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Thomas Piketty: A Brief History of Equality

Thomas Piketty: A Brief History of Equality Building on Capital in the 21st Century, Piketty continues to elaborate on its influential and controversial claims regarding the historical causes, trends, and consequences of wealth and income inequality in A Brief History of Equality, which summarizes decades of research with admirable clarity. This might be the single best summary of Piketty’s work so far. Although his statistical work has always been motivated by normative foundations, this book signals the clearest transition yet, to paraphrase Marx’s 11th Thesis on Feuerbach, from merely interpreting the world to changing it. Nor does Piketty balk at the challenge. He demands nothing short of “a profound transformation of the world economic system” (p. 103). He includes two concrete proposals that are of direct interest to basic income research: a) a one-off, means-tested, Painean capital grantA “Painean capital grant” refers to a substantial, once-in-a-lifetime endowment of resources, land, or capital, as originally proposed by Thomas Paine in “Agrarian Justice” (1797) and more recently by Bruce Ackerman and Anne Alstott in “The Stakeholder Society” (1999).to all young adults and b) a periodic (although not fully unconditional) minimum income payment to all citizens. These recommendations must be understood as parts of a broader policy framework of democratic socialism that entails massive transformations of national and international institutions. This scheme would, at the very least, mark a radical departure from existing welfare state capitalism. As such, its consequences are wrought with theoretical and practical unknowns that warrant serious scholarly debate and small-scale institutional trials before large-scale adoption is recommendable.Piketty’s normative premise is that egalitarianism exhausts social justice. His scientific claim is that a statistical analysis of modern history exhibits non-deterministic and limited but measurable progress by the forces of equality (of wealth, income, status, race, and gender). Although he emphasizes the persistence of the effects of unjust institutions like feudalism, inherited wealth, slavery, racism, and colonialism, he admits to being “optimistic and progressive” about the long-term course of historical development: “Between 1780 and 2020, we see developments tending toward greater equality of status, property, income, genders, and races within most regions and societies on the planet” (pp. 1–2). This progressive view of history encompasses everything from the abolition of slavery to the introduction of the progressive income tax and the (proposed) introduction of democratic socialism. At the same time, Piketty warns against complacency. He thinks that the compression of inequalities, while remarkable, has been too slow and uneven, especially among the bottom 50%, whose share of the collective wealth gains remains low. His long-term optimism derives from the fact that he takes societal wealth distribution to be subject to political renegotiation through hard institutional struggle, especially during opportune crises and revolutionary moments. As the paradigmatic example of such a moment, Piketty offers the transformation of institutions, power relations, and wealth during the “Great Redistribution of 1918–1980,” which led to the birth of the welfare state, the establishment of progressive taxation, and the unprecedented creation of the patrimonial middle class. He thinks that capitalism today is ready for another shakeup.As part of his broader vision of social transformation, Piketty proposes two complementary basic income like schemes financed by progressive taxes on income and wealth: 1) a one-off “inheritance for all” (or “capital endowment”) scheme equivalent to up to “60% of the average inheritance, paid at the age of twenty-five” (p. 160). 2) A permanent basic income equivalent to around 60% of average income. Let us call these the universal inheritance and basic income schemes respectively. Piketty points to familiar problems with existing minimum income schemes, including their bureaucratic and demeaning administration, and their failure to reach the working poor, the precariat, young people, the homeless, and other vulnerable people. His “inheritance for all” scheme entails a means-tested, one-time capital grant financed by a progressive tax on inherited wealth. The rich would pay progressive inheritance taxes to finance generous inheritance payments to the poor (roughly between €100,000 and €200,000 per person). His model of “basic income” is not a full-blown UBI, since it involves some means-testing, but it would still mark a departure from the patchwork of existing minimum income schemes. Piketty combines the dual schemes of universal inheritance and basic income with all the mechanisms of existing welfare states and a smorgasbord of wholly new schemes, including a Green New Deal, a job guarantee program, and gradually expanding worker ownership of corporations, to approximate the goals of “democratic, ecological, and multicultural socialism” (p. 227). The end goal of such “economic democracy” is to