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15 March 2024

Thomas Piketty: “The Labour Party is too conservative”

The French economist reflects on a decade since the publication of Capital in the Twenty-First Century.

By Gavin Jacobson

The reactionary author-turned-pornographer Michel Houellebecq is one of only two French thinkers whose work today receives any kind of significant attention outside l’Hexagone. This is a risible state of affairs for a country that has historically prided itself on its enviable production line of celebrity intellectuals. Bernard-Henri Lévy, a clothes rack in search of a war zone, only serves to heighten France’s cultural distress. If the arrival of the Fifth Republic in 1958 coincided with an unrivalled moment of intellectual and literary flourishing, the opposite now attests to what the historian Sudhir Hazareesingh has called “the closing of the French mind” at the fag end of Macron’s second term as president.

The other thinker is Thomas Piketty. A decade ago this April, Piketty’s Capital in the Twenty-First Century was published in English with Harvard University Press. Translated from the French by Arthur Goldhammer, who has done more to expose Anglophone audiences to the (decreasing) riches of French intellectual life than anyone else, the book – an enormous edifice of historical data on tax and income, illustrated with graphs, and dramatised by gobbets pulled from Austen and Balzac – has sold more than 2.5 million copies.

Piketty’s core thesis is that we have returned to an age of “patrimonial capitalism”, where the elite attain their fortunes through inheritance as opposed to innovation. When the rate of return on capital (r) outstrips economic growth (g), the rich get richer faster than they can spend their money. Inherited fortunes create a class of politically influential rentiers, deepening the unequal distribution of wealth and creating the conditions for social unrest. His conclusion: a global tax on capital.

In the twilight of those rebellions such as Occupy, which pitted the 99 per cent against economic and political elites, with western economies barely off life support following the crash of 2008, and a political mainstream oblivious to the electoral tempests to come, the 43-year-old son of ex-Trotskyist soixante-huitards supplied progressives with a wonkish new battle cry: r>g.

Accolades were heaped upon the Frenchman following Capital’s release. For Paul Krugman, it was the most important economics book of the decade – “we’ll never talk about wealth and inequality the same way we used to”. Martin Wolf believed that its author had returned “us back to the founders of political economy”. The Nation thought Capital “the most influential work of economics yet published in our young century”. Writing in the New Statesman, Nick Pearce said it was “the most remarkable work of economics in recent years, if not decades”. Lawrence Summers enthroned Piketty as a new “rock star”, both on the street and in the high-altitude conclaves of neoliberalism, such as Davos and The Aspen Institute.

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Since then, as Quinn Slobodian shows in his superb reflection on Piketty’s opus ten years on, the rock star’s career may be seen as one in which he has endeavoured to reclaim the meaning of his celebrity and show that the huge spread-eagled text of Capital can’t simply be reduced to a crisp formula.

According to Slobodian:

“Some saw Piketty naturalising inequality [in Capital], asserting an automatism inside of the capitalist machine. Piketty has since rowed forcefully in the opposite direction of this charge. In volume after volume (Harvard University Press alone has published four since the original and three others have appeared with other presses with a graphic novel forthcoming), he insists on the idea that inequality is not natural or machine-like nor should we understand the problem only through the tools of economics.

“In Capital and Ideology (2020), he ransacked the work of historians and anthropologists to show that what he calls inequality regimes differ greatly from place to place and century to century. There is no one way to understand what inequality is or what remedying it would look like. We must not give in to the supposed iron law captured in his equation r>g, he insists, becoming ever more strident about his own democratic socialist politics and often seeming set on outflanking his critics from the left – one of the seven books from the last decade was called simply Time for Socialism.”

Piketty is in many respects a typical French thinker, combining empirical rigour with grand abstractions to propose a better form of statecraft. But if the author of Capital is more like a creature of the Fourth Republic (1946-1958), when the French state was overhauled from above by a technocratic elite, the author of Capital and Ideology and Time for Socialism, with the emphasis now placed on bottom-up mobilisations and the power of crowds, channels the spirit of his once street-fighting parents. As he wrote in Le Monde in 2018:

“Should we burn May ‘68? Critics claim that the spirit of May ‘68 has contributed to the rise of individualism, even to ultra-liberalism. In truth, these assertions do not stand up to close scrutiny. On the contrary, the May ‘68 Movement was the start of a historical period of considerable reduction in social inequalities in France which ran out of steam later for quite different reasons… The answer is not to turn our backs on the spirit of May 1968 and social movements. On the contrary we must turn to them to develop a new internationalist programme to reduce inequalities.”

Piketty isn’t any less obsessed with data now than in the past. But cranking up the volume of his politics is a move almost out of joint with the times. When Capital was published in 2014, stubborn expressions of popular discontent remained after Occupy, the anti-austerity 15-M movement in Spain, and the Gezi Park protests in Turkey. In November that year, thousands of anti-capitalist protestors marched through capital cities as part of the so-called Million Mask March. While providing robust statistical buckshot for the left, Capital hardly reflected the raging temper of street politics.

When Capital and Ideology was published in 2020, societies found themselves under Covid-enforced lockdowns and at the highpoint of the technocratic exercise of power. But intellectually, Piketty seemed to have moved in the opposite direction, refusing to present himself as merely a social scientist who could affect an enlightened form of technocracy but as a more explicitly social thinker who underscored the importance of grassroots movements. Launching his Chartbook in November 2020, and decoding with industrial-like intensity an endless array of statistics to explain the strange new world of shutdowns, wars and energy shocks, Adam Tooze became, according to New York Magazine, “the leading demystifier of our global polycrisis” and arguably supplanted Piketty as the intellectual du jour.

Even so, Capital in the Twenty-First Century itself remains a work of far greater import than anything else that has been published in the fields of economic theory or history in the last decade.

On 11 March, Piketty spoke with me from his office at the École d’économie de Paris about the tenth anniversary of Capital, as well as technofeudalism, the conservatism of Labour’s economic agenda, why he won’t be going back to China, the book he’s most proud of, and his Macronite enemies.

Gavin Jacobson: Let’s start with Capital in the Twenty-First Century. Were you surprised at the book’s success?

Thomas Piketty: That was an exciting period, one which I certainly did not expect when I was writing the book. I was trying to write something for a broad audience, but even so, the reception was completely unusual for a work like this. What was especially gratifying was that the book was read all over the world – twice as many copies have been sold in China than in the US. This allowed me to meet lots of different people and learn from them, which was by far the most exciting part of those months after Capital’s publication. And it reminded me of the power of books, because you had people constantly saying that they don’t usually read texts like Capital but that they had learned a lot from doing so. That made me even more motivated to keep researching and asking the big questions. Capital was just one step – and not the first one either – in a long collective research process in which you try to address the limitations of your previous work and keep responding to the discussion.

GJ: Did you detect in Capital’s global reception differing interpretations between readers in Asia, Africa and Latin America, and readers in Britain, Europe and the United States?

TP: Each country has as its own intimate history with with inequality, which is something I tried to address in Capital and Ideology a bit more directly than I did in Capital in the Twenty-First Century. At the same time, we live under a global capitalist system with its sacralisation of private wealth, billionaire wealth and so on. So there was a general reaction around the world about excessive wealth and a common need to rethink the economic system in which we live.

But then each country would would look at the book from its own viewpoint. In China, for example, the success of Capital was partly owing to the fact that it didn’t really address the Chinese system. Readers there viewed the work as a direct criticism of the western capitalist model. They loved it. The book even outsold the one that Xi Jinping was publishing at the same time.

But in Capital and Ideology, I did address the Chinese system and this marked the end of my professional relations with China. The authorities tried to censor the book in a very crude and brutal manner, demanding major cuts on every paragraph that dealt with China, which I refused to do. I told the publishers that the way I’ve spoken about Trumpism in the US or pointed to the hypocrisies of the EU with respect to tax havens or to the follies of Brexit showed that I’m not particularly nice about anybody because that’s not my job. My job as a social scientist is to try and be fair when analysing the different political regimes, their values and ideologies, with respect to equality and inequality. But the Chinese authorities can’t accept this at all.

In South Africa, where I spoke about the book in front of an audience of around 15,000 people, the legacy of apartheid and the the inability of post-apartheid regimes to redistribute land and ownership makes the subject of inequality especially urgent there. In South Korea, the publishing company, which brought the rights to the book because they thought it would be a commercial success, were actually incredibly hostile to it because as far as they were concerned, the South Koreans who did like the book were basically North Koreans in their political positions!

In Latin America, governments on the left and right pretend they are in favour of social justice but then they don’t do much to redistribute wealth. In Egypt, the government struggles to fund basic social infrastructure and so has to sell some of its smaller assets to repay IMF debt or get some help from the oil monarchies of the Gulf, which don’t care too much about the social development of Egypt or the education of its people. So when I was presenting at the University of Cairo, and talking about what happens when public debt becomes larger than public assets, even though I didn’t have good data on Egypt, the kind of historical patterns that I was describing for other countries really resonated with the audience.

GJ: To what extent has your work since the publication of Capital in the Twenty-First Century been about taking ownership of how the book was understood? Do you feel torn between two Thomas Piketties: the one who has tried to demonstrate evidence of an iron law of capital, and the other who highlights the importance of contingent factors and the politics behind inequality? Have you become more explicitly political in your analysis?

TP: My own thinking and writing would have evolved even without the success of Capital in the Twenty-First Century. The main impact of the debate around that book was merely that it accelerated the transition of my research to a more global, south/north approach and to give more explicit attention to political ideology. I’ve written several books since 2014, on subjects such as voting structures, and I’ve recently published another with my wife Julia Cagé [the economist] on French political conflict, as well as embarking on new research programmes on the structure of political cleavages and ideologies around the world. I think my research would have evolved in this direction in any case.

But it is true that the debate around Capital helped me to realise the book’s limitations. One of which is that I put excessive emphasis on the universal law of capital. But doing that was mostly a technique to organise a large quantity of data. So when I refer to the “first law of capitalism”, I think it’s clear to anyone who reads me carefully that I’m always trying to historicise the processes and national specificities of how capital works, that it’s a political construction and so on. So these “laws” are not really laws, they are just simplified conceptual relations which can help organise a vast quantity of evidence.

I probably went a bit too far in presenting them as laws, more than I actually believe them to be. But again, I think if you read Capital carefully you can that I stress how the rate of return actually varies a lot with the owners of assets. You can’t just say “r>g”, you have to know which “r” you are talking about, and which “r” you get depends on the power relations in societies, and how different groups are able to construct financial assets and legal systems that suit their interest. Behind “r>g”, which has the appearance of a universal law, there is a lot of political conflict, which I tried to describe.

It was easy for people to just remember and regurgitate “r>g”, which I don’t regret because the formula was a successful way to summarise a larger thesis. But the price paid was that people often ignored or forgot the political complexities that exist in the background. I tried to reformulate things in Capital and Ideology, and also in A Brief History of Equalityy (2022), which is the book of mine I most prefer, and is also a response to some of the interpretations of Capital in the Twenty-First Century, which often saw it as being very pessimistic about the future, which has never really been my view. But maybe the way I wrote it lent itself to this kind of reading. A Brief History is much closer to what I really believe and what I have learnt in the last decade or so.

GJ: One debate that has taken place since you published Capital in the Twenty-First Century is over the question of whether or not the democracies of the north Atlantic have transitioned out of capitalism and have entered a post-capitalist, or “technofeudal”, age. Where do you stand on that debate?

