It is said that the critical difference between children’s literature and literature for adults is the former’s innate optimism. Dealing with real life situations requires life experience (and a degree of cynicism, I would say), which is absent in children. Hence, the happy end in stories for children: Sleeping Beauty marries her prince, Little Red Cap and her grandma are delivered from the Wolf, Hansel and Gretel outwit the witch.
Thomas Piketty’s book, A Brief History of Inequality, starts on a very optimistic note; this optimism ebbs somewhere in the middle but returns by the end of the book (although an attentive reader may ask whether this return is totally justified in light of the challenges listed by the author). Considering this, Piketty’s book belongs in the genre of children’s literature, even if the happy end is not clearly spelt out. This is a tongue-in-cheek remark, but on a more serious note, the book continues the venerable Marxist tradition of historical optimism. This optimism is based on the concept of an unstoppable social and material progress ultimately leading to resolving the existing antagonisms and establishing an eternal realm of freedom. Piketty’s optimism is reflected in the book’s title (A Brief History of Equality), particularly if you compare it to the concluding lines of his previous book, Capital and Ideology where he writes: “In this book I have tried to present a reasoned history of inequality regimes from early trifunctional and slave societies to modern hypercapitalist and postcolonial ones.”
Piketty’s new book continues this Marxist tradition in one more important respect. Marx famously said: “The philosophers have hitherto only interpreted the world in various ways. The point, however, is to change it.” Starting from the Communist Manifesto, all Marxist literature has endeavored to achieve a two-fold task. One is to show the inevitability of historical progress to a more just society, and the other, to adumbrate the key features of that future society. Lastly, Marxist literature is first and foremost a mobilization literature. It goes beyond explanation to presenting a social cause for change with the intent to enlighten and rally masses around that case. Moreover, in Marxism “practice has primacy over theory”, as the Marxist philosopher Louis Althusser put it.
Piketty is very open about his objective: “Economic questions are too important to be left to others. Citizens’ reappropriation of this knowledge is an essential stage in the battle for equality. If this book has given readers new weapons for this battle, my goal will have been fully realized.”
The book develops the key themes presented in Piketty’s three previous books: France’s Top Incomes Over the Twentieth Century (2001), Capital in the Twenty-First Century (2013); and Capital and Ideology (2019). But because of the much shorter format (244 pages) compared to thousand of pages in each of the above books, the main argument as well as the proposed program of action (if it may be called so) comes in a much clearer and concentrated form. (One can be a bit impertinent to ask if Piketty really needed to write 4,000 pages or so if everything he wanted to say may be compressed in 244 pages.)
Piketty’s main argument is that what he calls “democratic socialism” (there are many more adjectives to define such socialism, but I will talk about them later) is not only desirable but also highly likely in the near future. His optimism is based on the analysis of the developments, mostly in the global North, over the past 200 years or so. He notes the transition to the welfare state and the collapse of colonial extraction in the countries of the global North in the 1950s. The new model of capitalism that emerged as a result of these developments (the mixed social-democratic economy), is very different from the model that had prevailed before it (the authoritarian and colonial capitalism). Piketty argues that the mixed social-democratic economy, which was adopted by all countries of the global North (albeit to a different extent), is characterized by much lower levels of inequality than authoritarian colonial capitalism. Greater equality has been achieved across various dimensions (distribution of income and property, access to education and other public services) for various groups (social classes, racial groups, men and women). Admittedly, the progress has been uneven across countries and social groups, and there has been some regress since the 1990s as the neoliberal revolution replaced the welfare and Keynesian approaches to development.
If such “great redistribution” (to use Piketty’s term) could be achieved in a historically short period of time, why can’t an even more radical change happen in the next few decades, resulting in an even more equal and just society, asks Piketty: “I would also like to repeat that democratic socialism, though it may seem very distant from the present world, is in reality embedded in a stream of considerable transformations achieved in the past, sometimes within a few decades. Furthermore, according to Piketty, neoliberalism is running out of steam, a decline that was accelerated by the financial crisis of 2008 and by the pandemic of 2020. Optimistically, Piketty predicts that his version of socialism may be achieved in about 30 years: “If the democratic, participatory socialism described here were to be realized between now and 2050, it would be in direct continuity with this movement, and would probably not be any more different from the second model (the mixed social-democratic economy of 1980) then the latter is from the first one (the authoritarian and colonial capitalism of 1910).”
Piketty’s is a rich book that can be read, commented and interpreted from different perspectives. I will give a brief overview of the main themes and provisions of the book before zeroing in on two issues of particular interest to me: the post-colonial nature of democratic socialism and the limits of capitalist transformation.