gradually diminish the institution of private property in favour of a “system of circulating property” (p. 161) where all income and wealth is aggressively and continuously redistributed from the rich to the poor. Here, I have some concerns about both the desirability and the feasibility of Piketty’s scheme. To understand how radically anti-capitalist (or post-capitalist) such a scheme would be, Piketty would only allow for “the continued existence of a limited form of private ownership of the means of production (at the level of small businesses) and housing” (p. 167). The notion of “circulating property” seems to render property possession not only widespread but also insecure and temporary in a way that makes it hard, if not impossible, to interpret his scheme as a form of Meade’s or Rawls’s property-owning democracy, to which it bears superficial resemblance. At any rate, it is obvious that Piketty’s push for the progressive abolition of private property, which goes beyond existing welfare state capitalism, could have unintended negative consequences on innovation, entrepreneurship, and economic growth. These are worth preparing for. Curiously, Piketty mostly ignores the fact that a large part of the success of welfare state capitalism, including the Nordic model, has been based on its ability to harness a portion of the productivity gains from capitalist exchange. If the scope of the latter is reduced without a viable institutional replacement, this might make it harder for the society to achieve its many objectives, such as increasing its citizens’ living standards, financing public services, improving public healthcare, etc.This relatively brief book has many meritorious features. It excels in its lucid presentation. It illuminates several well-documented and significant historical trends (especially around wealth and status inequality) with clear graphs, explanations, and interpretations. It successfully demonstrates that democratic institutional reforms are powerful and long-lasting tools for reshaping wealth and income distribution. Substantively, it is easy to share Piketty’s aversion to the historical persistence of extreme inequalities, such as the “hyperconcentration” of property among the top 1% and the fact that “the poorest 50% have almost never had any substantial possessions” (p. 159). Reasonable intuitions from diverse moral perspectives will find such patterns objectionable. Basic income may have a useful or even necessary part to play in the more equal distribution of wealth, income, and status. But many people hold a pluralistic notion of a good society that balances equality with competing social desiderata, such as freedom, happiness, and virtue. Basic income, too, probably needs to be seen through a more pluralistic lens. Focusing narrowly on the wealth equalization task may undermine its other functions, like liberation from domination, the development of one’s autonomy, or increasing the dignity of citizens. Our pluralistic ethical goals are not sufficiently respected by Piketty’s implausible claim that egalitarianism exhausts the scope of social justice. Piketty is surely right that egalitarian social arrangements tend to carry a net social benefit. It is another thing to say that there are no major trade-offs to be encountered between competing social goals, such as between justice and efficiency, or equality and freedom. Economically speaking, his democratic socialist model hastily sidesteps the usefulness of private property rights and individual freedom for the kind of market dynamism, competition, and innovation that welfare states have demonstrably used to lift poor people out of poverty. Even if the effective coordination of economic activities and allocation of resources that are currently handled (however imperfectly) under welfare state capitalism can be replicated in a democratic socialist society, this needs to be shown and not merely assumed, let alone ignored, as Piketty does. Any robust form of socialist theory cannot afford to ignore the near century of literature, post-Mises and Hayek, Lerner and Lange, on the feasibility of socialist calculation, especially after the many failures of 20th century communism tied to efforts to abolish private property. It may be that any feasible form of democratic socialism, to channel John Roemer and Geoffrey Hodgson, ought to gravitate towards some form of liberal democratic market socialism. Perhaps Piketty is aware of this debate, but he fails to demonstrate it to this reader’s satisfaction. Lastly, it is a shame that Piketty fails to tackle the recent criticisms of his work by Matthew Rognlie, Carlos Góes, Phillip W. Magness, and others. For these reasons, Piketty’s research has several shortcomings. However, the book is well-written and packed with data, and it should be of value to scholars of economic history, social justice, and public policy. In it, Piketty takes vast swaths of mind-blowing data and puts it in the service of an ambitious and thought-provoking policy platform of democratic socialism whose normative attractiveness is only matched by its frustrating institutional inchoateness. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Basic Income Studies de Gruyter

