Why Class is hosting Thomas Piketty
Thomas Piketty is a phenomenon. Dubbed the “rock star economist”, he is the author of “Capital in the Twenty-First Century,” a number one best seller on Amazon; the most influential economics book of the decade, perhaps even the century. It is a book the Financial Times economics editor attempted to debunk on the front page. On June 16, Class will host Thomas Piketty in Parliament, in front of an audience of senior politicians, trade unionists, academics, and journalists.
So what is it all about? What does "Capital in the Twenty-First Century" say? Is it as significant as some, like Nobel prize-winning economist Paul Krugman, suggest?
The book is long and complex in places, but accessible to most. It is a profound and broad-ranging analysis of wealth and inequality, the sources of inequality and the main long-running economic trends of the last two centuries. Above all else, it is probably the deepest and most rigorous analysis of wealth and its distribution, based on collection and evaluation of statistics, especially in France, Britain and the US. He shows based on this data, stretching back 2000 years, but with great detail for the last 200, that there is a long-running trend that where the rate of return on capital (like property, stocks and shares) is higher than the rate of growth, wealth will tend to become more concentrated in the hands of the wealthy. And crucially he shows that historically that has always been the case.
His particular study relates to wealth, but he also looks at income, which in the last thirty years has become ever more unequal, and puts the two together to show the growing inequality of our time - and, on very conservative economic assumptions, predicts that this tendency left unchecked will continue for the rest of the century.
He has been critiqued by some on the Marxist left, who challenge his definition of capital and/ or say that he is not saying much that is new. He is challenged from the right, who have either unsuccessfully attacked his statistical analysis, or attempted to dismiss its significance. But I think this work will be of immense importance, perhaps a turning point in politics. After 2008, many on the left felt that neo-liberalism and the exaltation of the free market above else, was fatally holed below the water line. But we failed to recognise the capacity of the right to reorganise and fight back, and the weakness of progressive ideas and the failure of progressives to project an alternative that was convincing.
What is so important about the Piketty moment is that he crystallises and confirms much that many have been saying piecemeal. He provides the detail and confirms statistically that inequality is growing. He shows beyond doubt that the challenge of inequality is the biggest (alongside the related challenge of climate change) we face.
Historically, ideas grow and become powerful, but often it is the work of the statistician that provides the break point. In the Victorian era, many words were written about the plight of working class Britain from Engels onwards. But it was the decisive studies of Mayhew, Booth and Rowntree that provided the essential stimulus to social reform. For me, this is the key significance of Piketty.
Piketty also analyses possible solutions, including much on the role of the state, and in particular whether the social state of the twentieth century can be modernised. He also argues for the return of progressive taxation - specifically a global tax on capital, although he recognises immediately that it may be a utopian dream at the moment. But he argues cogently for regional and national progressive taxation of wealth, including at EU level.
Piketty’s thesis can be considered depressing, or extremely exciting. I tend towards the latter. If his ideas and analysis can provide the anchor and inspiration for social democratic politics in this century, then we could witness real change. And if we can find new ways to organise and mobilise, as well as renewing the role of unions, we can ensure such change is long-lasting and broad-ranging.
Photo credit: Emmanuelle Marchadour