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Capital and Ideology

posted by Jason Kottke   Sep 16, 2019

French economist Thomas Piketty has come out with a new book. The 1200-page Capital and Ideology is a followup to Capital in the 21st Century, a surprise bestseller when it was released a few years ago. The book just came out in French (English readers will need to wait until March) so details are still sparse, but The Guardian has a short preview.

Among the proposals in the book are that employees should have 50% of the seats on company boards; that the voting power of even the largest shareholders should be capped at 10%; much higher taxes on property, rising to 90% for the largest estates; a lump sum capital allocation of €120,000 (just over £107,000) to everyone when they reach 25; and an individualised carbon tax calculated by a personalised card that would track each person’s contribution to global heating.

In an interview with the French weekly news magazine L’Obs, Piketty made no apologies for the impact his ideas would have on the stock market. He said: “[Yes], it will also affect the price of real estate that is crazy in Paris, and it will allow new social groups to become owners and shareholders.”

Branko Milanovic, an expert on global inequality, has written an early review.

This part of the book looks empirically at the reasons that left-wing, or social democratic parties have gradually transformed themselves from being the parties of the less-educated and poorer classes to become the parties of the educated and affluent middle and upper-middle classes. To a large extent, traditionally left parties have changed because their original social-democratic agenda was so successful in opening up education and high-income possibilities to the people who in the 1950s and 1960s came from modest backgrounds. These people, the “winners” of social democracy, continued voting for left-wing parties but their interests and worldview were no longer the same as that of their (less-educated) parents. The parties’ internal social structure thus changed — the product of their own political and social success. In Piketty’s terms, they became the parties of the “Brahmin left” (La gauche Brahmane), as opposed to the conservative right-wing parties, which remained the parties of the “merchant right” (La droite marchande).

To simplify, the elite became divided between the educated “Brahmins” and the more commercially-minded “investors,” or capitalists. This development, however, left the people who failed to experience upward educational and income mobility unrepresented, and those people are the ones that feed the current “populist” wave. Quite extraordinarily, Piketty shows the education and income shifts of left-wing parties’ voters using very similar long-term data from all major developed democracies (and India). The fact that the story is so consistent across countries lends an almost uncanny plausibility to his hypothesis.