What are the essential features of the democratic, participatory socialism that Piketty advocates? It is democratic, of course (here Piketty opposes it to Chinese “statist, authoritarian socialism”) but also federal, decentralized and participatory. The federal characteristic refers to a system of “democratic federalism driven by explicit, verifiable social objectives” that transcends national boundaries. Specifically, Piketty discusses such mechanisms in Europe and Africa. For Europe, he suggests a stronger role for the European Parliament, including greater control over the European Central Bank. For Africa, he discusses new forms of fiscal and budgetary federalism, in West Africa and potentially someday in the African Union as a whole, absorbing all the lessons taught by the earlier failures, and in particular by conflicts revolving around fiscal transfers that have frequently undermined federal projects in the post-independence period. Piketty suggests transnational and even transcontinental parliamentary chambers (for example, on the Euro-African level) to deal with the common challenges of economic development, migratory flows, and environmental degradation.
The decentralized and participatory features of the socialism advocated by Piketty refer to a system that involves multiple economic and political decision-making actors and, in particular, deconcentration of decision-making at the level of the enterprise power-sharing between employers and employees to achieve a better involvement of employees in companies’ long-term strategies. Various proposals to this effect have been discussed for some time by the European Left focusing on different schema for the distribution of the voting rights between employers and employees.
But this is not the only way to achieve broader socialization of economic benefits. Piketty strongly advocates for transformation of permanent ownership into temporary ownership to prevent excessive concentration of wealth. He suggests two specific instruments: a progressive tax on inheritance and a progressive annual tax on wealth (as opposed to the tax on income). Thus, each generation is allowed to accumulate considerable wealth, but part of that wealth must be returned to the community at that generation’s passing or shared with other potential heirs, who thus get a fresh start in life. Furthermore, progressive income taxes, assessed at rates comparable to the inheritance tax, will ensure that the benefits of economic development are shared with the society at large while making it increasingly difficult to perpetuate large fortunes across generations (without a significant reduction in expenditure).
This approach would help finance a universal endowment, a system under which every young adult could begin his or her personal and professional life with a fortune equal to 60 percent of the national average, which would open up new possibilities such as purchasing a house or starting a business. In the rich countries (Western Europe, United States, Japan), such a capital endowment would average 120,000 euros.
One particularly interesting aspect of democratic socialism as advocated by Piketty is its post-colonial orientation. What does Piketty mean by this? In essence, post-colonial socialism is a system that (a) makes amends for the past wrongs through reparations to former colonies and (b) reverses the unequal power dynamic between the core and the periphery through redistribution at the international level. In particular, according to Piketty, each country, each citizen on the planet, should have some part of the tax revenues derived from multinational companies and the world’s billionaires: first, because each human being should have a minimum equal right to health care, education, and development; and second, because the rich countries prosperity would not exist without the poor countries. To sum up, democratic socialism is the one which “finally pays attention to the global South and to all the West’s inequalities and hypocrisies”.
Here Piketty continues another important Marxist tradition (summarized by Lenin in Imperialism, The Highest Stage of Capitalism), which explains the current Western prosperity by extraction of raw materials for colonies, exploitation of cheap labor, monopolization of dependent countries’ markets to boost their own domestic production and lastly, extraction of financial profits through capital exports (all these issues considered by Piketty to a varying degree).
Here, I think, Piketty simplifies things, reducing Western development to colonialist plunder. Whereas the Western colonialism in the 17th – 19th centuries was cruel and brutal, slavery being one of its most shameful pages, the assertion that Western prosperity is based on colonialism is disputed by a number of economists in the field of historical economics (Paul Bairoch and Peer Vries, among others) who point out that the income from colonial possessions, while cumulatively significant, never exceeded 1-3% of the gross national income of the largest colonial empires, including the British and French, which Piketty uses as preeminent examples. This figure is not insignificant (3% of France’s GNI in 2022 amounts to about EUR21 billion) but hardly a game changer for France. Furthermore, the costs of maintaining and operating such empires were rather considerable. Such costs were Adam Smith’s primary complaint about the possession of empires.
Joel Mokyr argues in A Culture of Growth that it was a culture of growth specific to early modern Europe and the European Enlightenment, rather than anything else, laid the foundations for the explosive technological and economic development. Mokyr demonstrates that culture—the beliefs, values, and preferences in society that are capable of changing behavior—was a deciding factor in societal transformations. One can easily think about countries, which are not so rich despite having colonies in the past (such as Portugal or Turkey) as well as countries that became rich without having any colonies (South Korea and the countries of East Europe, for example).
