CityReads | The End of Capitalism Is…Participatory Socialism

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The End of Capitalism Is…Participatory Socialism

Thomas Piketty argues for a new way of going beyond capitalism, a new form of socialism, participative and decentralized, federal and democratic, ecological, multiracial, and feminist.

Thomas Piketty, 2021. Time for Socialism: Dispatches from a World on Fire, 2016-2021, Yale University Press.

Sources: 

https://yalebooks.yale.edu/book/9780300259667/time-socialism

https://www.lemonde.fr/blog/piketty/category/in-english/

French economist Thomas Piketty just published a new book, Time for Socialism: Dispatches from a World on Fire, 2016-2021. Compared to the bulk of Piketty's first two books - Capitalism in the 21st Century is over 900 pages and Capital and Ideology is over 1,000 pages long - this book is not very long. This book is a collection of Piketty's monthly articles published in the French newspaper Le Monde from September 2016 to February 2021, documenting his observations and reflections on current world events, with the addition of charts and tables, references, and text published on the blog hosted by Le Monde.

The book is divided into four sections according to the times when the op-eds were published: Toward a Different Globalization, 2016-2017; What Reform for France? 2017-2018; To Love Europe Is to Change It, 2018-2020; and The Fall of the U.S. Idol, 2020-2021.

Piketty also wrote an introductory essay upon the publication of this book, Vivement le socialisme! In it, Piketty talks about his personal ideological transformation from a young age when he witnessed the dramatic changes in Eastern Europe and became a believer in market economy, after which, based on his historical study of the unequal development of capitalism and criticisms of the ills of hyper-capitalism, Piketty gradually became a socialist. Piketty argues that the time has come to support an inclusive and expansive conception of socialism as a counterweight against the hypercapitalism that defines our current economic ideology. Piketty proposes an alternative economic system to replace capitalism - Participatory Socialism. In his book, Piketty outlines the components of what he calls "participatory socialism".

Here is an edited excerpt from Vivement le socialisme!

If someone had told me in 1990 that I would publish a collection of articles in 2020 entitled Vivement le socialisme! in French, I would have thought it was a bad joke. As an 18-year-old, I had just spent the autumn of 1989 listening to the collapse of the communist dictatorships and "real socialism" in Eastern Europe on the radio.

In February 1990, I took part in a French student trip to support the young people in Romania who had just gotten rid of the regime of Ceauşescu. We arrived in the middle of the night at the Bucharest airport, then went by bus to the rather sad and snowy city of Braşov, nestled in the arc of the Carpathian Mountains. The young Romanians proudly showed us the impact of bullets on the walls, witnesses of their "Revolution". In March 1992, I made my first trip to Moscow, where I saw the same empty shops and the same gray avenues. I had succeeded in becoming one of the participants in a Franco-Russian conference entitled "Psychoanalysis and Social Sciences", and it was with a group of French academics, who were a bit lost, that I visited the Lenin Mausoleum and Red Square (the "Shrine of the Russian Revolution"), where the Russian flag had just replaced the Soviet flag.

Born in 1971, I belong to a generation that did not have time to be tempted by communism, and which became adult when the absolute failure of sovietism was already obvious. Like many, I was more liberal than socialist in the 1990s, as proud as a peacock of my judicious observations, and suspicious of my elders and all those who were nostalgic. I could not stand those who obstinately refused to see that the market economy and private property were part of the solution.

But now, thirty years later, in 2020, hypercapitalism has gone much too far, and I am now convinced that we need to think about a new way of going beyond capitalism, a new form of socialism, participative and decentralized, federal and democratic, ecological, multiracial, and feminist.

History will decide whether the word "socialism" is definitively dead and must be replaced. For my part, I think that it can be saved, and even that it remains the most appropriate term to describe the idea of an alternative economic system to capitalism. In any case, one cannot just be "against" capitalism or neoliberalism: one must also and above all be "for" something else, which requires precisely designating the ideal economic system that one wishes to set up, the just society that one has in mind, whatever name one finally decides to give it. It has become commonplace to say that the current capitalist system has no future, as it deepens inequalities and exhausts the planet. This is not false, except that in the absence of a clearly explained alternative, the current system still has many days ahead of it.

As a social science teacher-researcher, I have specialized in the study of the history of inequalities and the relationship between economic development, wealth distribution, and political conflict, which led me to publish several voluminous books. I have also contributed to the creation of the World Inequality Database, a vast collective and participatory project aimed at bringing more transparency to the evolution of income and wealth inequalities in the different societies of the planet.

