In an interview with ProMarket, Thomas Piketty speaks about his new book, the role of ideology as a driver of inequality, and what the Covid-19 crisis teaches us about our present-day “inequality regime.”
“Inequality is neither economic nor technological; it is ideological and political.” Thomas Piketty’s latest book, Capital and Ideology, is a 1200-page tome chock-full of facts, figures, policy proposals, and digressions that defies easy categorization, but its main argument can be best summed up by its opening line. Piketty’s latest is the long-anticipated follow-up to his bestseller Capital in the Twenty-First Century, which became an unexpected cultural phenomenon when its English translation came out in 2014. It is twice as long and much broader in scope, providing a sweeping historical overview of how inequality has been driven and reinforced by ideological and political decisions throughout history.
It is a startlingly ambitious book, even more so than its predecessor. Whereas Capital in the Twenty-First Century was firmly rooted in economics, Capital and Ideology’s overarching thesis draws on political science, history, and sociology. It is also, surprisingly, rather optimistic, as Piketty explores various historical examples to establish his argument that extreme inequality is not preordained.
All societies, argues Piketty, are unequal in one way or another. To avoid social and political collapse, every society “must justify its inequalities”—that is, rationalize the existence of inequality through narrative and construct a corresponding system of rules and institutions by which it is legitimized and codified, which Piketty terms “inequality regimes.”
Examples abound. In feudal societies (“Ternary societies”), clergy and nobility derived legitimacy for their power over laborers by providing protection and spiritual guidance. “Ownership societies,” which rose to prominence in the 18th and 19th centuries and were marked by enormous concentrations of wealth, were based around the notion that protection of private property by a strong centralized state is necessary to avoid social chaos.
Likewise, the rapid concentration of wealth and power that took place across Western democracies over the past 40 years has been accompanied by its own underlying ideology, one that sees self-regulated markets as more efficient and holds to the stubborn belief that both the winners and losers of today’s winner-take-all economy deserve to be where they are.
This ideology is now on the verge of collapse, as the Covid-19 crisis has revealed the extreme disparities that characterize our current “inequality regime,” as well as the need for more robust public systems.
“The Covid-19 crisis certainly illustrates the lack of attention to public health, universal health care, and more generally public services that we have seen in recent decades,” Piketty said in a recent interview with ProMarket. “It is high time to step back and use this opportunity to counter the dominant ideology and significantly reduce inequality.”
In his ProMarket interview, Piketty spoke about the role of ideology as a driver of inequality, his proposals to reduce inequality and increase democratic participation, and why he sees the Covid-19 crisis as an opportunity.
The following interview has been edited and condensed for length and clarity:
Q: How do you see this book in relation to Capital in the Twenty-First Century?
I think it’s a much better book. My previous book was too centered in Western Europe and North America. It was not entirely my fault, due to lack of access to proper data, but it was also a limitation in my thinking. I was very centered on how World War I and World War II reduced inequality in Europe, and to a lesser extent in the US.
But from the point of view of inequality in Brazil, or India, or South Africa, or China, World War I and World War II are not so important, or at least they don’t have the same critical importance as in Western Europe.
In this new book, I take a much broader comparative perspective of what I call inequality regimes, which in my view are systems of justification of inequality—a system of institutions that try to organize a certain level of equality or inequality between social groups.
I focus my attention on ideology—that is, the system of justifying equality and inequality. In my view, ideology is not negative in itself, in the sense that every society seeks to find some way to give some meaning and justification to the way it is organized.
In the previous book, I was not really opening the black box of politics and ideology as much as I think is necessary if we want to understand the true drivers of inequality and equality across societies.
Q: If Marx saw all history as the history of class struggles, it seems that you view history as a history of ideological struggles over inequality regimes. Would this be a fair characterization?
Yes. We need to take ideas and ideology seriously, because they always have some autonomy.
Class struggle, of course, can be important in history. But the class position of a given individual is never sufficient as a theory of property or theory of education, or of taxation, or of the finance system.
The idea that class struggle in its
elf produces some sort of deterministic process of change, and that ideology and institutions are determined entirely based on economic structure, is just wrong. What we observe in history is a wide range of possibilities.
Q: So is ideology, in your view, the main cause of inequality, or just a major factor contributing to it that we have understudied so far?
It’s the main driver of changes in the levels of equality and equality across societies. More specifically, I should say that my conclusion is not simply that any change in ideology can deliver any kind of change.
Partly, this is because we have a large diversity of possible trajectories. On top of that, I’m saying something a bit more specific: over time, on average, there is actually a process that leads to some form of reduction of inequality. In that sense, my book is very optimistic.
