The Tyranny of Property
Thomas Piketty’s new book argues that rising inequality is explained by politics, not economics, and offers some radical solutions.
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Figuring, perhaps, that readers might by now have summoned the time and energy to read his previous world-shattering bestseller Capital in the Twenty-First Century, the superstar French economist Thomas Piketty is back with an even bigger, even more imposing encore—one that shares much of the good, and some of the bad, with its predecessor.
If you liked Capital, you’ll probably like the new doorstopper, which came out in French last year and recently hit the shelves in English. Piketty makes the same data-driven arguments about wealth and inequality as before, though on a much broader canvas, and prescribes similar if even more pie-in-the-sky solutions.
In Capital and Ideology, Piketty seeks to do a couple of things he didn’t in the previous book: better explain why and how inequality persists and why even more radical solutions are necessary to reverse the trend. As for the why, Piketty argues that so-called inequality regimes—systems that embed a cycle of inequity—generally exist almost everywhere across the map and in the history books until, in some happy cases, they are swept aside. And those inequality regimes don’t come about by accident but by design. Whether in pre- and post-revolutionary France, colonial Haiti, belle epoque Europe, or Ronald Reagan’s America, the rules of the political and economic game are set up by people of property and privilege in order to propagate more property and privilege.
Inequality isn’t the natural, inevitable outcome of capitalism and the market, in other words; it’s an outcome chosen by the haves. “Inequality is neither economic nor technological; it is ideological and political,” Piketty writes.
At its heart, Capital and Ideology seeks to understand why the less advantaged masses, who’ve seen their share of the economic pie drastically shrink in recent decades, don’t unite to press for sweeping political changes that could bring economic justice. It has happened plenty of times before, he reminds us: Unfair economic systems that seemed immutable, whether in Edwardian Britain or early 20th-century Sweden, were swept away in a relative blink of an eye and replaced with something more fair.
In Piketty’s hands, that examination reads as though Michel Foucault were glossing Thomas Frank’s What’s the Matter With Kansas?: “[I]ntractable multidimensional ideological conflicts over inequality, immigration, and national identity … have made it very difficult to achieve majority coalitions capable of countering the rise of inequality,” he writes.
It wasn’t always—and doesn’t always have to be—so difficult to overturn an unjust system, Piketty argues. While the book dives into more places across a longer stretch of time than Capital, one of the most interesting parts concerns Sweden’s sudden transformation from one of the most unequal (and underdeveloped) countries in Europe to the polar opposite.
The class-based election system in 19th-century Sweden gave more votes to those owning more property and paying more taxes, which meant that in many villages a single landholder had more votes than the rest of the town combined. These rules guaranteed that, decade after decade, there would be no distribution of property or wealth and little economic dynamism: Throughout the 19th century, Sweden’s top 1 percent controlled about 60 percent of private property, and the top 10 percent owned nearly 90 percent; the bottom half of the population owned a paltry 3 or 4 percent of property. After the rise of the Social Democrats in the 1920s, who ruled for roughly the next 80 years, that all changed: The wealthy came to control just over half the property, while the middle and lower classes owned the rest.
Piketty spends a lot of time on the United States, where inequality was rife in the late 19th and early 20th centuries, with levels not even approached again until this century. The top 10 percent owned about 85 percent of property at the time of the 1929 stock market crash, for example, before a few decades of New Deal policies, progressive taxation, and political reform pushed that share down closer to 60 percent. After a series of tax cuts for the wealthy that began during the so-called Reagan Revolution, the share has crept back up to almost 75 percent. (And the top 1 percent has done even better.)
The roller-coaster trajectory of society, and especially the rapid rise in inequality since 1980, has the most bearing on the current state of affairs in the United States and Piketty’s proposed remedies. If the years of Presidents Dwight Eisenhower, John F. Kennedy, and Richard Nixon featured much higher taxes yet produced higher growth and more equality, Piketty argues, it must be more than a correlation. Likewise, the decades since Reagan have seen much lower taxes, especially on the rich, go hand in hand with greater inequality.
Piketty’s proposed solutions echo many that have taken center stage in this year’s U.S. presidential campaign: A return to the very high tax rates on income and inheritances that were in place during those golden years from 1950 to 1980 would go some way to restoring economic equality and a measure of social justice, Piketty argues, as have Sens. Bernie Sanders and Elizabeth Warren.
Piketty’s remedies, including what he calls “participatory socialism,” are grounded in part on his reading of the political—not economic—history of recent decades. In years past, working-class voters sided with social democratic parties such as the U.S. Democrats, Britain’s Labour Party, and Germany’s Social Democratic Party, whereas wealthier voters sided with the parties of property: Republicans, Conservatives, Christian Democrats, and the like. Then, not just in the United States but across the Western world and in big developing countries like India and Brazil, working-class voters began to abandon center-left parties, which everywhere became the parties of the highly educated. Those parties—Bill Clinton’s Democrats or Tony Blair’s Labour—sought to embrace a less regulated and increasingly globalized economic landscape, which brought plenty of obvious gains to the highly educated but fewer for the less advantaged.
And that’s why Piketty argues it was the center-left parties that abandoned the working classes and not that the working classes suddenly became raving racists and nativists. While race did play a role for white working-class Americans as they began to abandon the Democrats in the mid-1960s over civil rights, the reversal of what center-left and center-right parties stood for, and to which part of the electorate they appealed, took place nearly everywhere, Piketty argues—even where there was no conflict over race or immigration to explain it.
To reclaim the votes of the less advantaged and start tackling inequality, Piketty argues, social democratic parties need to abandon market-friendly policies that favor the wealthy and carry out a root-and-branch reform of the entire political and economic system, even if that means amending constitutions and neutering supreme courts. “Our present problems cannot be solved without major changes to existing political rules,” he writes.
In Capital and Ideology, Piketty goes further than he did in his previous book, calling for radical steps that would essentially make property ownership temporary, put workers and owners on nearly equal footing inside corporations, and implement universal capital endowments, universal health care, and basic incomes—all paid for by sharply higher taxes on the incomes and estates of the rich.
As he outlines his vision of a global federation of socialists overcoming the narrow boundaries of nationalism to rewrite constitutions and join hands in raising taxes, it starts to seem as if many of Piketty’s remedies were genetically engineered in a laboratory with the goal of provoking the most virulent possible response among the broadest swath of people.
“I am convinced that capitalism and private property can be superseded,” he concludes, “and that a just society can be established on the basis of participatory socialism and social federalism.”
In the end, as in Capital, Piketty’s new book seems more valuable when it is descriptive than when it turns prescriptive. The reams of economic data he unearths are eye-opening; many of his proposed solutions seem eye-rolling in the current climate. But as he points out, radical solutions once seemed unthinkable in the past, too—until suddenly they no longer were.
Given the starring role that inequality has assumed in today’s political discourse—in no small part due to his previous book—Piketty’s latest effort is a very welcome, very controversial, and, in another time and place, possibly even constructive contribution.
This article appears in the Spring 2020 print issue.