Drawing on the lessons of this historical research, and of course on my experience as a citizen-observer of the period 1990–2020, I have tried in my last book to outline some "elements for a participatory socialism"; I will summarize the main conclusions here. However, I must make it clear that these "elements" are only a small starting point among others, a tiny contribution to a huge process of collective elaboration, open discussion, and social and political experimentation, a process which will have to be a long-term one, approached with humility and tenacity, especially in view of the scale of past failures and the challenges to come.

The Long March toward Equality and Participatory Socialism

Let's start with a statement that some may find surprising. If we take a long-term perspective, then the long march toward equality and participatory socialism is already well under way. No technical impossibility prevents us from continuing along this already open path, as long as we all get on with it. History shows that inequality is essentially ideological and political, not economic or technological.

This optimistic point of view may certainly seem paradoxical in these times of gloom. Yet it corresponds to reality. Inequalities have been sharply reduced over the long term. This is thanks in particular to the new social and fiscal policies introduced during the twentieth century. Much remains to be done, but the fact is that it is possible to go much further by drawing on the lessons of history.

Consider, for example, the evolution of property concentration over the past two centuries. First of all, we can see that the share of the richest 1% of the total property (i.e., the total real estate, financial, and professional assets, net of debt) was at an astronomical level throughout the nineteenth century and until the beginning of the twentieth century—which shows, by the way, that the promise of equality of the French Revolution was more theoretical than real, at least as far as the redistribution of property is concerned. It can then be observed that the share of the richest 1% of the population fell sharply during the twentieth century: it was around 55% of total wealth on the eve of World War I and is now close to 25%. However, it should be noted that this share is still about five times higher than that held by the poorest 50%, who currently own just over 5% of the total wealth (despite the fact that they are by definition fifty times more numerous than the richest 1%). The cherry on the cake is that this low share has also been declining since the 1980s and 1990s, a trend that can also be observed in the United States, Germany, and the rest of Europe, as well as in India, Russia, and China.

To sum up: the concentration of ownership (and therefore economic power) has clearly decreased over the past century, but it is still extremely high. The reduction of property inequalities has mainly benefited the "property-owning middle class" (i.e., the 40% of the population between the top 10% and the bottom 50%), but has benefited very little the poorest half of the population. In the end, the share of wealth of the richest 10% has fallen significantly, from 80–90% to around 50–60% (which is still considerable), but the share of the poorest 50% has never stopped being tiny (see figure 1). The situation of the poorest 50% has improved more in terms of income than in terms of wealth (their share of total income has grown from barely 10% to around 20% in Europe), although here again the improvement is limited and potentially reversible (the share of the poorest 50% has fallen to just over 10% in the United States since the 1980s).

The Social State as a Vehicle for Equal Rights

How can we account for the reduction in inequalities observed over the past century, particularly in Europe? In addition to the destruction of private assets as a result of the two world wars, the positive role played by the considerable changes in the legal, social, and tax systems introduced in many European countries during the twentieth century must be emphasized.

One of the most decisive factors was the rise of the welfare state between 1910–1920 and 1980–1990, with the development of investment in education, health, retirement and disability pensions, and social insurance (unemployment, family, housing, etc.). At the beginning of the 1910s, total public expenditure in Western Europe amounted to barely 10% of national income, and a large part of it was regalian/public expenditure related to policing, the army, and colonial expansion. Total public expenditure reached 40–50% of national income in the 1980s and 1990s (before stabilizing at this level) and was mainly expenditure on education, health, pensions, and social transfers.

This development has led to a certain equality of access to the basic goods of education, health, and economic and social security in Europe during the twentieth century, or at least a greater equality of access to these basic goods than had been available to all previous societies. However, the stagnation of the welfare state since the 1980s and 1990s, even though needs have continued to increase, particularly as a result of longer life expectancy and higher levels of schooling, shows that nothing can ever be taken for granted. In the health sector, we have just bitterly noted with the Covid-19 health crisis the inadequacy of the hospital and human resources available. One of the major issues at stake in the epidemic crisis of 2020 is precisely whether the march toward the social state will resume in rich countries and will finally be accelerated in poor countries.

Take the case of investment in education. At the beginning of the twentieth century, public spending on education at all levels was less than 0.5% of national income in Western Europe. In practice, this meant extremely elitist and restrictive education systems: the mass of the population had to make do with overcrowded and poorly funded primary schools, and only a small minority had access to secondary and higher education. Investment in education increased more than tenfold over the twentieth century, reaching 5–6% of national income in the 1980s and 1990s, allowing for a very high level of educational expansion. All available evidence suggests that this development has been a powerful factor driving both greater equality and greater prosperity over the past century.

