Capital and Ideology

What, you haven't yet read Thomas Piketty's 1100 page book Capital and Ideology?? Speaking as someone who is just now reaching the end of this massive tome, I suppose you can be forgiven for a bit of malingering on this one. Still, I really do recommend it highly; there's a tremendous amount of useful information and big picture thinking in the book that you would be hard-pressed to find anywhere else. Even if you skip around, you're sure to find some of the sections valuable and mind-expanding.

It's a very radical book really, in many ways more radical than its more famous cousin, Capital in the 21st Century. But.....if you don't have time, here is an interview of Piketty on the Social Europe site that touches on some of the themes from Capital and Ideology and gives you a flavor of some of the ideas he's playing with.

"Let me first say that I am a European federalist—I believe in Europe. Before describing everything that should be improved, it’s important to remember that European nation-states have been able to build, especially in the decades after World War II, the best social-security system in the world, the least unequal, social-market economic system in the world. This is a great achievement. I am not here to say that everything is bad in Europe—that would be ridiculous. We have built a social system which, by and large, is the least unequal in history, and this is a huge achievement, but this achievement is fragile.

For a long time we thought that it was possible to have the welfare state within each nation-state and then the EU would just be in charge of enforcing the common market and the free flow of goods, services and capital. We realise today that this is not sufficient and if we don’t harmonise tax legislation—and, more generally, if we don’t have some common public policy to regulate capitalism and to reduce inequality—then indeed there is a risk that the divorce between the European project and les classes populaires at some point will just destroy the project itself.

I am very shocked by the fact that, as I show in Capital and Ideology, if you look, referendum after referendum—whether it is in Britain, France or Denmark—wherever you have a referendum over Europe, it’s always the bottom 50 or 60 per cent of income, wealth or education groups which vote against Europe and only the top 10, 20 or 30 per cent which vote for Europe. This cannot be a coincidence.

The explanation according to which the bottom 50 or 60 per cent group are so nationalist, or they don’t like internationalist ideas, is just wrong. There are many examples in history where, in fact, the more disadvantaged socio-economic groups are more internationalist than the elite.

It entirely depends on the political project—the political mobilisation around internationalist ideas—that you present. The problem is that over time the European project has been viewed more and more as being built in the interest of the most mobile and most powerful economic actors. This is indeed very dangerous.

With the Covid crisis, we have an opportunity to try to show to the public opinion of Europe that Europe can be here to reduce inequality. But this will require some deep change in the way we conduct economic and tax policy.

Who is going to repay the large public debt? For now we put everything on the balance sheet of the European Central Bank but at some point we will have to discuss who is going to pay for that. There are solutions which, in fact, come also from the history of Europe itself. Let me remind you that after World War II, in the 1950s, many countries—including in particular Germany—invented some very innovative ways to reduce large public debt, including very progressive tax on very high-wealth individuals.

Germany in 1952 put in place a very ambitious, exceptional, progressive wealth tax, which applied between 1952 and the 1960s: very high-wealth taxpayers had to pay a very large amount of money to the German treasury. This was very successful in the sense that this policy not only helped reduce public debt—it paid for public investment, public infrastructure, and it was part of the very successful postwar growth model.

We are going to have to find something similar in the future, except that now we cannot do it alone. It cannot be just Germany or France or Italy. We will have to have some common tax policy.

Europe has to show its citizens that Europe can mean solidarity—Europe can mean asking more of those who have more and, in particular, of very high-wealth individuals who have more than €1 million or €2 million in assets. They should make an exceptional contribution in the coming years, to repay some of the Covid debt. Some proposals have been put on the table in various countries, including in Germany—very similar in fact to what was actually done in Germany in 1952, when it was a big success."

SOCIALEUROPE.EU

Capital and ideology: interview with Thomas Piketty – Thomas Piketty

Thomas Piketty tells Robin Wilson how wealth and power can be transferred from capital to workers and citizens.