Thomas Piketty: A Brief History of Equality

Lehto, Otto
Basic Income Studies , Volume 17 (2): 4 – Dec 1, 2022
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de Gruyter
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© 2022 Walter de Gruyter GmbH, Berlin/Boston
ISSN
1932-0183
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1932-0183
DOI
10.1515/bis-2022-0009
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Abstract

Building on Capital in the 21st Century, Piketty continues to elaborate on its influential and controversial claims regarding the historical causes, trends, and consequences of wealth and income inequality in A Brief History of Equality, which summarizes decades of research with admirable clarity. This might be the single best summary of Piketty’s work so far. Although his statistical work has always been motivated by normative foundations, this book signals the clearest transition yet, to paraphrase Marx’s 11th Thesis on Feuerbach, from merely interpreting the world to changing it. Nor does Piketty balk at the challenge. He demands nothing short of “a profound transformation of the world economic system” (p. 103). He includes two concrete proposals that are of direct interest to basic income research: a) a one-off, means-tested, Painean capital grantA “Painean capital grant” refers to a substantial, once-in-a-lifetime endowment of resources, land, or capital, as originally proposed by Thomas Paine in “Agrarian Justice” (1797) and more recently by Bruce Ackerman and Anne Alstott in “The Stakeholder Society” (1999).to all young adults and b) a periodic (although not fully unconditional) minimum income payment to all citizens. These recommendations must be understood as parts of a broader policy framework of democratic socialism that entails massive transformations of national and international institutions. This scheme would, at the very least, mark a radical departure from existing welfare state capitalism. As such, its consequences are wrought with theoretical and practical unknowns that warrant serious scholarly debate and small-scale institutional trials before large-scale adoption is recommendable.Piketty’s normative premise is that egalitarianism exhausts social justice. His scientific claim is that a statistical analysis of modern history exhibits non-deterministic and limited but measurable progress by the forces of equality (of wealth, income, status, race, and gender). Although he emphasizes the persistence of the effects of unjust institutions like feudalism, inherited wealth, slavery, racism, and colonialism, he admits to being “optimistic and progressive” about the long-term course of historical development: “Between 1780 and 2020, we see developments tending toward greater equality of status, property, income, genders, and races within most regions and societies on the planet” (pp. 1–2). This progressive view of history encompasses everything from the abolition of slavery to the introduction of the progressive income tax and the (proposed) introduction of democratic socialism. At the same time, Piketty warns against complacency. He thinks that the compression of inequalities, while remarkable, has been too slow and uneven, especially among the bottom 50%, whose share of the collective wealth gains remains low. His long-term optimism derives from the fact that he takes societal wealth distribution to be subject to political renegotiation through hard institutional struggle, especially during opportune crises and revolutionary moments. As the paradigmatic example of such a moment, Piketty offers the transformation of institutions, power relations, and wealth during the “Great Redistribution of 1918–1980,” which led to the birth of the welfare state, the establishment of progressive taxation, and the unprecedented creation of the patrimonial middle class. He thinks that capitalism today is ready for another shakeup.As part of his broader vision of social transformation, Piketty proposes two complementary basic income like schemes financed by progressive taxes on income and wealth: 1) a one-off “inheritance for all” (or “capital endowment”) scheme equivalent to up to “60% of the average inheritance, paid at the age of twenty-five” (p. 160). 2) A permanent basic income equivalent to around 60% of average income. Let us call these the universal inheritance and basic income schemes respectively. Piketty points to familiar problems with existing minimum income schemes, including their bureaucratic and demeaning administration, and their failure to reach the working poor, the precariat, young people, the homeless, and other vulnerable people. His “inheritance for all” scheme entails a means-tested, one-time capital grant financed by a progressive tax on inherited wealth. The rich would pay progressive inheritance taxes to finance generous inheritance payments to the poor (roughly between €100,000 and €200,000 per person). His model of “basic income” is not a full-blown UBI, since it involves some means-testing, but it would still mark a departure from the patchwork of existing minimum income schemes. Piketty combines the dual schemes of universal inheritance and basic income with all the mechanisms of existing welfare states and a smorgasbord of wholly new schemes, including a Green New Deal, a job guarantee program, and gradually expanding worker ownership of corporations, to approximate