Piketty on inequality


in Books and literature, Economics, Politics

Previously, we discussed whether inequality of wealth or income is a problem in and of itself, or only insofar as it produces other undesirable consequences.

Thomas Piketty’s book Capital in the Twenty-First Century has received a huge amount of attention, and focuses precisely on the question of inequality. He has some interesting things to say on the subject:

In this book, I focus not only on the level of inequality as such but to an even greater extent on the structure of inequality, that is, on the origins of disparities in income and wealth between social groups and on the various systems of economic, social, moral, and political justification that have been invoked to defend or condemn those disparities. Inequality is not necessarily bad in itself: the key question is to decide whether it is justified, whether there are reasons for it. (p. 19 hardcover)

I belong to a generation that turned eighteen in 1989, which was not only the bicentennial of the French Revolution but also the year when the Berlin Wall fell. I belong to a generation that came of age listening to news of the collapse of the Communist dictatorships and never felt the slightest affection or nostalgia for those regimes or for the Soviet Union. I was vaccinated for life against the conventional but lazy rhetoric of anticapitalism, some of which simply ignored the historic failure of Communism and much of which turned its back on the intellectual means necessary to push beyond it. I have no interest in denouncing inequality or capitalism per se – especially since social inequalities are not in themselves a problem as long as they are justified, that is, “founded upon common utility,” as article 1 of the 1789 Declaration of the Rights of Man and the Citizen proclaims… I would like to see justice achieved effectively and efficiently under the rule of law, which should apply equally to all and derive from universally understood statues subject to democratic debate. (p. 31)

Piketty, Thomas. Capital in the Twenty-First Century. (Translated by Arthur Goldhammer) 2014.

{ 6 comments… read them below or add one }

. April 24, 2017 at 4:15 pm

Only catastrophe truly reduces inequality, according to a historical survey

AS A supplier of momentary relief, the Great Depression seems an unlikely candidate. But when it turns up on page 363 of Walter Scheidel’s “The Great Leveler” it feels oddly welcome. For once—and it is only once, for no other recession in American history boasts the same achievement—real wages rise and the incomes of the most affluent fall to a degree that has a “powerful impact on economic inequality”. Yes, it brought widespread suffering and dreadful misery. But it did not bring death to millions, and in that it stands out.

Having assembled a huge range of scholarly literature to produce a survey that starts in the Stone Age, he finds that inequality within countries is almost always either high or rising, thanks to the ways that political and economic power buttress each other and both pass down generations. It does not, as some have suggested, carry within it the seeds of its own demise.

Only four things, Mr Scheidel argues, cause large-scale levelling. Epidemics and pandemics can do it, as the Black Death did when it changed the relative values of land and labour in late medieval Europe. So can the complete collapse of whole states and economic systems, as at the end of the Tang dynasty in China and the disintegration of the western Roman Empire. When everyone is pauperised, the rich lose most. Total revolution, of the Russian or Chinese sort, fits the bill. So does the 20th-century sibling of such revolutions: the war of mass-mobilisation.

The 20th century was an age of increasing democratisation as well. But Mr Scheidel sees this as another consequence of its total wars. He follows Max Weber, one of the founders of sociology, in seeing democracy as a price elites pay for the co-operation of the non-aristocratic classes in mass warfare, during which it legitimises deep economic levelling. Building on work by Daron Acemoglu and colleagues, Mr Scheidel finds that democracy has no clear effect on inequality at other times. (A nice parallel to this 20th-century picture is provided by classical Athens, a democracy which also saw comparatively low levels of income inequality—and which was also built on mass-mobilisation, required by the era’s naval warfare.)

. December 14, 2017 at 5:50 pm

Piketty and 100 researchers: inequality is getting worse, and will continue to worsen

The World Inequality Lab — led by Thomas “Capital in the 21st Century” Piketty — has published its 2018 World Inequality Report, summarizing the research of 100 academics around the world who investigate and document capital flows from 1980 onward.

The overall picture is a familiar one, in which the lion’s share of increased global prosperity goes to the benefit of the 0.001%, 76,000 people who captured 4% of the world’s capital gains since 1980. The bottom 50%, meanwhile, did not participate in that increased prosperity at all.

. September 9, 2019 at 4:57 pm

Piketty’s new book – which runs to 1,232 pages and is as long as War and Peace – explores the ideas that have justified inequality down the ages, bemoans the ineffectiveness of the traditional parties of left and right at coming up with solutions for redistributing wealth, and advances his own ideas for making economies fairer. The book is released in France on Thursday but English language readers will have to wait until next March for the translation.

