Capital and Ideology by Thomas Piketty

 

Thomas Piketty’s Capital and Ideology is a monumental achievement. Its scope is vast, its size is daunting, its scholarship and vision both quite breath-taking on every one of its 1000-plus pages. Ostensibly, it claims to be an analysis of the origins, politics and economics of inequality, but it goes considerably deeper and further than its brief. This work is nothing less than a snapshot of global economic history and politics taken at the time of writing. Though the historical element might be seen in different forms via the lenses of centuries and assumed perspectives, the book’s analysis of current political issues was always going to be subject to faster change.  I doubt whether Thomas Piketty himself would have predicted that, just a few months after his work’s publication, the global economic and political landscape would be redrawn by a new, microscopic virus. But that is exactly what has happened. And, given the effects on wealth and asset distribution the author attributes to the capital-destroying wars that dictated the history of the twentieth century, one wonders what a post-Covid analysis of the mechanisms that create and maintain inequality might look like. One suspects that the political prescriptions in the book’s last chapter may just, out of sheer necessity, have been rendered more likely.

Capital in the Twenty-First Century charted the origins and extent of inequality in human societies. Capital and Ideology follows on by examining current and historical circumstances and mechanisms that determine its extent and influence its propagation. The book charts comparisons of inequality across countries, continents, cultures and eras. In doing so, its author uses much more than statistical comparisons. Historical and cultural perspectives are offered. Economic analyses are suggested. Crucially, societal structures are analysed, especially those of triumvirate societies, where the ownership of religious, scientific and military power provide the justification and the means of establishing and maintaining skewed ownership of assets. Though the book covers much ground, many different civilizations, locations and eras, the overall analytical focus is never lost.

A criticism of such an achievement may seem petty, but the book could have profitably dealt with one of its weaknesses much earlier. A constantly aired opinion of Thomas Piketty’s work is that, like all socialists, he wants everyone to be the same, to compress all to the same lowest common denominator. This, the criticism continues, would stifle creativity and drive in any society that tried to implement his recommended policies or even tried to address the obvious and growing inequality caused by market capitalism. Readers of Capital and Ideology, however, will have to wait until the book’s last chapter before reading this passage.

“A just society is one that allows all of its members access to the widest possible range of fundamental goods. Fundamental goods include education, health, the right to vote, and more generally to participate as fully as possible in the various forms of social, cultural, economic, civic, and political life. A just society organizes socioeconomic relations, property rights, and the distribution of income and wealth in such a way as to allow its least advantaged members to enjoy the highest possible life conditions. A just society in no way requires absolute uniformity or equality. To the extent that income and wealth inequalities are the result of different aspirations and distinct life choices or permit improvement of the standard of living and expansion of the opportunities available to the disadvantaged, they may be considered just. But this must be demonstrated, not assumed, and this argument cannot be invoked to justify any degree of inequality whatsoever, as it too often is.”

Let’s juxtapose this quote from page 967 of Thomas Piketty’s book with the following: “Above all, we will listen to the people who have felt left behind by the last few decades of economic growth and want to have control of their future. (We) will give the public services the resources they need, supporting our hospitals, our schools and our police. We will help people and families throughout their lives…” This latter passage is quoted verbatim from the webpage of the British Conservative Party, from the manifesto upon which they fought their successful campaign for the 2019 election, an election where an unprecedented number of voters from disadvantaged communities (largely as a result of previous Conservative governments’ priorities) opted to vote for the party in the hope they would honour a promise to “level up” the country. There seems to be electoral kudos in levelling, despite the opinion of right-wing politicians who extol the need for libertarian individualism married to economically deregulated separatism. Thomas Piketty analyses such tendencies and offers a paradigm to explain these shifting political alliances.

Capital and Ideology is the perfect text for anyone needing an update on the world. It has so many succinct and pertinent analyses that even a list of its insights would be a tome in itself. Some examples will suffice.

