When
I first wrote
about Thomas Piketty and his book-- a month before the publication of
the English language edition of Capital
in the Twenty-first Century--
I felt confident that he,
and it,
would have a large impact even beyond the academic community. For
sure, I never expected it to be a best-seller, but I thought I saw
the book filling a particular, urgent need for one segment of the
political spectrum. While others noted the book's timely appearance
in the wake of the 2007-2008 economic catastrophe and arrival
concurrent with attention to revealed trends in inequality, my sense
was that the book would be received as a godsend by liberals and
social democrats.
Though
the crisis cast a long ideological shadow over neo-classical
economics and its associated policies, the widely expected return to
the Keynesianism of the post-war era never materialized. Despite the
best efforts of high-exposure, acclaimed economists like Joseph
Stiglitz and Paul Krugman, New Deal-like policy prescriptions failed
to gain popular traction or political support. The dashed high hopes
invested in center-left governments in the UK, the US and, most
recently, France, further disappointed reform-minded forces in North
America and Europe. Accordingly, hopes of turning away from the
conservative, free-market paradigm of the last thirty-five years were
at a low ebb before Piketty's book.
It
was my view that the Piketty book would be enthusiastically welcomed
outside of the conservative consensus. His exposure of historical
patterns of inequality demonstrates the tendency of capitalism to
generate inequality, a condition seeming to cry out for a remedy. In
Piketty's research and his theoretical claims, liberals and social
democrats might find a new foundation for reforms, even a grand
assault on conservative hegemony. Indeed, some economists have
likened the anticipated impact of Piketty's book to the much earlier
publication of Keynes's General Theory of Employment, Interest,
and Money.
Indeed,
the Piketty phenomenon continues to draw interest. My Google alerts
on “Piketty” show fewer entries, but continue unabated. Yet
liberal and social democratic ideologues and policy makers are not
nearly as enthusiastic as I expected. The initial euphoria has been
tempered as Piketty's ideas are digested and their implications
carefully examined.
A
recent issue of Real
World Economics Review demonstrates
the widespread and growing hesitancy to accept Piketty as the messiah
of reform. Friends in the Communist Party of Ireland brought
attention to the Review's
Special
Issue on Piketty's Capital
in
which 17 economists of liberal and social democratic persuasion
reflect on the popular book.
The
“Respectable” Left Sours on Piketty
The
participants in the RWER forum are established social
scientists sincerely troubled by persistence of inequality and
poverty. Some-- Yanis Varoufakis, Ann
Pettifor, Richard Parker, Michael
Hudson, James K. Galbraith, and
Dean Baker-- are prominent commentators in
liberal and left circles. All express admiration for Piketty's
success in drawing attention to inequality. Yet nearly all are
uncomfortable with his research results and theoretical claims. Some
challenge his “fundamental laws of capitalism,” others his
“determinism.” In the end, the stone in the shoe of these liberal
or social democratic thinkers is Piketty's notion that, ceteris
parebis, capitalism systemically produces and reproduces
inequality. Dean Baker confirms this when he states: “It is the
adoption of policies that were friendly to these business interests
that led to the increase in profit shares in recent years, not any
inherent dynamic of capitalism, as some may read Piketty as
saying.” (My italics)
It
is the “inherent dynamic of capitalism” that troubles
liberals and social democrats. If capitalism necessarily generates
inequality, if inequality follows from the laws of capitalist
development, then reforms will never satisfactorily conquer social
inequality. Should it be true that inequality is a systemic product
of capitalism, then a basket of reforms, as advocated by nearly all
of the RWER commentators (and Piketty), will, at best, only
slow or retard the growth of inequality.
It
is this question that separates capitalist reformers from socialists,
and social democrats from Marxists. Marxists embrace Piketty's
claim that inequality is the capitalist norm, that periods of
diminishing inequality are the exceptions. Moreover, the very logic
of capitalism, with exploitation at its core, promises to increase
inequality. For capitalism to continue, capital must accumulate-- not
in social consumption, but in investment targeted to more
accumulation. Efforts to resist, reform or regulate will only retard
that process.
For
sure, progressive governments may enact reforms to redistribute
wealth, but eventually this inhibits accumulation and results in a
capital strike or capital flight. Capitalism is not an
equality-generating mechanism. Nor is it equality tolerant.
Labor
may fight for a larger share of wealth, but only to be trumped by
capitalist threats of plant closure or mass unemployment. Today's
collaborative labor leaders are caught in the compromised position of
being both an agent for corporate profitability and an advocate for
working class living standards. Surely no advance against inequality
is possible in the face of this dilemma.