Incidentally, Adam Smith wrote about France’s “great colony of St. Domingo, which has been raised from the improvement and cultivation”. Piketty mentions Saint-Dominique (today’s Haiti) as a classic case for reparations (in 1825 France demanded Haiti to pay 150 million gold francs as compensation to slaveholders in exchange for recognizing its independence). At the time of the writing, Jamaica is considering a referendum on independence from Britain and reparations for the period of colonialism and slavery. But except for such clear-cut cases (which are very few), the cause for reparation looks weak, divisive, and maddingly complex from the technical viewpoint.
The first challenge is the temporal dimension of possible reparations. Whereas we tend to think about colonialism as the Western colonialism in 16th – 19th century based on slavery, colonialism and slavery were a feature of human societies going back in history to at least ancient Greece and Rome. Should we, for example, hold Iran responsible for the colonies exploited by the Sasanian Empire? Before the Arab conquest of North Africa that part of the continent had been colonized first by the Roman and then by the Byzantine empires. How far back should we go?
The second is the territorial dimension. Traditionally, again, colonialism is thought about as the Western oversees colonialism. But what about “internal colonialism” when countries expanded and absorbed neighboring territories to exploit their resources? Lenin whom I quoted above believed that Russia was a colonial power with respect to non-Russians. Should Russia pay reparations to Poland, Ukraine and Tajikistan, for example? What about non-European colonialism? The Arab colonialism and slave trade in Africa even pre-dated the modern European colonialism. Should we hold Oman responsible for exploitation of Zanzibar? Should Turkey be made responsible for the colonial history of the Ottoman Empire and pay reparations to East European countries, such as Serbia and Bosnia, for example? What about the Japanese colonial rule in Korea, China and elsewhere in south-east Asia?
In any case, the colonial past, reprehensible as it is, is not of structural importance. The second aspect of the post-colonial socialism, which Piketty suggests, i.e. reversal of the unequal power dynamic between the core and the periphery through redistribution at the international level, goes into the heart of the problem. It has been well documented, for example, that the present global division of labor and power balance are highly inequal and tilted in favor of the developed countries. Moreover, the developed countries do little to support (or at times strongly oppose) the attempts of less developed countries to change this deplorable status quo. The recent COVID-19 episode when developed countries refused to waive patent rights to allow developing countries to produce their own vaccines, is very characteristic in this respect. According to Mariana Mazzucato writing in Project Syndicate, timely access to vaccines could prevent over 1 million deaths in the developing world. The Biden’s administration sweeping export controls, designed to prevent China from accessing advanced semi-conductors, is another manifestation of the same systemic issue. In the words of the Financial Times columnist Edward Luce, by isolating China’s high-tech sector, the US is engaging in a “full-blown” economic war.
The concept of economic convergence is built on the assumption that developing countries can catch up with the more developed ones as they will grow faster due to, among other things, adoption of advanced technologies, production methods, and institutions of developed countries. This is obviously not how this world is functioning. On the contrary, the current trend in international relations suggests that the world is fragmenting into several regional blocks. The notes prepared by the IMF for the Davos 2023 World Economic Forum was telling titled Geoeconomic Fragmentation and the Future of Multilateralism.
As Jason Hickel reminisces in The Divide about his work on an AIDS program with World Vision in Swaziland, he talks about realizing one day that, helpful as it was, the program did nothing to address the actual causes of the problems:
“Why were AIDS patients dying? Over time, I learned that it had to do with the fact that pharmaceutical companies refused to allow Swaziland to import generic versions of patented life-saving medicines, keeping prices way out of reach. Why were farmers unable to make a living off the land? I discovered that it was related to the subsidized foods that were flooding in from the US and the EU, which undercut local agriculture. And why was the government unable to provide basic social services? Because it was buried under a pile of foreign debt and had been forced by Western banks to cut social spending in order to prioritise repayment.”
Unequal trade exchange and unfavorable division of labor, “locking” developing countries in their status of raw material providers to the developed level, is another aspect of the unequal power dynamic, which was established during the colonial era but has largely survived it. Prebisch-Singer theory developed in the 1950s, argues that there was and would continue to be a secular decline in the terms of trade of primary commodity exporters due to a combination of low income and price elasticities of demand. This decline would result in an ongoing transfer of income from poor to rich countries that could be combated only by efforts to protect domestic manufacturing industries through a process that came to be known as import substitution (https://deveconhub.com/long-run-economic-trends-secular-decline-in-terms-of-trade/).