The level of inequality today is less than it was a century ago, and a century ago it was also, in some ways, lower than the century before. So there’s a long-run process of learning about justice, and historically this process has been a big success.
Economic prosperity, particularly in the 20th century, has come from a drive toward more equality, in particular more egalitarian investments in education than ever before.
Of course, this is not a linear process. We’ve seen setbacks in the past, certainly between 1914 and 1945, in particular on Europe, and we’ve returned to more inequality over the past 20 years. But if you take a very long-run perspective, we should not forget that there is a long-run process toward equality.
The message of the book, in the end, is that this long-run process could and should continue.
Q: Isn’t the argument that inequality is mainly driven by ideology dismissive of other factors, like religion and technology, and runs the risk of being monocausal?
Religion is a form of ideology, in the sense that it’s an attempt to give some meaning to human history and the organization of human society. To me, that’s part of the study of ideology.
I’m not saying that technological changes are not important, of course. The construction of scientific knowledge plays a major role in historical changes. But I stress the diversity of institutions, supported by different political ideologies, that make use of this technical knowledge.
Q: You write that “Every human society needs to justify its inequalities.” That to avoid collapse, every society requires a story that justifies the institutional arrangements with which it structures its economic, social, and political inequalities. What is the story of our time?
First, we are at a time of agitation.
There’ve been several stories. In the mid-20th century, there was a story that we need to control market forces, develop workers’ rights, spread education and social security—and these have been largely successful.
In the 1980s, we’ve had another story: the trickle-down narrative proposed by Reagan and Thatcher. It said, “Well, actually, we need a return to more inequality. We’ve gone too far with the welfare state, with the New Deal, with progressive taxation. So we need to reduce progressive taxation to let entrepreneurs and billionaires make more innovations so as to generate more growth.”
This story has been successful, at least in terms of political grip, in the 1980s and, to an extent, in the 1990s. In particular, if you look at the growth performance of the US economy in the 30 years after the Reagan decade, between 1990 and 2020, what you see is that, in fact, growth has been divided by two: the growth rate of national income per capita has been 1.1 percent per year between 1990 and 2020, and it was 2.2 percent per year between 1950 and 1990. This put this ideology, which could have been right at a theoretical level, under pressure.
To be more concrete, a big part of the middle class and lower class in the US feel that economic liberalism and globalization did not work too well for them. There are different reactions to this: One is the Trump discourse, which amounts to saying, “Well, it’s not that economic liberalism in itself is bad. The problem is that Mexican workers, China, and the rest of the world that are taking advantage of America—they’ve stolen some of our growth and our wealth away from us, but if we fight back, we will get it back.”
That’s the narrative that we hear a lot. To me, this narrative is not very convincing, and it’s not going to work in the long run. But unfortunately, this is a simple enough narrative to attract a lot of attention.
There’s another kind of possible narrative that, to me, is more convincing, which is returning to what had been a successful experience of the US in the past: more investment in public education, public universities, more workers’ rights, more progressive taxation.
Between these two possible responses to the failure of Reaganism, there is also the “business as usual” scenario, the one saying that after all, this is not working so bad, let’s continue in this direction.
Q: You characterize political developments in the past 40 years as dominated by two distinct elites—the Merchant Right (the business elite) and the Brahmin Left (the intellectual elite)—to the exclusion of low-income and less-educated voters that traditionally used to be represented by the left, before left parties abandoned them to focus on educated and affluent middle and upper-middle-class voters. This dynamic seemed to play out in the ideological divide that characterized the Democratic primaries.
Yes, very much so. It seems one possible neoliberal strategy is to try to bring the Brahmin Left and the Merchant Right together. It’s a little like what Emmanuel Macron has been doing in France, and there’s a temptation in the Democratic Party to do that.
To me, it’s a very risky strategy because once you look at the data in the US, you see very low electoral participation in general, in particular among the bottom 50 percent.
Of course, you can say, “There is nothing we can do about this, it has always been like that. Let’s forget the idea that these people could come and vote.” In the long run, this is pretty nihilistic and will just push more and more of this population to vote for right-nativist populists.
Also, in the long run, this is actually damaging to the legitimacy of our electoral democratic regime. The strength of the electoral democratic regime is that people participate, or at least a large majority of them participate, including within poor economic groups. If this is not true anymore, this questions the very legitimacy of electoral democracy.
If people don’t vote, there must be some reason for that. You cannot just assume that they don’t understand. It’s a bit too easy. The so-called centrist strategy, which basically believes there’s nothing we can do to bring back poor voters to the voting booth, is a very risky strategy.
