Abstract
Thomas Piketty gained a worldwide reputation with his book Capital in the Twenty-First Century (Piketty, 2014), analysing changes in inequality in personal wealth and incomes over recent centuries in the world’s wealthier countries. This new book purports to present a ‘first comprehensive map’ (p. 656) of what he calls ‘inequality regimes’, including enough countries to encompass most of the globe. He covers an enormous sweep of history, including Europe of the Middle Ages, slavery in Europe’s colonies and the USA, Indian society before, during and after British domination, the successes and failings of social democratic parties, disappointments with the EU and his proposals for a new policy agenda to achieve what he describes as ‘participatory socialism’.
The book is good where Piketty keeps close to his own research, following long-term trends and international comparisons using well-ordered numerical evidence. There is also a wealth of factual information on the hypocrisy and cynicism of those with wealth and power. However, there is also a lot of superficiality, unsubstantiated speculation and weak argument in areas outside Piketty’s expertise. In general, the book is over long and poorly organised, with frequent repetitions, digressions and expositions of events that do not relate to any central theme.
Much of the argument is built around his concept of an ‘inequality regime’, defined as a set of discourses and institutional arrangements that justify and structure inequality in a given society (p. 1043). He repeats several times his conviction that inequality is always given a justification that has at least some plausibility and this provides the foundation for an inequality regime. He distinguishes himself from Marx and Engels’s proclamation that ‘the history of all hitherto existing society is the history of class struggles’ (p. 1034). Instead, he sees it as ‘the history of the struggle of ideologies and the quest for justice’. In fact, much of what he writes rather suggests that this juxtaposition is unnecessary. A synthesis of the two would prove more productive.
A lot of the detail on crucial political conflicts – he describes them as ‘switch points’ when, he insists, various alternative roads of development were possible – reveals what would seem to be often brutal class struggles. Thus, serfdom in France was maintained, we learn, by such repressive means as cutting off the hands and feet of those who rebelled (p. 66). Slavery in Haiti came to an end primarily because of rebellions staged by slaves themselves (p. 213). Haiti then had to pay to France crippling levels of compensation for the loss of ‘property’ up to the 1950s. Former British slave owners too received compensation while former slaves received nothing. An ideology of the inviolability of private property, an argument that was trotted out at the time, need not have been of decisive importance. Haiti agreed to pay because it was confronted by French military power and former British slave owners were part of the wealthy class that held political power. Slaves, the obvious victims, had no military or political power.
In today’s world, with universal suffrage and personal liberties, ideas play a different role. Piketty cites the discourses of meritocracy and entrepreneurship as substantial supports to current inequality. There is more to how the issue is kept off the political agenda. In fact, one of the benefits of this and his previous book is that they show how much information voters do not have. The extent of inequality is not widely known partly because, as he demonstrates, wealth can be held in secret and offshore accounts. He estimates that 10 per cent of financial assets held by Europeans are in tax havens, rising to 50 per cent for residents of Russia (pp. 601–602). Moreover, and he blames this partly on conscious political decisions, the quality of official statistics on inequality has markedly deteriorated.
For all that inequality is an important feature of society, it seems wrong to place it as the central issue in a theory of history. Piketty maintains that higher levels of inequality lead to less successful economies, citing comparisons of growth rates over periods of higher and lower inequality, but that need not lead to political change. He demonstrates very high levels of inequality for several countries in the years leading up to World War I, suggesting that that would ultimately have proven socially unacceptable even without the intervention of war. It seems an odd view that inequality – repeatedly defined in terms of shares of income taken by percentiles of the population – is the primary driver of politics. Accounts of the rise of workers’ and socialist movements rarely avoid references to working and living conditions. He seems steadfastly to avoid any reference to the nature of economic changes in creating an organised working class and, indeed, to Marx’s or anybody else’s concept of exploitation. Progressive taxation prior to World War I – which he links to an aim of reducing inequality – came as much to finance the social and public services that workers’ movements were pressing for or, as he also argues, to finance military spending.
The societies of western Europe and North America from 1950 to 1980 he defines as social democracies, perhaps exaggerating the role of parties of the left in shaping those societies. A major justification for his terminology is steeply progressive taxation, appearing to him as part of a programmatic attempt to reduce concentrations of wealth. He exaggerates this somewhat, quoting top marginal rates of income tax in the UK rising to 98 per cent until 1979. In fact, the standard textbook of the day on taxation showed how the then Labour government had also made available ample means of avoiding this high rate such that the effective maximum was probably never above 60 per cent with further means to avoid taxation by receiving income in kind (Kay and King, 1978: 52–53). The point is important as an indication of the nature of social democratic governments – maybe a rhetoric of reducing inequality to impress supporters, but clear limits in practice – and also because Piketty uses his interpretation to suggest that steeply progressive taxation would be easy to impose again.
He sees social democratic society changing after 1980, putting the blame for opening the door to widening inequalities on the failure of social democratic parties to adapt to the changing world. Rather oddly, he centres on their acceptance of the continuation of elitist elements in higher education as a key source for loss of working-class votes, although he provides no evidence that the issue was that important. However, he does show how electoral support shifted towards a more educated electorate while lower income groups deserted them. This applied across western Europe and the USA. Social democratic parties, he believes, had become wedded to ‘smug and condescending’ (p. 755) higher-income supporters, and therefore to accepting reductions in the progressivity of taxation, leaving those on lower incomes to seek allegiances elsewhere.
There may be some truth in this, but even where left parties have concentrated more on the interests of lower-income groups, they have had difficulty winning elections. Oddly, he does not set changing voting patterns in the context of economic and social changes and in particular of the decline of large-scale traditional industries and the growth of mass public sector employment, often requiring high qualification levels. The decline of social democracy is blamed on its own mistakes and the implication is that a left that put them right could hope to succeed without difficulty.
His programme includes a major change in thinking on private property. Rather than allowing its accumulation over generations wealth, and also incomes, should be taxed enough to ensure a circulation of wealth by using revenues to give all at the age of 25 years an endowment to be used as they wish. The rights of private property should also be restricted by employee representation on company boards, giving much more power than co-determination systems introduced in Germany and Sweden after World War II. A new internationalism should be supported in such a way as to prevent hiding of wealth in tax havens. Arguing that parties of the left can be more radical has appeal, but is this enough and are all of these the right issues to put first? Progressive taxation makes most sense as a means to finance the public and social services that people are likely to demand, linked to an ideology that favours a dignified life for all.
A verdict on this book must be mixed. Parts are good, but the author feels obliged at the end to ‘beg the pardon of specialists in other fields’ (p. 1038) for its over-simplifications. Indeed, it was maybe too ambitious to hope to make a success of writing so enormous and wide ranging a book in so short a time.