For instance, if anyone finds it hard to understand why certain elite groups from Western democracies might now be sympathetic towards Putin’s Russia, Thomas Piketty can enlighten.

“It is important to note that it is very difficult to measure and analyse income and wealth in postcommunist Russia because the society is so opaque. This is due in large part to decisions taken first by the government headed by Boris Yeltsin and later by Vladimir Putin to permit unprecedented evasion of Russian law through the use of offshore entities and tax havens. In addition, the postcommunist regime abandoned not only any ambition to redistribute property but also any effort to record income or wealth. For example, there is no inheritance tax in postcommunist Russia, so there are no data on the size of inheritances. There is an income tax, but it is strictly proportional, and its rate since 2001 has been just 13 percent, whether the income being taxed is 1000 rubles or 100 billion rubles.”

When this is placed alongside the fact that Europe in general and the European Union in particular is a global outlier in the extent of its greater equality of wealth and income and we can see immediately why the libertarian, individualists of the political right, who for example favour Brexit for the United Kingdom, might also cast an envious glance towards Russia’s largely unregulated treatment of wealth, no matter how it was amassed.

Thomas Piketty offers numerous such insights. He analyses India’s castes, charts the French Revolution, analyses politics in the USA and takes long hard looks at colonialism and empires. And what is more, all of this is accomplished with transparency and fluidity, so that at no stage does a reader feel presented with a mere list. The analysis of current political strands is particularly enlightening.

Piketty rejects the term “populism” as meaningless. He prefers to use “identitarian” to describe the tendency for many voters in democracies to retreat behind promised protectionism and fortified borders to exclude foreigners. In doing so, he sums up both cause and effect in a single idea, a summary that is both more accurate and more enlightening than “populism” in terms of understanding the political direction being followed. But he goes beyond description and offers analysis of motives. He cites, for example, evidence relating to Poland and Hungary, both of whom currently have governments that have displayed tendencies to restrict freedom or roll back liberalism, even to the extent that they are at odds with a European Union they were once eager to join. Many observers are perplexed by this phenomenon, noting that both countries have benefitted hugely from European development aid and inward investment. Piketty’s analysis, however, examines net transfers and finds that for both countries, capital flow has consistently been out of the country and towards Europe’s epicentres of wealth. And electorates are aware of this bloodletting. The only solution, he maintains, is greater political integration, not less.

He analyses politics in the USA, though obviously not in great depth. He does, however, make enlightening points about race to illustrate how the Democrats became transformed from the party of southern slavery to the natural home of the “ethnic” vote. It is a process that happened over a century, from the Civil War, when the Republicans were the champions of opposition to slavery through the New Deal and into the late 1960s, when it was the Democrats who espoused civil rights.

The author spends much of the early part of the book identifying the structure of triumvirate societies, where a peasant majority is ruled by an alliance between warrior and priestly classes who, combined, rarely accounted for more than ten percent of the population. He then shows how this structure developed into proprietarianism, which preserved the right of the ruling classes to own property. This later evolved into capitalism when the owners of property increased the scale of operations and created industrialization. He makes a convincing case in relation to the political control claimed by an alliance of religion and sword that was used to justify and then preserve property ownership of the ruling minority. Piketty offers the following, again late in the book:

“I have defined proprietarianism as a political ideology based on the absolute defense of private property; capitalism as the extension of proprietarianism into the age of large-scale industry, international finance, and more recently to the digital economy. At bottom capitalism rests on the concentration of economic power in the hands of the owners of capital. In principle, the owners of real estate capital can decide to whom they wish to rent and at what price while the owners of financial and professional capital govern corporations according to the principle of “one share one vote”, which entitles them, among other things, to decide by themselves whom to hire and at what wage.”

