By Oset Babur
Rumor has it Thomas Piketty has written a manifesto, and that we, the unfortunate members of the rarely creative twenty-first century, have been chosen to receive it. The book has catalyzed the discussion on economic inequality around the world, and has prompted a serious examination of what kinds of policies cause discrepancies in wealth. Whether Piketty’s ideas come up at a cocktail party or in the classroom, it is likely that they will influence how Americans regard redistributive policies— or at least make them a little more comfortable using the M-word in public.
Capital draws the general conclusion that wealth accumulated in the past is growing at a rate faster than wages and economic output. This conclusion founds Piketty’s central critique of the capitalist model, and he claims that this trajectory means the ratio of wealth to income will increase rapidly, making inheritances seem like a much more effective way to make money compared to actually toiling in the workplace. He states that this shift undermines the meritocratic principles that democracy is supposedly based upon— and therein a controversy is ignited. Piketty fights against Conservative economics, or the metaphor that a rising economic tide will lift all boats, or people, with it. His support dates back to pre-Industrial Revolution income data, and instead argues that the increase in wealth inequality is enough to refute the validity of trickle-down economics. The future looks pretty bleak according to Piketty, and in his world, the rich get richer by investing, while the poor get poorer because of the comparatively lower returns on their labor.
But is Piketty’s world our world? Is Piketty’s world Marx’s world? The overlap between these three has fueled critics to craft responses highlighting Piketty’s Marxist bias in hopes of challenging the validity of his conclusions, and inspired others to herald his findings as the necessary publicized foundation for government policies to tackle cyclical inequality. Despite the fact that Piketty has publically denied being a Marxist, news sources around the world continue to regard his work as a mere translation and re-application of Karl Marx’s Capital. This could be because many of Piketty’s critics have yet to actually read Marx, but are aware of the Internet ‘hits’ to be earned by McCarthy-ing a 700-page text that many people won’t read and analyze for themselves. It could also be a result of some parallels Piketty does draw with Marx’s ideas. For one, Piketty focuses on the way in wealth is concentrated in the hands of the few, and discusses how the working class is increasingly less able to compete with the upper factions of society. Karl Marx discusses the unequal concentration of wealth and the exploitation of the laboring class in Kapital, as well. Furthermore, Piketty sees this unequal concentration of wealth as correctable through a ‘radical shock’ in the capitalist system, much like Marx does; however, the two diverge when it comes to the kind of shock that is necessary, as Marx is obviously much more explicit about the details.
So if this left-leaning French economist echoes and responds to Marxist ideas, has clearly read Kapital closely, and can engage its ideas without fits of terror or utter ignorance, is he actually a Marxist? There’s little reason to think so. Piketty’s Capital is not meant to be a contemporary response or translation for Marxist ideas, but rather looks to use their influence to contribute to a discussion on inequality that has already been escalated by organized movements like Occupy Wallstreet. Piketty spends some time discussing his policy prescriptions as to how the gap between the poor and wealthy can be narrowed, but most of his ideas are directed at politicians. For one, he suggests that we preserve the ‘social state’, which provides free services for education, and healthcare, and gives pensions for all. He also supports extending these services for Third World countries. While these are not particularly revolutionary aims, other goals Piketty describes in his text, such as setting a progressive tax on all capital assets. As a modest man, Piketty’s plan has some modest beginnings- tackling just the United States, the European Union, and Japan, for starters. While the adjusted rates are not incredibly far-fetched (his plan levies taxes of about one-percent on fortunes between one to five million US dollars), Piketty focuses on how so much of income is hidden forces the reader to accept that in order to fairly execute these taxes, all wealth must be disclosed, just as Americans are forced to declare their domestic assets. This international potential to add transparency to accumulated wealth and the way it is taxed has ignited alarm among both Conservatives and non-partisan critics alike.
The best way to interpret Piketty’s piece is for everyone to set aside an hour a night before bedtime, for the next two months, and make their way through Capital in the Twenty-First Century. Otherwise, we become food for the blogs and critics, looking to making assumptions about Piketty’s text, which they have not read, and how it mirrors a text by Karl Marx which they also haven’t read— probably.
Oset Babur is a Public Policy and Communications intern at EWI's New York center.