Conversely, all the evidence suggests that the stagnation in total educational investment observed in recent decades, despite the sharp increase in the proportion of an age group moving to higher education, has contributed both to the rise in inequality and to the slowdown in the rate of growth of average income. It should also be pointed out that extremely high social inequalities in terms of access to education persist. This is obviously the case in the United States, where the probability of access to higher education (largely private and fee-paying) is powerfully determined by parental income. But it is also the case in a country such as France, where total public investment in education (all levels) is very unevenly distributed within an age group, particularly in view of the huge inequalities between the resources allocated to selective and non-selective courses of study. In general, the number of students in France has risen sharply since the middle of the 2000s (from just over 2 million to almost 3 million today), but public investment has not followed suit, especially in general university courses and short technical courses, so that investment per student has fallen sharply, representing a considerable social and human waste.

Toward Participatory Socialism: Enabling Greater Circulation of Power and Ownership

Educational equality and the welfare state are not enough: to achieve real equality, the whole range of relationships of power and domination must be rethought. This requires, in particular, a better sharing of power in companies.

Here again, we have to start from what worked well during the twentieth century. In many European countries, particularly in Germany and Sweden, the trade union movement and social democratic parties succeeded in imposing a new division of power on shareholders in the middle of the twentieth century, in the form of so-called co-management systems: elected employee representatives have up to half of the seats on the boards of directors of large companies, even without any share ownership. The point is not to idealize this system (in the event of a tie, it is always the shareholders who have the decisive vote), but simply to note that this is a considerable transformation of the classic shareholder logic.

In particular, this implies that if employees also hold a minority stake of 10% or 20% in the capital, or if a local authority holds such a stake, then the majority can be tipped, even in the face of an ultra-majority shareholder in the capital. But the fact is that such a system, which gave rise to loud cries from shareholders in the countries concerned when it was set up, and which required intense social, political, and legal struggles, has in no way harmed economic development— quite the contrary. There is every indication that this greater equality of rights has led to greater employee involvement in the long-term strategy of companies.

Unfortunately, shareholder resistance has so far prevented a wider dissemination of these rules. In France, the United Kingdom, and the United States, shareholders continue to hold almost all the power of the company. It is interesting to note that French Socialists, like British Labor, favored a nationalization-centered approach until the 1980s, often finding the Swedish and German Social Democrats' strategies of power-sharing and voting rights for employees too timid. The nationalization agenda then disappeared after the collapse of Soviet communism, and both French Socialists and British Labor almost abandoned in the 1990s and 2000s any prospect of a transformation of the ownership regime. Discussions on Nordic-German co-management have been going on for about ten years now, and it is high time to generalize these rules to all countries.

Next, and more importantly, it is possible to extend and amplify this movement toward a better sharing of power. For example, in addition to the fact that employee representatives should have 50% of the votes in all companies (including the smallest), it is conceivable that within the 50% of voting rights going to shareholders, the share of voting rights held by an individual shareholder may not exceed a certain threshold in sufficiently large companies. In this way, a single shareholder who is also an employee of his company would continue to have the majority of votes in a very small company, but would have to rely more and more on collective deliberation once the company becomes more significant in size.

In order to ensure a genuine circulation of power, the tax and inheritance system must also be mobilized to encourage a greater circulation of property itself. As we have seen above, the poorest 50% own almost nothing, and their share in total wealth has barely improved since the nineteenth century. The idea that it would be enough to wait for the general increase in wealth to spread ownership is not very meaningful: if this were the case, we would have seen such a development long ago. This is why I support the idea of a more proactive solution, in the form of a minimum inheritance for all, which to give an idea could be on the order of 120,000 euros (i.e., about 60% of average wealth per adult in France today) or $180,000 (i.e., about 60% of the average wealth per adult in the United States today) paid out at the age of twenty-five. Such an inheritance for all would represent an annual expenditure of around 5% of national income, which could be financed by a mixture of an annual progressive property tax (i.e., on real estate, financial, and professional assets, net of debts) and a progressive inheritance tax.