And then there arose democracy and later war. It was not that wars had been unknown in the pre-modern era, but he suggests that the industrialization of war after the dawn of the modern era rendered it more thoroughly and extensively destructive than it had previously been. Because of its destruction of property and the creation of debt via interruption of economic life, war threatened proprietarian societies in a way they had never before experienced. Democracy also threatened ownership directly unless it could be manipulated, of course, and both of these threats to the classes born to own had to be managed. Ownership had previously coped with war losses, the twice national income debt in Britain after the Napoleonic Wars, for instance, having been turned to the owners’ advantage by the issuing of bonds their capital bought and a century of poor people’s contributions rendered lucrative to their owners via interest and redemptions.

Democracy posed a new type of challenge to the owners of assets, and still does. So, to explain how systems of inequality can be maintained after everyone, at least in theory, has an equal say, Thomas Piketty needs to examine in detail how politics have changed over the last century. He now finds there exist four almost equally popular political ideologies. He writes:

“In 2017, 21 percent of voters could be classified as “egalitarian internationalists” (pro-immigrant, pro-poor); 26 percent are “inegalitarian nativists” (anti-immigrant, pro-rich); 23 percent are “inegalitarian internationalists” (pro-immigrant, pro-rich), and 30 percent are “egalitarian nativists” (anti-immigrant, pro-poor).”

Furthermore, he finds that there is now a tendency for there to develop an alliance between the two factions of nativism, an alliance that does not challenge property rights.

And, crucially, he finds that the social democrat model that made significant inroads into inequality in the middle of the twentieth century has now been transformed into an ideology of a Brahmin-like educated elite, leaving the votes of the losers in the distribution of wealth to be hoovered into an identitarian trap by the owners of an increasing share of property. This, in essence, is not dissimilar in character to the concept of false consciousness that Marxists find they have to apply in order to explain why masses of people regularly vote or act against their own interests. Here, Thomas Picketty offers a rational mechanism and a convincing argument by which false consciousness can be cultivated and exploited, an approach which does not fall into the distasteful trap of branding poorer people merely stupid.

There is so much in Capital and Ideology that it is almost impossible to review. Reading it comes close to a life-changing experience. Please do read it. Do persevere with its length. Take it at a steady pace and read something else, something contrasting, alongside. Readers will immediately and repeatedly find themselves amazed at the scholarship, the revelations and the rationality of the book’s argument. Anyone interested in our own times should regard it as essential reading. The presence of a virus, however, probably demands a companion volume, since the political and economic landscape is now surely transformed, just like war ripped up its design a century ago.

Eventually, Thomas Piketty champions the politics of social democracy as the solution to growing inequality and, eventually, environmental degradation. He cites the example of Sweden, in that:

“it shows that inequality is not the product of some essential cultural predisposition: in the space of a few years Sweden moved from the most extreme hyper-inegalitarian proprietarian system, which survived until 1909-11, to a quintessential egalitarian social-democratic society once SAP came to power in the 1920s and then ruled almost continuously from 1932 to 2006.”

With the right policies and crucially an end to the retreat into identitarian separatism, the author sees a future where, during an individual lifetime, people can be as entrepreneurial and as successful as they like, but where tax systems and inheritance management ensure the recirculation of wealth and capital to ensure it does not become the permanent property of an ever-smaller elite. A still far from perfect Europe is the example, while the libertarian, identitarian deregulators pose the threat.

Sapiens by Yuval Noah Harari

When reading history, it's always instructive and insightful to step back and consider the “big picture”. Detail, though essential, indeed the very stuff of any understanding of history, can sometimes weave a web of obscurity and confusion around the obvious. The big picture, then, allows a reader to prioritize, to contextualize and to rationalize. What, then, might we make of a book which presents hardly any detail, but just a swift sketch of a big picture? Indeed, Sapiens by Yuval Noah Harari presents a picture of history so big it purports to be nothing less than a birth to death biography of homo sapiens, the current and dominant human species, in case you have yet to meet one.

From evolutionary beginnings through the establishment of our genetic identity, Yuval Noah Harari charts of the human tendency to form social groups, use tools and language, while sustaining ourselves by hunting and gathering. We exit Africa – somehow, probably thanks to assistance from contemporary climate change - and eventually become established across the planet. Via our Cognitive Revolution we developed our early skills and became rather good at most things we tried to do. Perhaps two good.

