On February 28th, Professor Piketty was interviewed by Room for Discussion. The discussion fell around Piketty’s newest book: Capital and Ideology (2019). Furthermore, if you want to get an insight into the topic and about Thomas Piketty, check out our preview on the interview here.
The hall was full and the expectation on the air. Professor Pikkety arrived, and the interview started with a fun question. “ Do you feel famous?” “No, I have a perfectly quiet and normal life in Paris”, the famous economist answered. Then, it moved to delve his motivation for inequality despite the fact of being a PHD math nerdy back in his early twenties. He said, there was a non-exploited combination: a quantitative, historical and economical approach. So he went for it. This mixture of fields shapes his well-known works.
Capital and Ideology: A new sight
Capital and Ideology goes even further with the incorporation of an ideological perspective, he highlighted. Besides, he received criticism about his previous work, Capital in the 21st Century, what moved him to write his latest book. He agreed that some of the criticism were well justified. First, the previous book was centred in the western context while leaving out the rest of the world. Professor Piketty resolved it by extending data collection on more regions like South Africa related to colonial periods, for example. Also, the role of politics, the ideological shift after the two world wars, was out of the picture.
An interesting fact about the data collection of more countries was that governments felt some pressure on the transparency and publication of information after the success of Piketty’s book, Capital in the 21st Century. The Indian government, for example, did not have official tax income data since 2000. According to Piketty, he concluded that inequality in India was raising almost up to colonial levels and the country authorities disagreed. But, the Indian government returned to release data on tax income after 2016, the boon of Piketty’s book.
Regarding the measurement of inequality, the economist thinks that it is not enough to calculate the Ginni coefficient. For instance, world income distribution is facing two contradictory trends. Inequality between the bottom and the middle is shrinking while there is an increasing gap among those at the top and the middle. According to professor Piketty, narrowing down the complexity of inequality to a simple number flattens this kind of changes. Instead, he chose a different tactic, the national income shares approach.
His newest book tries to explain how societies justify their inequality levels based on ideologies. Generally, dominant groups come up with at least some plausible story to uphold social order. As the justification of spiritual guidance was in the pre-french revolution era, or the accumulation of property and a flat tax system in the post-revolution up until the first world war.
The ideology of reparation: Propretarism
Capital and Ideology mentions Haiti as one of the extreme cases of propretarism. Back in the colonial times, around 95% of the population was treated like slaves under the French Atlantic system. During the French revolution, a slave revolt that led to the independence of Haiti from France. However, the French government imposed a sizeable public debt on Haiti in compensation for the slavery property loss. Only a century after, Haiti finished paying the enormous debts.
The ideology of education: The role of meritocracy
In modern societies, there is a tendency of blaming the looser of the economic system for their status quo and overemphasise winners actions, the so-called educational justice. In the late 1900s, the rise of education stratification determined a new ‘type’ of inequality. Over time, the top highest educated groups decided society’s new productive system where the bottom 60% were seen useless and were provided scare welfare transfers. Later, labour parties suffered from a division into populist and technicians party considered as low skilled and high skilled labour, respectively. Piketty points out that high educated population tended to look down to the low skilled, those at the bottom of wealth distribution.
The solutions: Participatory socialism
Professor Piketty proposed a two based solution: co-management and temporary property to balance power.
There are already examples of co-management in Germany and Sweden where one-third to one-half of a company voting rights belongs to worker’s representatives even without having any firm’s stock. The author of capital and ideology argues that these significant changes in the balance of power are not impossible to be spread to other countries. Was he talking about stake stakeholder capitalism?
Regarding temporary property, he proposed a progressive tax system on the top affluent population that would permit the circulation of property and allow everybody to be part of the decision making. The population benefiting from it would be those at the bottom. It is important to consider that having a wealth different from zero, to begin with, makes a lot of difference. It creates a threshold at which poor people is willing to accept a minimum wage or certain working conditions, for example.
Piketty feels that this amount given to the poor goes beyond the mere meaning of money. It enables the power and capacity of decision making.
Finally, the interview came to an end with energic round applause dedicated to Professor Piketty. The audience was eager to start reading Capital and Ideology, but only after they get inspiration from the famous economist autograph. Personally, Professor Piketty held a unique interview backed heavily with data what made his arguments robust and convincing.