the existing balance of power within society; it gives the regime the aura of inevitability. In the case of Haiti, after all, none of the French participants considered the possibility that France ought to offer reparations to the former slaves rather than the other way around. Jane Austen’s readers did not question why an English gentleman who had never worked in his life, but possessed profitable assets such as real estate, financial securities and slave plantations, should have an income of £ 4,000 a year. And we in the perverse present accept as legitimate the wealth of tech billionaires, who collect immense revenues based on knowledge developed largely through government-funded research. But at certain moments, Piketty observed, the power of ideology cracks. When it can no longer provide adequate justification for the existing state of things, it gives way to a new ideology and a new social order. Massive change comes about not gradually and peacefully but through crisis.
Piketty was thus obliged to descend from the elegant mathematical Olympus of economic theory into the muck of political and economic crises, public debates, social confrontations, and competing visions of progress. Capital and Ideology wove disparate episodes into a grand synthesis. The abstract determinism of ‘r>g’ gave way to an understanding of inequality as historically contingent and highly malleable. The story of inequality now became a history of change, crisis, and reinvention. Sweden – one of Piketty’s favorite historical cases – was one of the least egalitarian and least democratic societies in Europe in the beginning of the twentieth century, but it became a social democracy. The US, by contrast, used to be more egalitarian than the industrial societies in western Europe, taxing property and income more heavily, but after the 1980s it turned into the most unequal society in the west. France and England have become more unequal in recent decades but are still far from the inequality of the pre-World War I ‘belle epoque’. There’s nothing inherently Swedish about Swedish social democracy, nor essentially ‘American’ about rapacious capitalism. France and England look nothing like the imperial states of a century ago. Societies are not beholden to custom or tradition. Levels of inequality are in fact dynamically open-ended, and have been shaped and reshaped over time through struggle.
Capital in the Twenty-First Century was a huge best seller. Capital and Ideology, published shortly before the onset of Covid-19, did not garner the same commercial and critical success. Critics who had lauded the former, like Paul Krugman (always a weathervane), dismissed the latter, and signalled to readers that Piketty’s rockstar days were over. Piketty’s surprising emergence as a cultural icon – heavily-accented English, clear lack of fashion sense, and total absence of charisma (I am a social scientist!) – turned sour. Maybe the book was just long? But the first one was similarly long, with pages upon pages of tables and charts, and its author was completely unknown. Capital and Ideology was the more dramatic narrative, by a now-celebrity scholar. Was it because the book tour was cancelled due to the pandemic? But book sales soared during lockdowns.
The real misfortune for Capital and Ideology was not its length, nor Covid-19, but rather its release in the long aftermath of 2016. Emerging as a prominent public voice in the pre-Brexit and pre-Trump era, Piketty had come to personify a disjuncture. On the one hand, he embodied a paradigmatically neoliberal blend of technocracy, meritocracy, and expertise. His substitution of the language of social class with the categories of ‘deciles’ and ‘percentiles’ in Capital in the Twenty-First Century had earned him the respect of credentialed colleagues who could not help but concede that this was indeed a “serious book”. But with Piketty presiding, the Excel spreadsheets yielded unpalatable insights. Neoclassical economic methodology illuminated an unbridgeable divide, native to capitalism, between the haves and the have-nots. Social movements capitalised on this disjuncture when they armed themselves with the book’s deeper message about growing inequality, even as their cry of ‘We are the 99 percent!’ chastised and ridiculed its banal mode of authority. Piketty himself thus became a signifier of a moment of fracturing ‘ideology’. By the time Obama-era adulation of Hamiltonian finance gave way to the shock of Trumpism, this disjuncture – and Piketty’s rogue version of neoliberalism – had served its purpose and no longer possessed the same appeal.
Time for Socialism, a fairly lean book by Piketty’s standards, gathers his Le Monde columns from 2016 to 2021. The anthology moves chronologically, its axis tilting between the long durée and the day-by-day unfolding of events. Newspaper columns by economists are a weird genre, by which the oracles of our epoch are called upon to read the tea leaves and speak to the immediate present. Alas those leaves often prove to be remarkably unprescient when it comes, say, to subprime mortgages, to risk in the global banking system or to the outcomes of pivotal elections and referenda, not to mention climate catastrophes or public health hazards. Piketty’s methodological conservatism, though, precludes him from becoming yet another pundit, prone to the fads of the hour.
To be sure, this commitment to cautious empiricism comes at a narrative cost. To read his columns now is to relive the tumult of the last half decade – Brexit, Trump, the Yellow Vests, the crisis in Catalonia, Bolsonaro – through a perspective at once highly credible and yet totally detached from the overall mood of those years. These monthly dispatches – really more like pithy journal entries, light on literary flourish – betray little of the media meltdown about the looming threat of ‘populism’ in those years. True to form and unswayed by the headlines, Piketty kept his laser focused on the problem of economic inequality, methodically following his ever-multiplying and ever-expanding datasets to their logical policy conclusions: budget shortfalls were less of a problem than deep democratic deficits. He did not frame events as dramas of culture, identity, or national reckoning, nor was he tempted to peer into the mass psychology of the electorate. He instead proposed sober and implementable constitutional changes that would have measurable effects.