The same unequal power dynamic has resulted in the unequal distribution of the negative consequences of global warming. The African continent for example, contributes the least to climate change yet is the most vulnerable to its impacts. African countries that contribute so little will have to spend up to five times more on adapting to the climate crisis than on healthcare. G20 countries, meanwhile, represent around 75% of global greenhouse emissions. A financial mechanism to compensate developing countries for this negative impact has been discussed for a long time but the Loss and Damage Fund promised at the last COP meeting in 2022 is yet to materialize.
The existing international mechanisms to address these inequalities and long-lasting effects of colonialism have shown little effectiveness. Inter-continental parliamentary assemblies suggested by Piketty are unlikely to be more effective (“the transnational assemblies that would ideally be entrusted with global public goods and common policies of fiscal and environmental justice”). This situation is unlikely to change, no matter how much effort may be invested. We may recall Aghiri Emmanuel’s theory of unequal exchange, which 50 years ago explained the observed absence of (workers’) solidarity, particularly between high- and low-wage countries, by the situation where the rate of profit has been internationally equalized, but wage-levels (or those of any other factor of production) have not. This, in fact, made the nationally enclosed workers movements into the principal cause of unequal exchange.
And this leads us to the critical issue of capitalism’s capacity to change and adapt. Marx is traditionally criticized for underestimating the flexibility of capitalism but his critics and other “historical optimists” may be asked whether they are overestimating this capacity. Piketty’s reasoning is straightforward: if capitalism has managed to develop into its current democratic social welfare form, what prevents it from developing further into an even more socialized system where the private property itself may wither away?
Essentially, the question is about the possibility of a peaceful and evolutionary transition from capitalism to socialism – not a new question by any means. Marx believed that social revolution was both fundamentally essential and inevitable to the progress of human society. The famous line in the Communist Manifesto states that Communists should “openly declare that their ends can be attained only by the forcible overthrow of all existing social conditions” and that “the ruling classes” should “tremble at Communistic revolution.” Yet, both Marx and Engels and, later, Lenin on many occasions referred to a peaceful revolution, one attained by a class struggle, but not by violence. More than that, they used to substantiate the necessity of distinguishing the concept of social revolution from the paths on which it may take place on given occasions.
At the same time, none of them thought that socialism may evolve in a natural way within capitalism without a social revolution. Lenin was particularly derisive of democracy under capitalism: “The bourgeois parliament, however democratic and in however democratic a republic – is nothing but a machine for the suppression of millions of working people by a handful of exploiters – if the property and power of the capitalists is preserved.”
There are good reasons to believe that there are limits to capitalism’s transformation that can be achieved without an enabling socio-political upheaval. Imperfections of capitalist democracy and an often-uneasy cohabitation between capitalism and democracy are well known and analyzed by many authors, from Yascha Mounk and Fred Block to Joseph Stiglitz and, indeed, Thomas Piketty himself): https://deveconhub.com/trio-ii-the-winter-of-our-discontent-part-1/; https://deveconhub.com/capitalism-reality-or-illusion/). And despite an upbeat story of capitalist transformation, one can easily find in Piketty’s book many examples of the ruling classes’ stiff opposition to more progressive legal initiatives as well as the signs of regression from the high point of the welfare state in the 1980s towards its present situation of higher economic inequality, privatization of essential social services, etc.
Reading some passages in the book, one can’t help an impression that lurking behind Piketty’s historical optimism are his serious doubts whether this project is implementable: ”Elite resistance is an inescapable reality, in the current era (with its wealthier-than-state transnational billionaires) at least as much as it was during the French Revolution. It can only be overcome by powerful collective mobilizations and during moments of crisis and tension.” But how much crisis and tension it may require and how much the elites would be ready to give in is an open question. This is in addition to the ambiguity and controversies over how the future just and emancipatory institutions should look like, which Piketty also recognizes as a challenge.
To repeat, Piketty’s is a very rich and thought-provoking book. It is definitely worth reading. But its historical optimism may not be entirely justified. It is also a very Eurocentric book. Hardly any non-Western country (with the exception of China, which is treated as a threat to the Western “rules-based” order) is mentioned in the book. In a world that is becoming more and more fragmented and characterized by diverging concepts of justice and fairness, transnational collective mobilization is circumscribed whereas building a social paradise in the European Union (to borrow from Josep Borrell) may encounter far stronger opposition as the limits of the capitalist system’s flexibility are tested further.