Debating Capital in the 21st Century with Piketty himself

Debating Capital in the 21st Century with Piketty himself

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[EngFr]

A few weeks ago, the French National Library and the Annales Journal co-organised a debate to allow 350 people crammed in the Library’s great auditorium to listen the new global guru economist THOMAS PIKETTY.

First, let’s set the scene. It was a 2-hour debate. When an academic gives a talk, he starts with a brief outline of his upcoming intervention, followed by multiple convolutions to clarify and nuance his argument, and finally lands with an unintelligible complicated sentence phrased as a question. The professorial tone of voice also wraps the whole speech into an ethereal mist.

Notwithstanding that this type of debate belongs to the type of bizarre sensory experiences where time seems to freeze, your devoted blogger Céline Trèfle attended it to bring back some notes and try to distill key insights for the BlaqSwans readers!

Theme #1 : An economic and social history? What for?

Shall we talk about an economic and social history?” The Annales Journal founded in 1929 always had economic and social history as its main focus, influenced by historians who have now become classic such as BRAUDEL and LABROUSSE. In 1933 Ernest LABROUSSE published a study on the movement of prices and revenues in France during the 18th century, showing that the history of prices cannot be dissociated from social history, and in particular from the history of the French Revolution.

It was noted that research methods are inductive by nature: i.e. data is studied across long periods. François SIMIAND also studied the evolution of wages and prices in the 19th century with a sociological approach to economic realities. In the second part of the 20th century Adeline DAUMARD, with her ‘Bourgeois et Bourgeoisie’ took on to draft a statistical monster by studying the way elites accumulated their wealth from the 19th century till the early 20th century. However, those econ-historical studies almost disappeared from the field of research since the early 1980s.

Commentators have been highlighting how ‘Capital in the 21st Century’ goes contrary to that trend, and has created a renewed interest for this type of research. PIKETTY suggests that this second wind is made possible by IT: large amounts of statistical data can now be made available online for readers and researchers to access, while the main book can focus on the analysis and insights. This makes the work much more ‘reader-friendly’.

The conversation then moved on to remark that since the 1980s there has been an absolute divide between economics and social sciences.

On one hand a neoliberal orthodoxy has locked economics into mathematical research as if to try to provide a scientific alibi to models that have been promoting the omnipotence of markets and the supremacy of the ‘homo-economicus‘ (echoing the researchers, so numerous in Japan, who indulge in game theory) in the face of any social and political reality.

On the other hand, social sciences have deserted the study of economic hegemony to investigate other forms of domination: i.e. inequalities related to gender, races, culture. In other words, they moved from studying ‘social’ issues to studying ‘societal’ issues. No doubt it was also convenient for sociologists to abandon technical fields to pseudo-economics-experts.

So it is pretty good news that social sciences are now re-occupying the field of economic hegemony. However, studying the strong interrelations between economic and cultural hegemonies would even be better. Thomas PIKETTY defends the idea that “we cannot dissociate the history of wages, of revenues, of wealth from the political and cultural history. They feed from each other. Political representations lead to institutional choices, choices of the theories used to analyse our system, and that in turn shape the knowledge we build about those economic realities. However they are only representations shaped by various languages and perspectives, which in turn influence policies. So history is absolutely social, cultural, about labour and wealth (..) We must get rid of the delusion of a difference between economic structures and political structures. All the body of work between the 18th and 19th century maintained the fiction of a decoupled economic evolution on one hand, and on the other hand the cultural history telling the history of people and nations. When you study the 20th century, you realise they are the same. The entire history of the 20th century is a history of inequalities: the 2 world wars, the turmoil of 1930s, the counter culture and protests of 1968 in France, the neo-liberal turn of the 1980s (..)

PIKETTY summarised his point by: “We need MARX, but we also need BOURDIEU. We need to combine analyse in terms of financial capital, but also in terms of cultural and symbolic capital, which feed each other, producing an incredible violence never reached in history.” For instance, the abhorrent logic that has been gaining ground lately which would have us believe that the poor are “losers” because they deserve it because of their laziness or lack of intelligence…

Theme #2: inequalities and way ‘Capital in the 21th Century’ has been perceived in various countries

1,500,000 copies of the book have been sold across Asia, Europe and America – roughly around 500,000 copies in each of those geographies.

In the US, the debate about inequality is prominent but for different reasons. Occupy Wall Street has denounced the banks’ responsibility in the 2008 financial crisis, and has popularised the indignation against the greedy 1%. In parallel, it is the monopoly of the elite on political power that is a real worry over there, and represents a tangible threat on the American democracy. Indeed, even the pro-Bush US Supreme Court has declared unconstitutional any limit on political donation, which will therefore increase the role money plays in American politics, and will favour the wealthy.