Those columns now sketch a narrative counter-arc of our time. Immediately after the election of 2016, Piketty declared flatly that Trump’s victory was “primarily due to the explosion in economic and territorial [i.e. regional] inequality in the US over several decades and the incapacity of successive governments to deal with these.” In 2017, he explained to readers that “Populism is merely a somewhat confused but legitimate response to the feeling of abandonment experienced by the working classes of the advanced countries in the face of globalisation and the rise of inequalities.” In 2018, he accounted for the protests of the ‘Yellow Vests’ by detailing the injustice of Macron’s tax policies. He reprimanded the French president for “abandon[ing] and humiliat[ing] all those who do not consider themselves to be ‘leading lights’” of the Republic. In 2019, he called on progressives to reject both “identitarian nationalism” and “elitist globalism” in favour of “economic transformation”. His columns focused not on the dangers of right-wing demagoguery or authoritarianism, but on the European Union’s (EU’s) imposition of austerity, the abandonment of the working class by centre-left parties, the disproportionate share of funding for higher education absorbed by elite universities, and the lack of transparency and accountability in international organisations like the IMF and the European Central Bank.
Here, then, was another disjuncture: a credentialed economist published judicious political commentary, fully backed up by reams of empirical data, but found himself increasingly at odds with a liberalism that was lamenting the decline of respect for evidence and expertise. In this era of so-called post-truth and alternative facts, Piketty had scientific facts galore: the fortunes of the wealthiest Frenchmen – the 0.1 percent – rose from four to 20 million Euros per capita between the years 1980 and 2016. (Did they, Piketty wondered, really need the wealth tax phased out?) Whereas in the post-War World II decades, the Democratic Party attracted voters with the lowest levels of income, wealth and education, after 1980 it became the Party of the wealthiest, topmost earners, and most highly educated. (Is it any wonder they do not do more for ‘social justice and redistribution’?) The number of migrants entering the EU, far from escalating, had in fact halved from 1.4 million per year (between 2000-2010) to 0.7 million per year (2011-2018), a minuscule number relative to the population of the EU and even more minuscule compared to historic waves of migration. (Must this be the most urgent political question on our agenda?) From 2008 to 2018, the number of students in France rose by 20 percent, and yet overall government spending on education rose by only 10 percent, leading to a fall in spending per student. The Reagan, Bush, and Trump tax cuts, Piketty noted, marked not a return to American low tax traditions, but a betrayal of the country’s “egalitarian origins”. Piketty reminded his readers that for most of the twentieth century the US taxed its rich heavily, including high tax rates on the topmost incomes (81 percent!) and inheritance (74 percent!). These empirical measures made little dent on how our political debates were framed. Piketty’s favoured politicians – Bernie Sanders, Elizabeth Warren, Jean-Luc Mélenchon – were hammered at the ballot box. No wonder that in those years he became increasingly interested in the power of ideology.
Time for Socialism. What’s in a title?
Time. The narrative structure of Piketty’s history has evolved from the U-shape history of Capital in the 21st Century (inequality → temporary reversal to relative equality → return to inequality) to the much more punctuated and less predictable arc of Capital and Ideology (a sequence of ‘inequality regimes’). This latter view of history informs the historical discontinuity he is now calling for. Ours is to be not a transcendent historical pivot, but a more mundane yet nevertheless profound transition to a new ‘regime’. The transition he imagines is, in fact, more analogous to the relatively soft and creeping triumph of neoliberalism in the 1980s and 1990s than it is to a violent break in human history.
Socialism. The socialism he seeks is less about weakening, let alone dismantling, institutions, nor does it envision fundamentally new instruments of governance. His goal is to repurpose existing mechanisms and indices – taxation, social spending, corporate boards, economic statistics, higher education, the EU, the Federal Reserve – to adopt a new egalitarian logic. Instead of allowing the few to hoard wealth and power, those mechanisms will redistribute resources within and across societies. It is through the accretion of many substantive shifts, in an array of strategic sites, that a new regime would take shape.
For. Piketty’s emphasis on reprogramming the prevailing logic of institutions with a new operating code is what makes his proposals appear readily achievable, perhaps even trivial. A new organisational capacity does not need to be created; it simply needs to be reoriented. But it is precisely these substantive micro changes that will of course remain most challenging to enact, especially in the face of such consistent and thorough dominance of the code by an inegalitarian logic. They require more than new rhetoric and good ideas, and much more than a successful election cycle; they require a dogged, generation-long effort in the face of overwhelming obstacles. Hence the sense of frustration – always covered over with hope – that pervades the book. Progressive policies are always viable, always sensible, yet they consistently remain beyond reach. Conquest can take many forms.
(Courtesy European Review of Books, Issue 1, June 2022)