Thomas Piketty: The Making of a Socialist
The French economist Thomas Piketty came to prominence with his 2014 book, “Capital in the Twenty-First Century.” The title was a deliberate echo of Marx’s “Capital,” though Piketty was far from a Marxist. Drawing on his virtuoso knowledge of historical economic statistics, he demonstrated something close to an iron law of capitalism. Wealth concentrates because the return on capital tends to exceed the general rate of economic growth. Since income broadly tracks wealth, economies become relentlessly more unequal over time. Piketty demonstrated this pattern in all major nations and at all historic periods for at least 200 years, with one notable exception — the mid-20th century, when income and wealth in Europe and the United States became more equal.
In explaining this anomaly, Piketty pointed to the great wars of the last century. Wars tended to wipe out riches. Given that wealth was disproportionately held by the wealthy, the result was a leveling. The trouble was that the wars had different impacts on different nations. Both World War I and World War II indeed destroyed wealth in Europe, which Piketty knows best. But they were bonanzas for the United States. Neither conflict was fought on American soil, where war production created vast new riches.
However, postwar Europe and America did have one thing in common. Governments in the West changed the dynamics of political power. The great crash and the legacy of the New Deal left American capitalists with less wealth and power than usual. In Europe, the disgrace of both the fascist right and free-market conservatives brought to power coalitions committed to full employment and extensive welfare benefits, as well as a legitimate role for unions and the use of public capital. The result: For a generation, economies on both sides of the Atlantic became more equal. But then, as trade, private finance and politics reverted to normal, capitalists regained their traditional power to make the rules. After 1973, Piketty’s pattern of deepening inequality returned, and has been worsening ever since.
Whatever the deficiencies of his political analysis, Piketty’s prodigious research got the headline and the details right, and his timing was perfect. “Capital in the Twenty-First Century” appeared just when inequality had broken through to become a first-tier political issue. His book became an international best seller and Piketty became a celebrity. He also began contributing regular columns to Le Monde.
TIME FOR SOCIALISM: Dispatches From a World on Fire, 2016-2021
By Thomas Piketty
Translated by Kristin Couper
Yale University Press; 360 pages
October 26, 2021
Hardcover: $25.00
ISBN: 9780300259667
Now Piketty has collected several dozen of those columns into an anthology (here translated by Kristin Couper), beginning with a 26-page original essay audaciously titled “Long Live Socialism!” After his deep exploration of intensifying inequality, Piketty has concluded that the redistributive policies of welfare capitalism — mildly progressive taxes and social benefits — are inadequate. Nobody is as surprised by this turn as Piketty himself. “If someone had told me in 1990 that I would publish a collection of articles in 2020 entitled Vivement le socialism! in French,” he writes, “I would have thought it was a bad joke.”
Looking at the limits of taxing and spending, Piketty concludes that “educational equality and the welfare state are not enough” and that power relationships need to be transformed, beginning with greater worker representation in the governance and wealth sharing of corporations. Recognizing that globalization has been an instrument for the resurgence of laissez-faire and the extremes of inequality that result, Piketty proposes a very different globalization. “We need to turn our backs on the ideology of absolute free trade,” he writes, in favor of “a model of development based on explicit and verifiable principles of economic, fiscal and environmental justice.”
Throughout the West, especially in the United States, instruments of wealth creation for the middle class, like debt-free higher education, affordable owner-occupied housing and worker pensions, have been weakened since the years of the great egalitarian postwar boom. As a more direct strategy of wealth redistribution, Piketty calls for a “universal capital endowment” for all citizens beginning at age 25, funded by taxes on wealth and inheritances.
Though provocative, none of these ideas is remarkable or original. What makes this manifesto noteworthy is that it comes from Piketty, an economist who gained his reputation as a researcher with vaguely left-of-center sensibilities but was far from a radical. Yet the times are such, and the inequalities so extreme, that even honest moderates are driven to radical remedies. Piketty is in good company with President Biden.
The rest of this collection contains a few nuggets, but newspaper columns get dated fast. Piketty writes, “Some of the columns have aged less well than others, and I apologize in advance for any repetition.” Quite so. Piketty himself personifies his point about wealth translating into power. Such is the commercial value of the celebrity intellectual that Piketty was apparently not asked by his editors to weed out the columns that were past their pull dates, and instead, got by with a one-sentence disclaimer.
In the collected columns, Piketty is persuasive on the need for the European Union to be governed more democratically and to jettison austerity economics in favor of something like a debt-financed New Deal. He is also good on climate issues, third world development and women’s rights. This material might have been integrated into a more substantial original volume.
One can forgive Piketty for the self-indulgence of packaging a 26-page essay and some old columns as a new book. He grasps the dynamics of grotesque inequality as well as any living economist, and his conversion to the cause of radical redistribution and social ownership of wealth must be taken seriously.
[Robert Kuttner is a founding co-editor of The American Prospect and a professor at Brandeis University’s Heller School. His forthcoming book is “Going Big: FDR’s Legacy and Biden’s New Deal.”]