The
RWER writers would prefer to address the decades since Reagan
and Thatcher rather than the centuries studied by Piketty. Where
Piketty finds a long-term tendency for capitalism to generate growing
and extreme inequality, they prefer to ignore that elephantine fact
and debate the causes of growing inequality since the nineteen
seventies.
They
are intent upon ignoring centuries of enduring inequality because
accepting that reality would cast doubt on the possibility that
equality and capitalism are compatible, that the capitalist system
can be reformed. Piketty's long-term data and theoretical argument
challenge that possibility.
Rather
than accept the implications of capitalism's long-term tendency, its
centuries-old trajectory, liberals and social democrats point to the
historically brief respite from income inequality after World War II
(in the US and parts of Europe) along with the post-war expansion of
the welfare state as a kind of golden age for social democracy. They
see the abrupt turn away from the moderation of inequality--
occurring only some twenty-five years later-- not as a return to the
normal course of capitalism, but as a political coup against tamed
and tempered capitalism. With little more than nostalgia to support
this view, reformists cling to the illusion that an egalitarian,
humane capitalism is in the cards. Liberals and social democrats
refuse to see the maintenance and growth of inequality as systemic;
rather they want to believe that growing inequality is merely a
matter of political choices. Thus, they rail against the
ideology of “neo-liberalism,” as though the explosion of
inequality in North America and Europe over the last 30-40 years was
the result of a right-wing confidence game and not driven by the
logic of capitalism. “Defeating neo-liberalism” has become a
convenient mantra for those ill-disposed to fighting for a new
socio-economic order: socialism.
Writing
for the RWER forum, Claude Hillinger bluntly states his
opposition to Piketty and his allergy to capitalism as inequality's
father: “By treating inequality as an economic problem, Piketty
diverts attention away from what it really is–a political problem.”
A
“political problem” that has proven intractable for hundreds of
years under capitalism? A “political problem” better solved under
twentieth-century socialism than by any and all twentieth-century
bourgeois politicians? A “political problem” only if we choose to
slight or ignore Piketty's data.
It
is an unpleasant, unstated truth that liberals and social democrats
are much more comfortable addressing the concept of poverty rather
than inequality. Under capitalism, alleviating the pain of those at
the very bottom of the economic hierarchy appears to be much easier
and more desirable than tackling the economic hierarchy in its
entirety. Not surprisingly, many well-compensated academics are impressed
with their own merit and, thus, find a ready defense of the hierarchy
of inequality.
RWER
contributor V.A. Beker gently attempts to move the spotlight on
to poverty: “Let me now ask an awkward question. Should reduction
of inequality or reduction of poverty be our main concern?”
Certainly by reducing the target to poverty, the question of
inequality's relationship to capitalism can be evaded.
Another
evasion is to interpret “egalitarianism” as “procedural
egalitarianism,” as does YanisVaroufakis in the EWER forum.
While taking a gratuitous, but well-deserved pot shot at John Rawls's
liberal theory of distributive justice, Varoufakis cavalierly
dismisses all distributive egalitarianism in favor of procedural
justice, a lofty euphemism for “equal opportunity.” Proponents of
“procedural egalitarianism” claim victory for equality when the
rules of life apply equally to everyone. Outcomes are irrelevant if
no one violates the shared mutually agreeable procedures, standards,
or rules of participation. Everyone has the same opportunity-- the
“created equal...” of the US Declaration of Independence.
Thus,
nine innings of baseball, played according to the rules,
constitute an example of procedural justice. And while the outcome
might be lopsided, the game would be played consistent with
procedural egalitarianism.
What
the advocates of procedural justice dare not address is the case of a
Little League team playing the Chicago Cubs. While the rules of that
game may be assiduously observed, the outcome is certainly not fair,
just, or egalitarian. I doubt if any political philosophers would
show enough confidence in procedural justice to bet on the Little
League team.
Should
the advocates of procedural justice modify the rules of baseball to
disallow the inequality of resources or skills enjoyed by the Cubs,
they must also recognize that outside of the world of games,
differential resources and skills always affect fairness, justice,
and equality. Accordingly, “procedural” egalitarianism can be no
answer to inequality, unless it comes to grips with the inequality of
resources, skills, and power ever present in capitalism. But
addressing questions of asset distribution returns us to distributive
justice and, ultimately, how capitalism distributes these assets.
Try
as they may, liberals and social democrats are faced with an
impossible task in imagining a capitalist world that evades or
transcends the inequalities of the system's past. Inequality is
inherent in capitalism, deeply embedded in its genetic code.
Piketty's
conclusions from studying “la longue durée”
of inequality-- its trajectory over centuries-- stands as an obstacle
to those who believe the myth of capitalism without inequality. Or
put another way, the results stymy those who want equality without
socialism.
Zoltan
Zigedy