Success, perhaps, led to an Agricultural Revolution, where suddenly property became a concept. We domesticated animals, selectively bred yield into crops and docility into beasts of burden. We also succumbed to other new concepts such as epidemics. Note here that an unknown number of millennia intervened between stage one, the Cognitive, and stage two, the Agricultural. Writing also intervened at some point, but probably only after we invented property, for only then did we start to train accountants.

Agriculture, this new mode of production, effectively unified the human race, however. It was so successful that it spread to wherever humans ventured, and progressively this had become the entire planet. But this relatively sedentary lifestyles and the emerging possibility of control of economic resources led to the establishment of towns and villages, empires, armies, castles and probably soft furnishings.

And then there was Science and human kind’s increased ability to predict or control the physical world beyond the lifecycles of plants or docile servant beasts. Beginning barely 300 years ago, this latest, current and possibly last human revolution is still with us. It led to the invention of countless previously non-existent concepts, such as capitalism and socialism, mass consumption and ideological veganism, exponentially increased energy consumption, a Green Revolution that perhaps laid waste, genetic engineering, the internet, artificial intelligence and breakfast cereals.

Throughout, Yuval Noah Harari identifies identifies the human need to create myth. And this has real purpose in our race’s modus vivendi. Without myths called religion, human beings would never have been able to conquer the genetic necessity of individual competition. We would not have become urbanized or cooperated to solve the complex tasks that exploiting our planet requires. Harari’s grouping together of all such mythical motivation – and thereby his dismissal of its representing anything approaching the concept of truth – might have led to the book and the author falling foul of certain authorities across the globe, if past experience is anything to trust. Perhaps this also tells us something about what kinds of book the committed religious don’t read.

Thus through the 400 pages or so of Sapiens we can relive the entire history of the human race and travel centuries into its speculated future. Though it is easy to sound flippant about a book that presents itself almost as a biography of homo sapiens, there is hardly a page of the work that is not stimulating, informative or even surprising, all at the same time. Such broad pictures are perhaps easy to write, especially if they are in accurate or polemical. But that when they are well researched, lucidly written, accurate, insightful and thought-provoking, their construction of a big picture really does help us to understand and contextualize the details of history which otherwise may not constitute joined-up thinking. Sapiens is a thought-provoking and challenging work, claiming to be A Brief History of Mankind. By the end we are eager for more, but also not convinced there will be much more to write.

Development As Freedom by Amartya Sen

Perhaps not many people regularly read non-fiction, especially when it might appear to emanate from academic sources. Thus a title such as Development As Freedom by Amartya Sen, if encountered on a book browse, might suffer immediate and regrettable rejection. Subjects such as international politics, economic change and human development considered via the writings of a Nobel Prize winning economist might not suggest bedtime reading. But read again! And preferably read many times, for this book surely places the word ‘human’ at the heart of the development process and, because of that, is not only readable, it is an absolute joy.

Sen’s argument is simply encapsulated in the book’s title. As human beings change and as the societies in which they live transform, development can be measured, certainly perceived, and possibly achieved via greater life expectancy, access to education, improved gender and social equality, increasing population, technological progress, access to health care and a host of other life enhancing and enriching phenomena that all of us now seem to take for granted, bur, perhaps paradoxically, few societies actually achieve.

But for Sen, and this is the truly optimistic core of the book’s message, is that all of these identifiable and measurable phenomena are mere effects of a more fundamental cause. Development, for Amartya Sen, is about increasing human freedom. The concept includes freedom of choice, freedom to participate, freedom to express and in fact any freedom that might be exercised by an individual or community in the context of enhancing, not undermining, the wider social groups or societies in which the people live. There is undeniably something wider called society and it is thus society’s role to evaluate policy and practice to ensure that social and economic change enhance the sum of freedoms that people can claim.