the goals of “democratic, ecological, and multicultural socialism” (p. 227). The end goal of such “economic democracy” is to gradually diminish the institution of private property in favour of a “system of circulating property” (p. 161) where all income and wealth is aggressively and continuously redistributed from the rich to the poor. Here, I have some concerns about both the desirability and the feasibility of Piketty’s scheme. To understand how radically anti-capitalist (or post-capitalist) such a scheme would be, Piketty would only allow for “the continued existence of a limited form of private ownership of the means of production (at the level of small businesses) and housing” (p. 167). The notion of “circulating property” seems to render property possession not only widespread but also insecure and temporary in a way that makes it hard, if not impossible, to interpret his scheme as a form of Meade’s or Rawls’s property-owning democracy, to which it bears superficial resemblance. At any rate, it is obvious that Piketty’s push for the progressive abolition of private property, which goes beyond existing welfare state capitalism, could have unintended negative consequences on innovation, entrepreneurship, and economic growth. These are worth preparing for. Curiously, Piketty mostly ignores the fact that a large part of the success of welfare state capitalism, including the Nordic model, has been based on its ability to harness a portion of the productivity gains from capitalist exchange. If the scope of the latter is reduced without a viable institutional replacement, this might make it harder for the society to achieve its many objectives, such as increasing its citizens’ living standards, financing public services, improving public healthcare, etc.This relatively brief book has many meritorious features. It excels in its lucid presentation. It illuminates several well-documented and significant historical trends (especially around wealth and status inequality) with clear graphs, explanations, and interpretations. It successfully demonstrates that democratic institutional reforms are powerful and long-lasting tools for reshaping wealth and income distribution. Substantively, it is easy to share Piketty’s aversion to the historical persistence of extreme inequalities, such as the “hyperconcentration” of property among the top 1% and the fact that “the poorest 50% have almost never had any substantial possessions” (p. 159). Reasonable intuitions from diverse moral perspectives will find such patterns objectionable. Basic income may have a useful or even necessary part to play in the more equal distribution of wealth, income, and status. But many people hold a pluralistic notion of a good society that balances equality with competing social desiderata, such as freedom, happiness, and virtue. Basic income, too, probably needs to be seen through a more pluralistic lens. Focusing narrowly on the wealth equalization task may undermine its other functions, like liberation from domination, the development of one’s autonomy, or increasing the dignity of citizens. Our pluralistic ethical goals are not sufficiently respected by Piketty’s implausible claim that egalitarianism exhausts the scope of social justice. Piketty is surely right that egalitarian social arrangements tend to carry a net social benefit. It is another thing to say that there are no major trade-offs to be encountered between competing social goals, such as between justice and efficiency, or equality and freedom. Economically speaking, his democratic socialist model hastily sidesteps the usefulness of private property rights and individual freedom for the kind of market dynamism, competition, and innovation that welfare states have demonstrably used to lift poor people out of poverty. Even if the effective coordination of economic activities and allocation of resources that are currently handled (however imperfectly) under welfare state capitalism can be replicated in a democratic socialist society, this needs to be shown and not merely assumed, let alone ignored, as Piketty does. Any robust form of socialist theory cannot afford to ignore the near century of literature, post-Mises and Hayek, Lerner and Lange, on the feasibility of socialist calculation, especially after the many failures of 20th century communism tied to efforts to abolish private property. It may be that any feasible form of democratic socialism, to channel John Roemer and Geoffrey Hodgson, ought to gravitate towards some form of liberal democratic market socialism. Perhaps Piketty is aware of this debate, but he fails to demonstrate it to this reader’s satisfaction. Lastly, it is a shame that Piketty fails to tackle the recent criticisms of his work by Matthew Rognlie, Carlos Góes, Phillip W. Magness, and others. For these reasons, Piketty’s research has several shortcomings. However, the book is well-written and packed with data, and it should be of value to scholars of economic history, social justice, and public policy. In it, Piketty takes vast swaths of mind-blowing data and puts it in the service of an ambitious and thought-provoking policy platform of democratic socialism whose normative attractiveness is only matched by its frustrating institutional inchoateness.

Journal

Basic Income Studies – de Gruyter

Published: Dec 1, 2022

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