February 28, 2020 / 2:44 PM / a month ago

Breakingviews - Review: Piketty digs deep for fool’s gold

LONDON (Reuters Breakingviews) - For most of history, powerful people were rich, and poor people were very poor. Slavery was hard on slaves and colonisation was tough on the colonised. Details vary. The cult of private property, which first flourished in advanced economies in the 19th century, serves the interests of the rich and powerful. History could have turned out differently if people had made different decisions.

French economist and academic Thomas Piketty attends a symposium "Les Entretiens du Tresor" at the Bercy Finance Ministry in Paris January 23, 2015.

With that summary, would-be readers can safely skip the first third of Thomas Piketty’s new 1,141-page book, “Capital and Ideology”. The French economist’s follow-up to his best-selling “Capital in the Twenty-First Century” takes a long time to make some pretty obvious points.

This rambling, repetitive, muddled and narrow-minded work then turns to more recent events. The narrative is peculiar. In Piketty’s mind, it seems that the most remarkable economic development of the 20th century had little to do with mass production, globalisation, the rise and fall of communist governments or the development of welfare states.

All of these topics put together merit less attention from the expert on income inequality than the history of income inequality. A large part of that discussion is dedicated to the high tax rates on the rich which arrived in the first third of the 20th century and retreated in the last third. The focus is so extreme that it sometimes feels like the 60 million people who died in World War Two were martyrs to the cause of greater post-tax income equality.

Piketty, as a professed believer in “participatory socialism”, deeply regrets the recent trends in tax policy. He complains of the takeover by a new “inequality regime”. This “neo-proprietarian” ideology of “hyper-capitalism” is a malignant power which sits “between modernity and archaism”.

The fancy words and almost hysterical tone are excessive. While almost all experts agree that there has been a significant increase in the inequality of incomes and wealth in the United States, the evidence in other developed economies is more mixed.

Also, “Capital and Ideology” barely acknowledges that economic growth in many developing countries has significantly reduced global inequality. Even within developed economies, Piketty’s pessimism is exaggerated. “Hyper-capitalism” has hardly reversed such historically unprecedented economic accomplishments as the universal distribution of electricity, secondary education, clean water and medical care. Nor has it more than dented welfare states’ protection from calamity.

The at-best intermittent awareness of the universal rise in living standards sometimes leads to analyses which miss the obvious. Piketty dedicates more than 100 pages to regretting the shift of European and American left-wing parties from representing the “classes populaires”, or “least favoured classes”, to speaking for the self-consciously caring affluent voters he labels the “Brahmin left”.  However, Piketty barely notes that the left’s traditional agenda was no longer sufficient to win elections once the vast majority of the lower social orders had become educated members of the bourgeoisie.

Any patient souls who slog through the first 1,000 or so pages receive some reward in the closing chapters, which provide an interesting if overly detailed description of how a more just and democratic society would look. One interesting – if currently unrealistic – suggestion is to partially combine the legislature of the European Union with those of its member states, creating a greater regional identity without losing national focus.

Proposals for more effective and higher taxes on the rich and on corporations are more plausible in the current political environment. Still, it is hard to share Piketty’s confidence that a new tax regime would calm “identitarian” anger.

“Capital and Ideology” ranges over many topics, including the pre-modern history of the Indian caste system, the plots of a contemporary Chinese novel, and the correlation of current French government spending on education to family incomes (the rich do better than the poor). Some potential readers will perhaps be lured in by the breadth, but others might ask for a clearer narrative thread.

Piketty believes that his sprawl is unified by a single great theme, which he describes as “the importance of political-ideological factors in the evolution of inequality regimes”. The claim is unpersuasive. For one thing, it is peculiar to describe all societies, except perhaps a future egalitarian one, as “inequality regimes”. More substantially, everyone but a few Marxist materialists already believes in the historical importance of ideas and politics. As a philosopher of history, Piketty struggles to clear the bar of banality.

A firmer editor might well have suggested that the first 90% of this text be published privately, to share only with close friends and family. The highlights of the last 10% could then be rearranged into a few more coherent articles. However, as might be expected from a member of the “Brahmin left”, Piketty has taken full advantage of the economic power which comes with previous commercial success.

That accomplishment could be the starting point for Piketty’s next book. Perhaps the first head of the Paris School of Economics could turn his attention to the intellectual injustices created by the inequality of academic fame.

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