Thomas Piketty: The Making of a Socialist

French economist Thomas Piketty stood out in 2014 with his book “Capital in the 21st Century”. The title was a purposeful echo of Marx’s “Capital”, although Piketty was far from a Marxist. Drawing on his virtuous knowledge of historical economic statistics, he demonstrated something close to an iron law of capitalism.

Wealth is concentrated because the return on capital tends to outpace the general pace of economic growth. As income often lags behind wealth, economies steadily become more unequal over time.

Piketty has demonstrated this pattern in all major countries and in all historical 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 eliminate wealth. As wealth was disproportionately in the hands of the rich, the result was a leveling off.

The problem is that wars have had different impacts on different countries. Both World War I and World War II did destroy the wealth in Europe that Piketty knows best. But they were bonanzas for the United States. None of the conflicts were fought on American soil, where war production created vast new wealth.

However, post-war Europe and America had one thing in common. Western governments have changed the dynamics of political power. The Great Recession and the legacy of the New Deal left American capitalists with less wealth and power than usual.

In Europe, the disgrace of the fascist right and free-market conservatives brought to power coalitions committed to full employment and broad social benefits, as well as giving a legitimate role to unions and the use of public capital.

The result: for a generation, economies on both sides of the Atlantic became more egalitarian. But then, as commerce, private finance and politics returned to normal, capitalists regained their traditional rule-making power. After 1973, Piketty’s pattern of deepening inequality returned, and it has worsened ever since.

Whatever the shortcomings of his political analysis, Piketty’s prodigious research got both the title and the details right, and his timing was perfect. “Capital in the 21st Century” was published just as inequality had become a front-line political issue. His book became an international bestseller and Piketty a celebrity. He also began to regularly collaborate with columns in the French newspaper “Le Monde”.

Now Piketty has assembled several dozen of these columns into an anthology (translated in the US by Kristin Couper), starting with an original 26-page essay boldly titled “Long Live Socialism!” After deeply exploring the intensification of inequality, Piketty concluded that the redistributive policies of welfare capitalism—moderate progression taxes and social benefits—are inadequate.

No one was as surprised by this conclusion as Piketty himself. “If someone had told me in 1990 that I would publish a collection of articles in 2020 entitled “Vivement le socialisme!” in French,” he writes, “I would have thought it was a bad joke.”

Examining the limits of taxation and spending, Piketty concludes that “educational equality and the welfare state are not enough” and that power relations need to be transformed, starting with greater representation of workers in government and the division of corporate wealth.

Recognizing that globalization was instrumental in the resurgence of “laissez-faire” and the resulting extreme inequality, 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 development model based on explicit and verifiable principles of economic, fiscal and environmental justice.”

Across the West, especially in the United States, wealth-generating instruments for the middle class, such as free higher education, affordable owner-occupied housing, and worker pensions, have been weakened since the years of the great post-war egalitarian boom. As a more direct wealth distribution strategy, Piketty calls for a “universal endowment of capital” for all citizens aged 25 and older, financed by wealth and inheritance taxes.

Though provocative, none of these ideas are remarkable or original. What makes this manifesto noteworthy is that it comes from Piketty, an economist who earned his reputation as a researcher with slightly left-of-center sensibilities, but who was far from a radical. But the times are such, and the inequalities so extreme, that even honest moderates are drawn to radical remedies. Piketty is in good company with President Joe Biden.

The rest of his collection contains a few gems, but the newspaper columns quickly get dated. Piketty writes, “Some of the columns have aged less well than others, and I apologize in advance for any repetition.” It is true. Piketty himself personifies his thesis about wealth translating into power. Such is the commercial value of the celebrity intellectual that Piketty was apparently not asked by his editors to remove the outdated columns, and instead got away with a caveat.

In the assembled columns, Piketty is convincing about the need for the European Union to be governed more democratically and to spurn economic austerity in favor of something like a debt-financed New Deal. He’s also good about climate issues, third world development, and women’s rights. This material could have been integrated into a more substantial original volume.

We can forgive Piketty for the self-indulgence of wrapping up a 26-page essay and a few old columns like a new book. He captures 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.

Translated by Luiz Roberto M. Gonçalves

TIME FOR SOCIALISM
Dispatches From a World on Fire, 2016-2021
[É tempo de socialismo – Despachos de um mundo em chamas]

Translated into English by Kristin Couper

Price – US$ 25 (R$ 142)

Author – Thomas piketty

Publishing company – Yale University Press, 360 pp.