On “Capital and Ideology”

In her book Plutocrats, Chrysia Freeland writes: “In 2005, Bill Gates was worth $46.5 billion and Warren Buffet $44 billion. That year, the combined wealth of the 120 million people who made up the bottom 40 percent of the U.S. population was around $95 billion—barely more than the sum of the fortunes of these two men.” That is astounding, and by logical extension of this fact, if we were to hypothetically expropriate these two men of their wealth and redistribute it, we could double the material conditions of four in ten American citizens. 

Admittedly, this is logistically implausible, and my point is not that we should eat the rich. Rather, this scenario implies a larger truth: there is no economic reality which necessitates the profound destitution faced by the worst off, and thus, poverty is the result of deliberate societal decisions as opposed to vague and inevitable economic trends. In other words, people are suffering, and it does not have to be this way. Adam Smith’s invisible hand has made us awfully quick to discard our most basic moral intuitions. 

If you’re wondering where the sudden socialist conviction came from, I recently read Thomas Piketty’s 1100 page book, Capital and Ideology, a Herculean chronicle of inequality over several centuries of global history. It is an ambitious compilation of research and perhaps unnecessarily detailed at some points—the 200-page chunk he spends detailing the injustices of premodern French taxation comes to mind, for instance. Nonetheless, his central call to arms is clear: there are alternatives to social organisation which transcend property ownership, and attempts to justify inequality as an inherent part of growth ignore the viability of more egalitarian approaches. I guess we have a tendency to view capitalism as a natural process, an innate component of human society. Piketty would disagree: he views the system of ownership as a social construction, something that we collectively create through legal and regulatory systems which protect property rights, and more broadly through an agreement on the conceptual definitions of property. Even something as simple as currency, the medium through which all modern transactions of capital occur, is only meaningful because of our choice to ascribe value to it. The conclusion is not that we should reject property in its entirety—Piketty himself acknowledges that property has “an emancipatory dimension”—but rather that we should not enshrine property rights at the forefront of a just economy, and that the legitimacy of capital deserves to be questioned. 

Justifications of Inequality

I recently searched up, for interest, “What would happen if we redistributed all wealth equally?” and stumbled upon some interesting answers. One author writes, “After the redistribution, the previously poor people will probably commit money mistakes and acquire liabilities because they don’t know how to manage their finances. Meanwhile, those who used to be self-made millionaires will do what they know they do best – work hard, leverage other people’s money, accumulate assets, and create multiple sources of income.” This is a rather convenient two-sentence encapsulation of the meritocratic discourse that has taken hold in most post industrial societies. I concede there is a certain appeal to the American Dream, but I often wonder whether this is based in actual logic, or whether it is a post hoc rationalization of inequality. Because, to return to the scenario I present at the beginning of this article, a meritocratic defense of capitalism begs the question: what precisely has Warren Buffet done that is 60 million times more valuable than the labour of any given individual in America’s bottom 40%? 

The space that capitalism occupies in modern political spheres loosely resembles the role which organised religion once took on in preindustrial societies. Interestingly, Piketty points out in his book that ecclesiastical decline coincided with the rise of propertarianism in Britain and Spain, among other European countries, suggesting that capitalism in some ways filled the moral void left by secularization. We are hesitant to condemn meritocratic ideals, because it calls into the question the legitimacy of our own successes, and a foundational aspect of justice as we know it. What’s more, the commitment to justifying capitalism exists across political boundaries. If we look at the United States, for instance, the narrative is most obvious in the Republican Party. To quote the GOP website, “Prosperity is the product of self-discipline, enterprise, saving and investment by individuals.” But the Democratic Party is not exempt from meritocratic advertising either, and in some ways, this manifests more perniciously—their targeted appeals to an educated elite positions the Democratic Party as the winners of the neo proprietarian lottery, and implicitly scorns those who were not talented enough to access social mobility. 

Solutions to Inequality

By 800 pages into his book, it sounds like Piketty is just about ready to pull out a guillotine and have his way. And his recommendation, a 90% wealth tax on those earning above 2 billion euros, is perhaps not far from that. Despite my redistributionist fervour, I doubt that would ever be a political reality, and I’m not too sure whether it would be a desirable one either. The broader point is not lost on me though, and radical redistribution does seem warranted given the radical accumulation of wealth over the last few decades. As is generally acknowledged, Sweden’s progressive taxation policies during the 20th century enabled them to concoct the Scandinavian socialist utopia we know and love today. What is less known, though, is that prior to those policy reforms, Sweden was even more egregiously unequal than modern day America: at the beginning of WWI, Sweden’s wealthiest 1% owned 60% of private wealth, and the top 10% owned 88%. The top decile in America, by comparison, owns “only” 70% of wealth (although this is far worse in some particularly racially unequal urban centres, such as Atlanta and New Orleans). In that sense, Sweden’s ability to redress massive inequality in the space of one short century is a hopeful indicator, and suggests that wealth inequality is not a fixed construct. 

The question then becomes, how do we get from Atlanta to Stockholm? Piketty diagnoses modern political establishments with a sort of fatalist disengagement from the quest for a just economy, which was formed in the aftermath of Communist states’ failures to achieve economic success. His prescription? A socialist coalition which embodies a more unified narrative of redistribution, which in countries like the U.S. and U.K. would hypothetically enable the left to recapture the working class white vote (as a Guardian review of his book puts it, the working class has been left electorally homeless). This is where I think Piketty’s solution falls short, in that I think he significantly underestimates the appeal of social nativism in right wing political advertising, and thus overestimates the willingness for working class voters to buy into socially expansive policies when there is the perception that these policies would primarily benefit groups whom they view as socially undesirable. Piketty also advocates for transnational redistribution, though it is very unclear on how he is planning to get there given that it is not in the incentives of any wealthy country to spontaneously relinquish their economic advantages. 

The specifics of redistribution are an ongoing discussion, but the core message is this: this strange, post ideological conception of economic growth which we have settled upon, the resignation to the injustices of a capitalist system, is both unnecessary and self-destructive. I may not be able to get behind 90% wealth taxes, but I can agree that there is a moral vacuum in politics. What we require is a recalibration of the way we distribute opportunity and of our conception of economic justice.

3 thoughts on “On “Capital and Ideology”

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