To clarify my ideas further, one can indeed envisage, in the context of consideration of the ideal tax system, revenues of a total of around 50% of national income (close to the current level in Western Europe, but this would be more fairly distributed, which would allow for possible future increases). These would be composed of, on the one hand, a system of progressive property and inheritance taxes (which would bring in around 5% of national income and finance the universal capital endowment), and, on the other, an integrated system of progressive income tax, social contributions, and carbon tax (with an individual carbon card to protect low incomes and responsible behavior, and to concentrate efforts on the highest individual emissions, which would be heavily taxed), which would bring in a total of about 45% of national income and finance all other public expenditure, and in particular articulate all social expenditure (education, health, pensions, social transfers, basic income, etc.) and environment-related measures (transport infrastructure, energy transition, thermal renovation, etc.).

As long as access to these other fundamental goods is guaranteed, including of course access to a basic income system, then the minimum inheritance for all represents an important additional component of a just society. The fact of owning 100,000 or 200,000 euros or dollars in wealth indeed changes a lot compared to owning nothing at all (or only debts). When you own nothing, you have to accept everything: any salary, any working conditions, or almost anything, because you have to be able to pay your rent and provide for your family. Once you have a small property, you have access to more choices: you can afford to refuse certain proposals before accepting the right one, you can consider setting up a business, or you can buy a home and no longer need to pay rent every month. By thus redistributing property, we can help to redefine the whole set of relations of power and social domination.

On the basis of the historical elements at my disposal, the ideal society seems to me to be one where everyone would own a few hundred thousand euros, where a few people would perhaps own a few million, but where the higher holdings (several tens or hundreds of millions, and a fortiori several billions) would only be temporary and would quickly be brought down by the tax system to more rational and socially more useful levels.

For a Feminist, Multiracial, and Universalist Socialism

The participatory socialism I am calling for is based on several pillars: educational equality and the social state, the permanent circulation of power and property, social federalism, and sustainable and fair globalization. On each of these points, it is essential to take stock without concession of the inadequacies of the various forms of socialism and social democracy experienced in the twentieth century.

Among the many limitations of the multiple socialist and social-democratic experiences of the past century, it must also be emphasized that the issues of patriarchy and postcolonialism have not been sufficiently taken into account. The important point is that these different issues cannot be thought of in isolation from one another. They have to be dealt with within the framework of a comprehensive socialist project based on the real equality of social, economic, and political rights.

All human societies up to the present day have been patriarchal societies in one way or another. Male domination has played a central and explicit role in all the inegalitarian ideologies that succeeded one another until the beginning of the twentieth century, whether ternary, proprietarist, or colonialist. Over the course of the twentieth century, the mechanisms of domination became more subtle (but no less real): formal equality of rights has gradually been established, but the ideology of a woman’s place as being the home reached its apogee in the prosperous 1945–1975 period, known as the "thirty glorious years" in France. In the early 1970s, almost 80% of wage earners were men. Here again, the question of indicators and their politicization is crucial. All too often, we are simply informed that the gender difference in pay for "the same job" is 15% or 20%. The problem is precisely that women do not have access to the same jobs as men do. At the end of their careers, the average pay gap (which will then continue throughout retirement, not including career breaks) is actually 64%. If we look at access to the best-paid jobs, we can see that things change only very slowly: at the current rate, it would take until the year 2102 to reach parity.

In order to accelerate the movement and truly move away from patriarchy, it is essential to put in place binding, verifiable, and sanctioned measures, both for positions of responsibility in companies, administrations, and universities and in political assemblies. Recent work has shown that this improved representation of women could go hand in hand with an improvement in the representation of disadvantaged social categories, which are currently virtually absent from assemblies. In other words, gender parity must advance in tandem with social parity.

The issue of gender discrimination must also be considered in relation to the fight against ethno-racial discrimination, particularly in terms of access to employment. This also involves the necessary collective and civic reappropriation of colonial and postcolonial history. Some people are surprised today to see demonstrators of all origins attacking the statues of slave traders that still adorn many European and American cities. Yet it is essential to consider the extent of this shared history.

The current epidemic crisis can be an opportunity to reflect on a minimum health and education allocation for all the world's inhabitants, financed by a universal right for all countries to a share of the tax revenues paid by the most prosperous economic actors around the world: large companies and households with high incomes and assets. This prosperity is, after all, based on a global economic system—and incidentally on the unbridled exploitation of the world's natural and human resources for centuries. It therefore now requires global regulation to ensure its social and ecological sustainability.

Let's conclude by insisting on the fact that the participatory socialism I’m calling for will not come from the top: it is useless to wait for a new proletarian vanguard to come and impose its solutions. The devices mentioned here aim to open the debate, never to close it. Real change can only come from the reappropriation by citizens of socioeconomic questions and indicators that allow us to organize collective deliberation. 

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