But let it also be clear that this is no neo-liberal, individuality-is-God, markets-know-best diatribe. Development As Freedom is a concise, sometimes intense, but always sympathetic look at various aspects of economic and social change and the generality of development policy that can stimulate it. The point is that the human race and the societies in which it lives make progress for the common good when participation is widened, when inclusion rather than exclusion is the goal, when the whole range of human potential, rather than that of an elite in restricted roles, is allowed to blossom. And it is this overall message that makes the book such a positive and enriching experience.

Early on in the book, Sen sums up his approach by saying that “Poverty can be sensibly defined as capability deprivation…” and thus that the alleviation of poverty, in all its manifestations, allows human beings to develop whatever capabilities they might have, capabilities that would otherwise never be realised. Furthermore, greater social equality is more likely to provide opportunity for the development of this human potential than any other route.

In making his case, Amartya Sen deals the occasional body blow to a few nostrums. Reassessing Adam Smith from the original, Sen identifies that the original intellectual arguments on markets were at least partly aimed at countering the power and influence entrenched interests of the time. Now those would have certainly arisen out of the previous century’s tendency to grant and support monopolies. Sen thus casts Smith as least partly as a moderniser, who wanted to transform economic structures in order to transform society as he knew it. He also finds in Smith an admission that opportunity might have more to do with birthright than ability, or even availability of educational facilities. The champion of the market principle, as we now know him, is here not seen to claim that markets in themselves will always provide the most effective or efficient basis for economic interaction.

Sen also illustrates how so-called free markets might not work to the advantage of the majority. He cites an example of a Pareto-efficient system in which 1000 people each give up one dollar, without caring too much about the transaction. One person pockets the thousand dollars as profit and will clearly fight hard to retain such privileged status. When opinion about how the society transacts, it is likely that the individual who profits will speak loudly to maintain the status quo and, given the status of economic success, the person will also have access to the modes of expression needed. The thousand do, however, have the right to vote and so democracy is at the core of any approach to enhance freedom, but to be effective it has to function. Sen reminds us that there has never in human history been a famine in any democratic society with a free press.

Since development, in Sen’s vision, is about developing the capabilities of all people, it is clear that human development as a goal is first and foremost an ally of the poor, rather than the rich and powerful. Modernisation theory is thus merely a starting point for the process as Sen envisages it. But beyond this beginning it must continue until participation is increased and real democracy is achieved. Policy and practice should be continually evaluated to ensure the proper spread and effectiveness of their goals. Development As Freedom is much more than a description of what we are and from where we have come. It is nothing less than a far-sighted and clear prescription for political practice and provides a yardstick we might use to evaluate it.

www.philipspires.co.uk

An evaluation framework - Economic Policy and Human Rights by Radhika Balakrishnan and Diane Elson

Economic Policy and Human Rights by Radhika Balakrishnan and Diane Elson apparently declares an intention to compare and contrast fiscal and monetary policy, public expenditure consequences, taxation, trade policy and pension reform in Mexico and the United States of America. The choice of countries is justified on several levels: they are of comparable size, differ in level of development, contrast in governmental approaches and, crucially, are both signatories of NAFTA, the North American Free Trade Agreement which, itself, suggests a commonality in certain policy areas. At the outset, the authors declare that the neoliberal economic assumptions that have dominated policy choice for thirty years have not worked, ostensibly because their main result has been the current crisis. The authors thus attempt to illustrate this claim by examining a range of social, employment and economic indicators to assess the impact of the current paradigm on particular groups within both Mexico and the United States.

But Balakrishnan and Elson also declare the intention of doing much more than this, in claiming that the framework they adopt could become transferable to other places and contexts. Their choice of framework appears to achieve exactly what they intend, and it does so quite spectacularly. And it is a position that could have benefited my own work a couple of decades ago, if only it had then existed. My own research on education’s role in Philippine development found that increased use of market forces and privatisation in an education system already heavily reliant on the private sector produced distortions that undermined some of education’s potential and desired objectives.