Among the proposals in the book are that employees should have 50% of the seats on company boards; that the voting power of even the largest shareholders should be capped at 10%; much higher taxes on property, rising to 90% for the largest estates; a lump sum capital allocation of €120,000 (just over £107,000) to everyone when they reach 25; and an individualised carbon tax calculated by a personalised card that would track each person’s contribution to global heating.


. March 30, 2020 at 12:16 pm

Mr Piketty’s new book is over 1,000 pages long and looks far beyond the West. Austen and Balzac turn up again—joined by “Black Panther”, a recent blockbuster film, and Chimamanda Ngozi Adichie’s novel “Americanah”. Mr Piketty says the tome is “in large part a sequel” to its predecessor, yet in an important way it is a clear change of direction. In “Capital” Mr Piketty shared Karl Marx’s goal in the work of the same name that he published in 1867: to reveal the economic logic of the capitalist mode of production. “Capital and Ideology”, by contrast, is closer to the sociological writings of Marx and his followers, especially “The German Ideology” (1845-46), which sought to explain the social and political means by which capitalists maintained power over the working classes.

None of this analysis of elite skulduggery is very novel. For example, Theodor Adorno and other members of the Frankfurt School argued that the media turned people into capitalist drones. Michel Foucault examined how prisons, hospitals and schools shaped good capitalist subjects.

And Mr Piketty’s account of ideology is less well developed than some such predecessors’. In part this is because he flits between case studies (with strange digressions, such as an explanation of the role of vegetarianism in Hinduism). It is not clear who exactly is promulgating the ideologies he sketches, or how. Moreover, in his overly pessimistic view of history, elites are only ever self-serving. Take the repeal of the Corn Laws in Britain in the mid-1840s, an episode which Mr Piketty barely mentions. Some bigwigs wanted to preserve the privileges of the landed gentry by maintaining high tariffs on imported grain, but others genuinely wanted to reduce the cost of food for the working classes.

Nevertheless, his book has virtues that many post-Marxist critiques lack. For one thing, it is more readable. The prose is pithy and light on theory. Mr Piketty draws on an impressive range of historical statistics. In the early 1980s, he relates, income inequality in Soviet Russia was only marginally lower than it was in Europe. His numbers show how the definition of “elite” has changed over time. Just before the revolution of 1789 the French church owned almost a quarter of the country’s property; today all non-profit organisations in France own just 1%. Above all, Mr Piketty’s sweeping scholarship enhances, rather than obscures, his central argument.

Inequality has risen in most countries in recent decades, but it remains much lower than it was a century ago. The world is healthier and wealthier than ever; the author accepts the rise in life expectancy, though he begrudgingly points to “the limitations of available demographic sources”. The development of capitalism from the 18th century onwards greatly lifted average living standards. Meanwhile, considerable (if incomplete) progress has been made on racial and gender equality. But for Mr Piketty, history lurches from one inequitable regime to the next, each scarcely better than the last.

. September 2, 2020 at 8:11 pm

China blocks Piketty book on inequality as leadership prepares to declare victory over poverty – The Globe and Mail

Mr. Piketty’s newest research, meanwhile, has shone an unflattering light on China. Using new analytical methods, he found that the country’s top 10 per cent earned 41 per cent of all income in 2015, compared with 27 per cent in 1978, and have accumulated almost 70 per cent of all private wealth. The bottom half dropped from 27 per cent of all earnings to 15 per cent over that time

“The fact that China so quickly became so much more inegalitarian than Europe was by no means inevitable and clearly represents a failure for the regime,” Mr. Piketty writes in Capital and Ideology. “In the 1980s, the level of income inequality was close to that of the most egalitarian countries in Europe, such as Sweden.”

Thomas Piketty refuses to censor latest book for sale in China | Thomas Piketty | The Guardian

. May 4, 2021 at 8:48 pm

But in a working paper titled “Persistence through Revolutions”, a group of scholars based in America, Britain and China find that Mao’s social re-engineering had a less lasting impact than might be supposed. The grandchildren of the pre-Communist elite have largely regained the status their families once enjoyed. They are a lot more educated and wealthy than other households. Their values and attitudes also differ from the descendants of those who had lower social standing before 1949. They are less bothered by inequality, more entrepreneurial, more pro-market, and more inclined toward individualism and a belief in success through hard work.

Led by Alberto Alesina of Harvard University (who died in May), the academics mined data from household surveys, census reports and land records. They found that by 2010 the incomes of descendants of the pre-Communist elite were 16-17% higher than those born into families that were underprivileged before 1949. They were also more likely to have completed secondary and tertiary education. They performed significantly better in maths tests.

Leave a Comment

Previous post:

Next post: