Thomas Piketty Takes On the Ideology of Inequality

March 27, 2020 1:53 PM

In his sweeping new history, the economist systematically demolishes the conceit that extreme inequality is our destiny, rather than our choice. - Marshall Steinbaum reviews Piketty's "Capitalism and Ideology".
posted by sapagan (16 comments total)

I’m still working on his last opus!

To be fair, this is partly because I sometimes pause to read one of the 19th c novels he uses as case studies.
posted by clew at 2:18 PM on March 27, 2020 [5 favorites]

I thought I remembered that Piketty had made his previous book available for download, so went to see what I could find - and there are indeed some extracts from this new book, and a lot of figures and tables, available from his website (Et la version française aussi!) And there's still a bunch of info up from his previous Capital in the 21st Century, thanks to the Internet Archive's Wayback Machine.

I long for the day when I can make the time to fully read and ponder these books; in the meantime, a quick skim of the Marshall Steinbaum review looks quite informative. Perhaps I'll at least be able to make the time to fully ponder that.

Thank you so much for posting this, sapagan!
posted by kristi at 2:40 PM on March 27, 2020 [4 favorites]

Here's The Economist's review. Note The Economist is institutionally opposed to Marxist thought, but the review is pretty solid. Not quite a Cliff's Notes version but it'll let you bluff your way through a cocktail party video chat.
posted by Nelson at 2:58 PM on March 27, 2020 [5 favorites]

Where are the Cliff Notes?

You might be interested in this, posted previously:

"Capital and Ideology" (a 67-page pdf of a presentation that summarizes it).
posted by mandolin conspiracy at 4:39 PM on March 27, 2020 [5 favorites]

Many of his claims...that inequality in the West is approaching levels last seen during the Belle Époque are fiercely debated

Fuck right off Economist.

How can you claim to be a paper of rigeur and then print that tripe.
posted by Reasonably Everything Happens at 6:32 PM on March 27, 2020 [11 favorites]

Really! Where are the Cliff Notes?

Try the audiobook. Just shy of 49 hours.
posted by dobbs at 7:02 PM on March 27, 2020 [2 favorites]

Fuck right off Economist.

My understanding is that the economist's model is to hire kids out of b school or whatever on the cheap. And since they don't print bylines, no one knows it's a bunch of new grads doing all the writing.
posted by kaibutsu at 7:15 PM on March 27, 2020 [4 favorites]

I'm looking forward to reading it. Really liked Capital.

The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.

Funny how poverty is actually a choice!;-)
posted by Zpt2718 at 7:28 PM on March 27, 2020 [7 favorites]

Mod note: A few deleted. Davebarnes, cut it out. Everyone, let's not continue to derail on the topic of "this one person thinks there are too many pages in the book." We can do a little better than this.
posted by taz (staff) at 4:35 AM on March 28, 2020 [4 favorites]

My understanding is that the economist's model is to hire kids out of b school

Why are The Economist’s writers anonymous?
posted by Mister Bijou at 4:37 AM on March 28, 2020

“ My understanding is that the economist's model is to hire kids out of b school or whatever on the cheap”

As opposed to everyone else’s model of hiring kids right out of undergrad.
posted by kevinbelt at 6:00 AM on March 28, 2020

Many of his claims... are fiercely debated

That's literally true though. Here's a snapshot of part of the debate from 2014. There's been a lot of followup scholarship extending, questioning, or outright arguing against Capital in the Twenty-First Century. After Piketty: The Agenda for Economics and Inequality for example. How could it be otherwise? It is a staggering book of huge import, a work not only of excellent data collection but also carefully reasoned analysis coming to a clear, bite-size conclusion. Of course it's fiercely debated; what else would a scholar want? He didn't write a gospel that is unquestionable divine received wisdom.

Anyone read other solid meaty reviews worth reading? I don't think the NYRB or LRB have gotten to it yet. The book's been out several years in French, there must be more. I'd be thrilled to read a comprehensive review from a more Marxist-leaning publication. Like I said, The Economist is institutionally opposed to Piketty's conclusions, even at the same time it is honest enough about economics and history to respect what he's writing.

Here's some less in-depth reviews: The Guardian, The New York Times (Krugman warning). The publisher's page has a bunch of pull quotes from reviews but somehow the geniuses at Harvard couldn't figure out how to hyperlink the actual review, so it's not a very useful list.
posted by Nelson at 7:31 AM on March 28, 2020 [8 favorites]

So I tried to follow the debate for a while, as I'd put in the time to read the book, and like what I saw back then wasn't that anyone is seriously disputing his claims about levels inequality. The "After Piketty" link doesn't suggest that either. A lot of the debate seems to be about ways of classifying capital, real estate, income, sources of divergence, etc. which is certainly relevant but not what the Economist implies (if the pull quote above is right, I'm paywalled).
posted by mark k at 5:52 PM on March 28, 2020 [1 favorite]

Many of his claims... are fiercely debated

That's literally true though

Yeah, I'm not debating that there's scholarly discussion. And really the Economist isn't either. What they say in that opening is basically questioning the premise of the research topic, not just the conclusions or methods of Picketty. And they're saying it that way on purpose.

Now, if you don't think we have historical rates of inequality and enough data to back up that fact. I just don't know what to tell you. Keep reading the Economist, I guess.
posted by Reasonably Everything Happens at 7:43 PM on March 28, 2020 [2 favorites]

Transcending capitalism: three different ways?

In a new paper ”What is socialism today: Conceptions of a cooperative economy”, John Roemer starts with three essential pillars of all economic systems: an ethos of economic behavior, an ethic of distributive justice, and a set of property relations. In capitalism the three pillars are (1) individualistic ethos, (2) laissez-faire (no redistribution), and (3) privately owned means of production with profit accruing to capitalists. Until now, Roemer argues, all attempts to transcend capitalism focused on element No. 3, replacing privately owned capital with state or socially (collectively) owned capital. They have all failed.

Instead, our emphasis should be, according to Roemer, on developing solidaristic ethos. Using the terminology from the game theory, Roemer contrasts Nashian ethos where each individual behaves as to maximize his or her gain (and which in some cases, like the prisoner dilemma, may lead to perverse outcomes) and the Kantian ethos where we behave in the way in which we wish that everybody else would behave. This is a form of a golden rule (behave towards the others the way you wish that they behaved toward you), or, in more narrowly economic language, we try to internalize (account for) the behavior of everybody else.

In a presentation given recently at the Graduate Center CUNY in New York, Roemer gave the example of the “tragedy of the commons” where Nashian (narrowly profit-motivated individuals) maximize own fishing with the result that eventually no fish remain vs. a Kantian type of solidaristic behavior where one needs to think that if he increases his fishing everybody else would do the same. The person would thus “internalize” the behavior of others and presumably avoid the tragedy of the commons...

A different way of “transcending capitalism” was recently proposed in Piketty’s new book “Capital and Ideology”. In the last part of the book, Piketty, after reviewing on some 800 pages, the ways in which various hierarchical and property relations that seem abhorrent to us today (slavery, patriarchy, racism, serfdom etc.) have been ideologically justified, argues for ending the ideology of private property fetishism. In terms of Roemer’s taxonomy, Piketty is clearly back to the pillar No. 3 but unlike Marxists and the Soviets Piketty does not require a dogmatic thorough-going elimination of all private property but looks at the ways in which the economic power held by property holders could be limited. To that objective, he deploys a radical yet realistic proposal whereby all enterprises after a certain size would have obligatory workers’ shareholding with workers holding 50% of the shares, and no single capitalist (regardless of the amount of capital he has invested in the company) could hold more than one-tenth of the capitalist half of shares. (Thus even the largest owner would be limited to 5% of total voting power). Piketty would allow small enterprises to be managed as they are now with capitalists holding the full power and workers being a hired labor, but as soon as such enterprises would go over the threshold, obligatory workers’ shareholding would kick in.

This two-tier system at the production level would be combined with the system of the so-called “temporary ownership” consisting of severe annual taxation of private wealth and progressive taxation of inheritance.

The aim of the two systems (at the production stage and fiscal) is to fundamentally alter the relations of production in favor of labor and to limit the accumulation of private wealth. The latter will not only change levels of inequality that currently exist but would structurally constrain the ability of the rich to control the political process and to transmit their wealth across generations. It would thus significantly change inter-generational mobility. But even more importantly, perhaps, it would change the intra-enterprise hierarchical relations between owners and workers.

(Piketty’s idea have been criticized—see here—for being un-Marxist in the sense that they do not go beyond the logic of capital or social-democracy, do not dispense with all power relations derived from ownership, and that his concept of social change is idealistic, as opposed to materialistic.)

A third way to envisage the change in the modern capitalism is somewhat different... materialistic and grounded In the “objective” relationship between the two factors of production (labor and capital), or more exactly in their relative scarcities. It is based on a standard Marx-Weber tripartite definition of capitalism (used in the book): (a) production is carried using privately-owned means of production, (b) labor is legally free but hired (that is, the entrepreneurial function is exercised by owners), and (c) coordination of economic decision-making is decentralized. Now, as I argue in “Capitalism, Alone”, the current apotheosis of capitalism is largely due to the weakening power of labor, brought about by the doubling of the global labor force that works under capitalist conditions following the transition to capitalism of the Soviet-bloc countries, China, Vietnam and India. Furthermore, the digital capitalism of today has enabled commercialization (“commodification”) of many activities that have never been commercialized before and has thus made further inroads into our private life. The dominion of capitalism has become extended both geographically (to encompass the entire globe) and “internally” to move to our individual private sphere.

But if the underlying relations of relative scarcities between labor and capital change in this century or the next, if the world population reaches its peak and remains there (as all projections indicate) and if the capital stock keeps on increasing, we might face an entirely different situation between capital and labor—very much the reverse of the one the world is facing since 1990. The relative abundance of capital may allow individuals to become entrepreneurs by simply borrowing capital and not letting the suppliers of funds have a decisive role in management. This is what we currently observe in the start-up world. It might seem not important, but it is: the agency which is now almost exclusively vested in capitalists would be transferred to “workers”. The component (b) of the standard Marx-Weber definition of capitalism –the existence of wage labor—would disappear. The system would still maintain the private ownership of the means of production and decentralized coordination: it would be a market economy, but it would not be a capitalist market economy.

This “transcending” would be different from the other two. Unlike Roemer, it would not rely on the change in our ethos, and unlike Piketty, it would not depend on constructivist change in the rules but would arise “organically” from the changed relationship between the two factors of production.

posted by kliuless at 5:33 PM on March 29, 2020 [2 favorites]

I would point out that one of the issues with the tech-startups holding power instead of investors is folk like Elon Musk who are just as bat-$#!+ as can be. What we need is the threshold to be the point at which a business becomes an ESOP and the initial capital investment becomes a loan with earlier dividends being turned into payments on principal with an interest rate on the remaining loan capped at near five percent. Investors deserve a return. A reasonable, middling, and non-startling return. There is a risk and they are taking it. Employees deserve to profit from their ongoing creation of value. Once an initial investment has been returned the ongoing wealth should belong to those who create it.

This solution does create a perverse incentive to keep all businesses small to mid-size so that investors continue to get a return on investment after initial returns have been recouped. And I think I may be OK with that.
posted by Ignorantsavage at 10:19 PM on March 29, 2020