In so-called communist China, there is no real tax on inheritance. Whilst liberal Japan has just increased the upper marginal rate of its inheritance tax to 55%. As for Russia, there is no progressive tax: so former communist countries turn out to have the more brutal tax policies towards the masses…

In India, PIKETTY’s book has had very little coverage. However, the debate on inequality is also very important there, echoing the more prominent debate on the (disastrous) economic impact of the British colonisation. In 1946-47, strikes paralysed the country, and social demands were numerous. In 2015, undeniable strong growth has come at the price of significant inequalities, but also strong unemployment rate, hence creating a different situation from post-WWII Europe.

France also has its own particularity. It has actually never had a fiscal revolution that could have led to a strong progressive tax applied on a large base and directly withheld from wages and salaries. Instead, the French have opted for a mix of direct and indirect taxes, levies, which have been put in place in lieu of effective modernisation of the fiscal toolkit. The main effect being that the French tax system is actually not very progressive, and in fact becomes regressive above a certain level of revenue. This hotchpotch is also a reflection of the trust in the public system, and of the ability to take collective ownership of the decision making process.

Haven’t politicians remained oblivious of the book when it was published?

In any case PIKETTY reminded the audience that he didn’t write the book for politicians, but to contribute to the broader public debate. With 200,000 copies sold per French person, he got in his homeland the best sales-per-capita ratio. Moreover, he joked that politicians have far less power than they pretend. They don’t read much, and are enslaved to what we can call the “the prevailing opinion”. An economist doesn’t have to predict the future, nor to prescribe public policies. The role of social sciences (note the plural) is to bring data and insights to the public debate, and enlighten it. This is why PIKETTY is keen to participate in various capacities such as during election time, or via his monthly column in ‘Liberation’, for what he calls his “intellectual hygiene”.

Theme #3: Which political solutions? Révolution or not révolution ?

History teaches us that only conflicts and struggles have truly challenged hegemonies. So isn’t the solution proposed by ‘Capital in the 21st century’ – a global progressive tax on wealth – just a bit cute and naïve? Not even to mention the difficulty to impose it to those holding power?

PIKETTY acquiesced to this question. Yes, conflicts have been necessary to truly change bargaining powers. “I am not a futurist. This is only a history book. I humbly do my part to democratically spread knowledge. Anyone can then take it, and do something about it. Social activists, and others.” Which sounded more like dodging the question.

So. Révolution or not révolution?

PIKETTY then departed from the rapid, incisive, self-assured and brilliant tone of voice he had since the start of the debate, for a more ‘muted’ and grave voice to assure that we can avoid descending into a bloody conflict. “The entire historical period covered by the book is made of struggles and domination around the issue of property rights, which can be solved and regulated by a variety of tools and institutional policies, tax being one of them.

There he said it: “No revolution”.

Instead, he explained that change could also come from salaried workers joining executive committees and company boards, citizen assemblies collectively managing natural resources, a new ethics for governance…

His tone could almost sound like humility regarding his legitimacy to propose solutions. But in fact, behind this ill-at-ease demeanor was PIKETTY’s own confession: “I know my answer is a bit weak. It’s a bit of social-democrat bullshit. I apologise about that, but I have nothing else in store…”

Céline Trèfle for the live report from the conference in Paris – Blaq Swan for the English translation.


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For the francophones amongst you, 3 supplements to this debate – which the Blag Swans are busy translating in English so that you can enjoy asap:

1 – A very critical review of ‘Capital in the 21st Century’ from Marxist French economist Frédéric Lordon initially published in Le Monde Diplomatique

2 – Followed by a live rejoinder  between Piketty and Lordon on TV [Chez Frédéric Taddeï – “Does Capitalism deserve a good admonition? – Ce Soir (Ou Jamais !) – 17/04/2015]

3 – An excellente review of that TV show on Paul Jorion’s blog (pretty popular in France)

Video: “”Does Capitalism deserve a good admonition? – Le capitalisme mérite-t-il une bonne correction ? – Ce Soir (Ou Jamais !) – 17/04/2015

1ere partie : Piketty vs Lordon

2eme partie : Piketty and Lordon vs Sorman (Liberal public figure)

3 Comments Debating Capital in the 21st Century with Piketty himself

  1. Barbara

    I like his perspective but I can also appreciate that he has no solutions and knows that his role is to present the problem in a way that may spark others to act.

    “Thomas PIKETTY defends the idea that “we cannot dissociate the history of wages, of revenues, of wealth from the political and cultural history. They feed from each other. Political representations lead to institutional choices, choices of the theories used to analyse our system, and that in turn shape the knowledge we build about those economic realities. However they are only representations shaped by various languages and perspectives, which in turn influence policies. So history is absolutely social, cultural, about labour and wealth (..) We must get rid of the delusion of a difference between economic structures and political structures. All the body of work between the 18th and 19th century maintained the fiction of a decoupled economic evolution on one hand, and on the other hand the cultural history telling the history of people and nations. When you study the 20th century, you realise they are the same. The entire history of the 20th century is a history of inequalities: the 2 world wars, the turmoil of 1930s, the counter culture and protests of 1968 in France, the neo-liberal turn of the 1980s (..)”

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