Q: You seem to allude to a certain shared interest or worldview between the Brahmin Left and the Merchant Right when it comes to inequality. Would that be a fair analysis?
Yeah, it’s a fair analysis. They have differences, but there’s a lot in common between the two. In particular, they feel they are benefiting from the economic system as it is.
The Merchant Right will insist on the practicality and the non-intellectual dimension of work and effort, making good deals, being a little tough in negotiation, whereas the Brahmin Left will emphasize more intellectual openness. They emphasize different personal qualities and dimensions of individual effort. But in the end, they both believe that people who have made it to the top made it through their efforts.
At some general level, it’s of course right that effort matters. But if you push this view too strongly, in effect you’re stigmatizing the people at the bottom.
When I studied inequality regimes across history, there’s always a temptation for people to talk about their merit and to stigmatize the poor for their lack of merit and effort, but today it’s really stronger than in all previous inequality regimes. This can be quite damaging for the overall stability of society.
Q: You propose a number of ambitious reforms in the book, including far-reaching wealth taxes, massive investments in education, institute power-sharing in corporate boards between workers and shareholders, and a sort of internationalist world government to combat tax avoidance. You call this “participatory socialism”—can you explain what that is?
Yes. Let me also say that if some other people want to call this “social democracy for the 21st century,” if they are more comfortable with this or some other term, I have no problem with that.
What I mean by participatory socialism is basically to continue in the direction of what has worked in the 20th century. Progressive taxation, I think, had been a big success. Some people may have forgotten this, but the rise of progressive taxation on top incomes and inherited wealth between the 1920s and the 1970s has come together with very large productivity growth.
In fiscal terms as well, it’s easier to convince the middle class and the poor that they need to pay for a public education system if they know that people at the top are paying even more than what they do.
The sense of fiscal justice has been very important in the building of social democratic societies and the welfare state over the course of the 20th century. We need to take stock of this and go further in the direction of progressive taxation of wealth and classification of wealth.
The other dimension has to do with workers’ rights and, generally speaking, with the fact that the rights of property owners have to be rebalanced with the rights of workers, consumers, and local governments. Again, this has been done pretty much in every country over the course of the 20th century and has been very successful. Countries that have gone even further, like Germany or Sweden, which have substantial workers’ rights and workers’ representatives in the boards of corporations with substantial voting rights, have been able to involve workers in the long-term investment strategy of their companies.
Finally, there is the issue of educational justice which, as I said earlier, is a true source of economic prosperity and reducing inequality in the long run. In the middle of the 20th century, when the issue was to promote access to primary and then secondary education, this deep, radically egalitarian educational push was a big success. With the rise of higher education, we need more investment in public universities. We need a new egalitarian educational push.
Q: You propose much, much higher taxes on the rich. In a review of the book, Paul Mason wrote that you’re trying to “tax capitalism out of existence.” Is that what you’re attempting to do?
[laughs] No. I’m just trying to see what has worked historically.
The US had a top-income tax rate on the highest incomes of 80-81 percent on average between 1930 and 1980, and this has not destroyed capitalism. It steered it in a good direction. It’s what allowed us to take advantage of the good part of private property and market competition, which of course I want to keep, but limit the negative consequences in terms of excessive concentration of income and wealth. I want to deepen this experience in order to go further.
The idea that because one individual has made a fortune at the age of 30, he should be given full decision-making power to make complicated decisions alone in a very large organization for the rest of his life strikes me as very crazy. In our very educated societies, there are lots of people, lots of workers, engineers who can contribute and participate in decision-making in our society. Where this has been applied, it has worked very well.
The ideology of hyper-concentration of power in a few hands is not suitable for our time.
Q: What has the Covid-19 crisis taught us about our present-day inequality regime?
The Covid-19 crisis certainly illustrates the lack of attention to public health, universal health care, and more generally public services that we have seen in recent decades, particularly in the US, but also in Europe and all rich countries.
The situation is even worse in poor countries, where the lack of a proper public health system and of minimal income maintenance programmes could have very damaging consequences in the coming weeks and months.
The technology-capitalist illusion assumes that social and economic progress follows mechanically from technological change and market forces, but this is not so. Historically, social and economic progress has come together with the reduction of inequality and the rise of more equal societies, particularly in the area of education and health.
Since the 1980s-1990s, many people have forgotten these lessons from history and have attempted to push for an alternative, hyper-capitalist narrative. It is high time to step back and use this opportunity to counter the dominant ideology and significantly reduce inequality.