After the debt decade of the 1980s, increased reliance on market forces in Philippine education placed most high quality educational experience beyond the reach of anyone but the economic elite. And yet, declared policy stated that the promotion greater equality was one of the education system’s explicit goals. In the future, work intending to identify such contradiction will benefit from employing the universal reference point of the transferable framework identified in Balakrishnan and Elson’s superb study. The authors begin with a short discussion of the Universal Declaration on Human Rights. Importantly, the rather general goals that this advises have been rendered more specific by subsequent declarations. And, by signing up to these, governments – presumably – declare their desire to see the declared goals achieved, both at home and abroad. Such general aims have thus become more specifically objectified via the Convention on the Elimination of All Forms of Racial Discrimination, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and the Covenant on the Elimination of All Forms of Discrimination Against Women. Thus policy objectives, if not timetables for their achievement, in the areas of race, gender, employment and several other areas can be specifically identified as having been espoused by governments because they have willingly signed up to these treaties, even though that might have been prompted more by political expediency than commitment.

Using these objectives as a framework for evaluation, the book’s individual papers conduct a near-forensic examination of a range of Mexico’s and the USA’s recent economic and social policies in the specified areas in order to examine whether the agreed objectives have been furthered or hindered. Almost without exception, neoliberal policy conformity is shown to undermine these agreed objectives and often to impact differently from their declared intent on specific and identifiable target groups within the population. This evidence makes a strong case for greater and more active accountability of government action and thus also questions declared commitment to previously agreed – and politically convenient – principles. In more than one area, there is strong evidence to suggest that policies are mere populist window-dressing in that their stated objectives are in line with identified and desired goals whilst their implementation can only undermine their own stated intent. Economic Policy and Human Rights thus provides much more than an examination of particular policy prescription in Mexico and the United States. Indeed it may even present an evaluative framework that could be applied by progressive analysts to any state or region that has adopted the objectives of these quite specific treaties. As such it will surely provide an important and enduring contribution to any debate on social and economic policy.

Between The Assassinations by Aravind Adiga

Aravind Adiga’s White Tiger won the Booker Prize and was notable for its intriguing form. I thought it would be a hard act to follow. It would need a great writer to be able to make a repeat match of both originality and style with engaging content. So on beginning Between The Assassinations I was prepared to be disappointed. I need not have worried because Aravind Adiga’s 2010 novel is perhaps a greater success than the earlier prize winner.

The novel does not have a linear plot, nor does it feature any resolution to satisfy the kind of reader that needs a story. But it does have its stories, several of them. Between The Assassinations is in fact a set of short stories, albeit related, rather than a novel. But the beauty of the form is that the book sets these different and indeed divergent tales in a single place, a fictitious town called Kittur. It’s on India’s west coast, south of Goa and north of Cochin. Kittur presents the expected mix of religion, caste and class that uniquely yet never definitively illustrate Indian society.

And by means of stories that highlight cultural, linguistic and social similarities and differences, Aravind Adiga paints a compelling and utterly vivid picture of life in the town. The observation that this amalgam both influences and in some ways determines these experiences is what makes Between The Assassinations a novel rather than a set of stories. It is the place and its culture that is the main character. The title gives the setting in time.

The book’s material thus spans the years between the assassinations of the two Ghandis, Indira and Rajiv. So it is the 1980s, and politics, business, marriage, love, loyalty, development, change and corruption all figure. Aravind Adiga’s juxtaposition of themes to be found in Kittur town and society thus leads us through times of questioning, rapid change and wealth creation. The book’s major success is that this conducted tour of recent history never once leads the reader where the reader does not willingly want to go.

The stories are vivid, the personal relationships intriguing, the settings both informative and challenging. Between The Assassinations is a remarkable achievement. The author has succeeded in writing a thoroughly serious novel with strong intellectual threads via a set of related stories that can each be enjoyed at face value, just as stories, if that is what the reader wants. Writing rarely gets as sophisticated as this or indeed as enjoyable, since humour, often rather barbed, is always close to the surface. Between The Assassinations is a wonderful achievement.