Introduction to Capital & Ideology by Thomas Piketty
I’m taking advantage of my time in isolation to tackle Piketty’s new book Capital & Ideology.
I plan to do it in 4 posts, one for each part listed in the image below. (5 if you count this one.) This first post will be the shortest as it only covers his own introduction to the book. As I finish each section I’ll retroactively edit this page with links to subsequent sections.
Introduction
For those who don’t know Piketty’s previous book was basically a (somewhat) brief history of inequality, mostly limited to the West if I recall correctly.
Its central thesis was that if the rate of return on capital is greater than the growth rate of an economy, (r>g) inequality will increase over time excepting brief periods of leveling such as World War 2. This rule applies pretty much everywhere, but not to the same extent everywhere. Laws, tax policy, and political power still matter.
This sequel from what I can tell so far, is a more interdisciplinary examination of how societies throughout history justified themselves. The goal is to gain perspective on how our present society justifies itself, and to what extent its justifications hold up to scrutiny.
Every society has to justify its inequality. This discourse to do so is economic, social, and political all at once.
“In today’s societies, these justificatory narratives comprise themes of property, entrepreneurship, and meritocracy: modern inequality is said to be just because it is the result of a freely chosen process in which everyone enjoys equal access to the market and to property and automatically benefits from the wealth accumulated by the wealthiest individuals. Who are also the most enterprising, deserving. and useful. Hence modern inequality is said to be diametrically opposed to the kind of inequality found in pre modern societies, which was based on rigid, arbitrary, and often despotic differences of status.”
This ideology is becoming more and more fragile as its contradictions heighten.
Nearly everywhere a gaping chasm divides the official meritocratic discourse from the reality of access to education and wealth for society’s least favored classes. The discourse of meritocracy and entrepreneurship often seems to serve primarily as a way for the winners in today’s economy to justify any level of inequality whatsoever while peremptorily blaming the losers for lacking talent, virtue, and diligence. In previous inequality regimes. the poor were not blamed for their own poverty. Or at any rate not to the same extent; earlier justificatory narratives stressed instead the functional complementarity of different social groups.
Piketty states plainly that the economic status quo is contributor to the rise in xenophobic populism in recent years, which is a controversial, (in my opinion historically justified) position. It was an early indicator that this sequel would be more overtly political than the previous. As I read on, it becomes more and more clear that this book does not center economics nearly as much as the last. I personally find this to be an improvement, constructing a historical narrative much more broad and compelling than a r>g hypothesis no matter how well supported.
“The hyper-inegalitarian narrative that took hold after 1980 was in part a product of history, most notably the failure of communism. But it was also the fruit of ignorance and of disciplinary division in the academy. The excesses of identity politics and fatalist resignation that plague us are in large part consequences of that narrative’s success. By turning to history from a multi- disciplinary perspective, we can construct a more balanced narrative and sketch the outlines of a new participatory socialism for the twenty-first century. By this I mean a new universalistic egalitarian narrative, a new ideology of equality, social ownership, education, and knowledge and power sharing. This new narrative presents a more optimistic picture of human nature than did its predecessors — and not only more optimistic but also more precise and convincing because it is more firmly rooted in the lessons of global history. Of course, it is up to each of us to judge the merits of these tentative and provisional lessons, to rework them as necessary, and to carry them forward.”
“Inequality is neither economic nor technological, it is ideological and political.”
“It is hardly surprising that the elites of many societies, in all periods and climes, have sought to ‘naturalize’ inequality. They argue that existing social disparities benefit not only the poor but also society as a whole and that any attempt to alter the existing order of things will cause great pain. History proves the opposite: equality varies widely in time and space, in structure as well as magnitude. Changes have occurred rapidly in ways that contemporaries could not have imagined only a short while before they came about. Misfortune did sometimes follow.
Broadly speaking, however, political processes, including revolutionary transformations, that led to a reduction of inequality proved to be immensely successful. From them came our most precious institutions — those that have made human progress a reality, including universal suffrage, free and compulsory public schools, universal health insurance, and progressive taxation. In all likelihood the future will be no different. The inequalities and institutions that exist today are not the only ones possible, whatever conservatives may say to the contrary. Change is permanent and inevitable.”
Piketty’s approach seems to critique the Marxist focus on historical materialism as a bit reductive arguing political ideological discourse is more autonomous. “ideologies count in history. They enable us to imagine new worlds and different types of society.”
Piketty takes a moment to elaborate on his emphasis on ideology in this book. The goal is not to label everyone else as irrational ideologues like some Youtube Intellectual, but to rigorously explore each ideology to gain perspective. He chooses in particular six specific ideologies to understand their internal coherence. (One of my favorite phrases.) The six ideologies are proprietarian, social democratic, communist, trifunctional, slaveist, and colonialist.
“Knowledge of History and Economics is too important to leave to historians and economists.”
(This is almost word for word the sentiment of Ha Joon Chang who I’ve summarized here before.)
To form his narrative Piketty will draw from historical data on inequality, which has grown but is still limited, as well as political writings from the respective epoch, electoral surveys, and even fictional literature.
Human Progress & Inequality.
Human Progress certainly exists in the macro even if it is uneven and fragile. We should be able to acknowledge that things could be better, and also that things could be worse.
Top decile share of income has increased almost everywhere, but the rates vary. India and the US more than China & Europe respectively . Causes vary widely. The legacy of colonialism and slavery is relevant in Brazil & S. Africa & the US. The Middle East is more affected by Petroleum Wealth Concentration.
Since 1980 the only place inequality may not have increased is the Middle East since it was already so unequal to begin with. Middle East Inequality has always been high, remains high, and is likely even higher than we have evidence for.
There is an argument that this inequality has been a driver of growth for example in China inequality goes up as poverty goes down. This narrative is contradicted by coexisting superior growth and egalitarianism in the US & Europe in the post war decades. India had lower growth and higher inequality than China at the same time giving the poor the worst of both factors.
Elephant Curve: Inequality between bottom & middle of global income distribution has gone down, inequality between middle & top has increased. At the same time the countries with the highest wealth shares going to the elite generally have worse outcomes for the poor. Piketty asserts that there is no rule justifying more than double the growth for the top 1% than for the bottom 50%. Distribution is just as important as growth.
The stability argument, that any shift in policy to favor the poor would hurt those it intended to help was present in the gilded age, trifunctional & slave societies. (Also applies to the argument that life was generally improving therefore the status quo is justified.)
Learning from History
In the US gilded Age, the country worried about becoming as inegalitarian & oligarchic as the societies they left which led to progressive taxation. The US has a well documented history of income taxes over 80% which did not inhibit capitalism, rather the opposite.
In the 1980s marginal tax rates were cut massively by far right governments in the US and UK and were never reversed by ensuing administrations. In hindsight these reforms did not lead to productivity growth and are not justifiable on their own terms. Piketty sees these societal changes as the seed that grew into the 2016 election & Brexit.
Why have Social Democratic Parties failed or disappeared so thoroughly?
The “left” went from the poor working class to the educated liberal class. The question of who abandoned who first is a source of controversy to be explored. Did the democrats abandon the working class or did racial divisions break up the egalitarian coalition? The two are both true to some extent, and even reinforce each other over time.
So these are the areas we’ll be exploring. Follow if interested.
Part One is up.
Part Two is up.
Part Three is up.
Part Four is up.
