CityReads│Piketty Traces How Inequality Changes Ideology

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Piketty Traces How Inequality Changes Ideology

If Capital in the Twenty-First Century transformed the way we look atinequality, Piketty’s new book Capital and Ideology will transform the way we look at political ideologies.

Sources: https://www.hup.harvard.edu/catalog.php?isbn=9780674980822

http://piketty.pse.ens.fr/files/Piketty2019Ecineq.pdf

https://promarket.org/thomas-piketty-new-book-brings-political-economy-back-to-its-sources/

French political economist Thomas Piketty’s last book, Capital in the 21st Century, was a publishing phenomenon, which sold 2.5 million copies in 40 languages worldwide after its publication in 2013. More importantly, it drew the world’s attention to the problem of growing inequality.

Piketty’s new book, Capital et idéologie, was released in France last week but the English translation will not be out until next March. It 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.

In this audacious follow-up, Piketty challenges us to revolutionize how we think about politics, ideology, and history. His bold and innovative use of data (The book contains more than 160 graphs and about 10 tables) produces a new way of looking at phenomena that we all observe but were unable to define so precisely. He exposes the ideas that have sustained inequality for the past millennium, reveals why the shallow politics of right and left are failing us today, and outlines the structure of a fairer economic system.

Our economy, Piketty observes, is not a natural fact. Markets, profits, and capital are all historical constructs that depend on choices. Piketty explores the material and ideological interactions of conflicting social groups that have given us slavery, serfdom, colonialism, communism, and hypercapitalism, shaping the lives of billions. He concludes that the great driver of human progress over the centuries has been the struggle for equality and education and not, as often argued, the assertion of property rights or the pursuit of stability. 

The new era of extreme inequality that has derailed that progress since the 1980s, he shows, is partly a reaction against communism, but it is also the fruit of ignorance, intellectual specialization, and our drift toward the dead-end politics of identity. Piketty argues for a new “participatory” socialism, a system founded on an ideology of equality, social property, education, and the sharing of knowledge and power. 

“Capital and Ideology” ranges across time and geography and is organized into 4 parts. Part 1 and part 2 look at ideological justifications of inequality across different societies with analysis of colonial, slave-owning and communist economies, and references to India, China and Brazil; Part 3 and part 4 introduce an entirely new way of studying recent political cleavages in modern societies.

The following are excerpts from a presentation file introducing the main ideas of his new book, Capital and Ideology, on Piketty’s personal website.

Main contribution of the book is empirical/historical. Piketty constructs long-run series on the changing structure of the electorate, i.e. who votes for which parties depending on different dimensions of inequality: income vs wealth vs education (also age, gender, religion, origins, etc.) mainly based on the post-electoral surveys available since 1940s-1950s.

Secondary contribution is theoretical. Piketty presents simple two-dimensional models of inequality, beliefs & redistribution which can help interpret these findings: domestic vs external inequality: vertical redistribution vs conflict over identity; and educational vs wealth inequality: intellectual elite believes in education-related effort, business elite believes in business related effort.

The most insightful analyses of the book look empirically at the reasons that left-wing, or social democratic parties have gradually transformed themselves from being the parties of the less-educated and poorer classes to become the parties of the educated and affluent middle and upper-middle classes. To a large extent, traditionally left parties have changed because their original social-democratic agenda was so successful in opening up education and high-income possibilities to the people who in the 1950s and 1960s came from modest backgrounds. These people, the “winners” of social democracy, continued voting for left-wing parties but their interests and worldview were no longer the same as that of their (less-educated) parents. The parties’ internal social structure thus changed—the product of their own political and social success. In Piketty’s terms, they became the parties of the “Brahmin left” (La gauche Brahmane), as opposed to the conservative right-wing parties, which remained the parties of the “merchant right” (La droite marchande).

To simplify, the elite became divided between the educated “Brahmins” and the more commercially-minded “investors,” or capitalists. This development, however, left the people who failed to experience upward educational and income mobility unrepresented, and those people are the ones that feed the current “populist” wave. Quite extraordinarily, Piketty shows the education and income shifts of left-wing parties’ voters using very similar long-term data from all major developed democracies (and India). The fact that the story is so consistent across countries lends an almost uncanny plausibility to his hypothesis.

Globalisation/migration (domestic vs external inequality) and educational expansion (education vs property inequality) have created new multi-dimensional conflicts about inequality, leading to the collapse of the postwar left-vs-right party system and the rise of multiple-elite politics.

In the 1950s-60s, the vote for left-wing (labour-socialist-democratic) parties in France-UK-US used to be associated with lower education & lower income voters: it was class-based political conflict therefore policies were more focused on redistributive issue.

It has gradually become associated since 1970s-80s with higher education voters, giving rise since 1990s-2000s to a multiple-elite party system: high- education elites vote left, while high-income/high-wealth elites vote right. I.e. intellectual elite (Brahmin left) vs business elite (Merchant right). That’s why redistributive issues have become less central.

Other groups might feel left behind may explain the rise of populism. This evolution corresponds to a gradual decomposition of the postwar party system and opens up many uncertain possibilities for the future.

In France, there is a complete reversal of education gradient over 1956-2017 period. At the beginning of the period, the more educated, the more right-wing. At the end of the period, the more educated, the more left-wing.

Capital and Ideology delves into the political ideologies behind income inequality, while providing radical solutions for reversing the world's wealth disparities.

• Half of the seats on company boards should filled by employees.

• No shareholder should have more than 10% of a company's voting power. 

• Taxes as high as 90% on the wealthiest estates. 

• A lump-sum investment of $132,000 provided to everyone when they turn 25 years old.

• A personalized carbon tax that would be based on an individual's contribution to climate change.

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