TP: It’s not capitalism and it’s not technofeudalism. To be deliberately provocative, I would say that the kind of societies we live in, at least in the core capitalist countries of Western Europe, North America, Japan and Korea, are still best characterised as social democratic. The economic and social systems in these regions are now so different from the capitalist systems of the past. When I talk about participatory socialism or a new form of democratic socialism for the 21st century, people counter that these notions are unrealistic and have nothing to do with the world today. What I want to stress, however, is that what I try to describe for the future is different from what we have today, but it is less different from what we have today compared to the difference between the system now and the form of capitalism that existed around 1910 – colonial, patriarchal, authoritarian.

If you compare that time to what we have now, with respect to political and labour rights and what it means to be a property owner, this has very little to do with the capitalist system of 100 years ago. We’re not going to return to a situation where total tax revenue was less than 10 percent of national income, we are not going to return to a system where you have almost no public education or public health system. If anything, developments over the past 10 years, following the 2008 financial crisis and the Covid pandemic, have demonstrated that societies need public authorities to face the major challenges of our time.

There is also the growing awareness of the climate crisis, which has become, since the publication of Capital in the Twenty-First Century, the major threat together with new geopolitical competition – all of which has created a new awareness and new thinking about the role of the state. And this is not just reheating the old neoliberal version of the state, which exists solely to protect the interests of private property. States are still doing this but they’re also doing more in health, education, infrastructure, energy.

The most important thing is to stop thinking of the welfare state as a finished or frozen product. Over the last 20 or 30 years, the Labour Party in Britain, as well as the French Socialists and the German Social Democrats, have increasingly stopped thinking about transformation of the economic system. It’s as if they believe that they won the battle for the welfare state in the 20th century, and now all they have to do is protect it. But if your only platform is protect an existing system then you look conservative and that can make you electorally vulnerable over time.

GJ: Speaking of Labour, what, if any, views do you have on the party’s economic agenda?

TP: There is a risk that Labour once again becomes too conservative on the economy. Control of the party has been taken by what I view as conservative approaches, which simply won’t work. Given the scale of the climate crisis, as well as the various social challenges and levels of public debt – the idea that you can confront these without major transformation of the fiscal system is just wrong. If the 20th century invented the income tax system, the 21st century will need to enact a progressive wealth tax system. What the Labour Party is currently advocating is far too conservative.

GJ: A year after the release of Capital and Ideology, Antoine Vauchez and Pierre France published The Neoliberal Republic, which looked at the emergence in France of a new state-corporate elite, a revolving door between public service and private enrichment. To what extent does your work take direct aim at this elite class? Or, to put the point more crudely, are these Macronite elites who spin between corporate law firms and public bureaucracy your enemies?

TP: You can say that. But I’ve been thinking about this issue long before the Macronites came to power and I’ll be thinking about it after they’ve left. In the 1990s, I was an advocate for the free market, partly as a reaction to my parents, who were for a time on the extreme left and I was not fully convinced by everything they said. I turned 18 in 1989 when the Berlin Wall fell, and all my first trips abroad as a student were to Eastern Europe and Russia, and I was greatly upset by communism and anybody who tolerated the Soviet Union.

But through my research and observing the excess of free capital flows and the hyper-capitalist phase of the 1990s and 2000s, I changed my mind on capitalism. So I don’t blame the neoliberals who staff the Republic for not having had the same intellectual revolution yet. I’m not sure if they are “enemies”, but I can see where this kind of belief system comes from. And rather than pointing out the neoliberals for attack, I prefer to concentrate my energies on trying to construct alternatives.

The battles today are still essentially between the three big families of ideas which have structured the political battles since the 18th century: liberalism, nationalism, and socialism. Today, we’re in an era where neoliberalism hasn’t collapsed but has reached its limits. What is going to come next? It is a confrontation between some form of neo-nationalism and some form of new democratic socialism, which is still very weak. This is to the advantage of neo-nationalism, which we’ve seen enjoy electoral success around the world, from the US to India. The only priority now is to construct a socialist alternative.

[See also: How Thomas Piketty found politics]

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This article appears in the 03 Apr 2024 issue of the New Statesman, The Fragile Crown