Economics serving society

Thomas Piketty : « Every human society must justify its inequalities: reasons must be found because, without them, the whole political and social edifice is in danger of collapsing »

These are the opening lines of Thomas Piketty’s latest book, Capital and ideology. Piketty is research director at the EHESS, professor at PSE and co-director of the World Inequality Lab. His previous book, Capital in the 21st century, was published in 2013 and has since been translated into 40 languages and sold more than 2.5 million copies world-wide. On 12 September 2019, Seuil released his new work on inequality, Capital and Ideology (1), which he talks about in this interview with PSE.

We remember the enthusiasm that Capital in the 21st Century created. Now you have given us Capital and ideology. How would you define the relationship between these two books?

Capital in the 21st Century was a study of the changes in inequality of property and wealth in Europe and the United States. After that, I wanted to extend its geographic scope and deepen the historical perspective in order to refine our understanding of the phenomenon of inequality, but also to study the evolution of ideologies of inequality (so, you understand why the new book is longer than its predecessor!). This work was possible thanks to a whole new collection of archives and data bases, as well numerous trips and exchanges with other researchers, all of which greatly enriched my thinking. In this respect, Capital and ideology offers a more detailed picture of the diversity of systems of inequality in the world and across time and provides a better understanding of how the inequality created by our current system result from political and ideological choices. Discourses that seek to “naturalise” inequality are essential to maintaining existing relations of power and property. This book shows that other systems are possible. Current ideologies (“premiers de cordée” in France, “job creators” in the US, etc.) are not necessarily less crazy than those of the past and they too will end up being replaced!

On that question, your book offers a number of propositions for changing the existing economic and fiscal system; what do you see as the priorities?

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We must rethink private property and replace it with a system of social and temporary property. We must redefine the distribution of power in firms, via systems of worker participation in management, like those that have been in place in Germany and the Nordic countries for 50 years, where 50% of board of management seats go to employees. We could go further, by limiting the voting rights of the biggest shareholders. I am convinced that decision-making power in companies must be better distributed and that it would result in greater social and economic dynamism.

In my view, on the individual level, everyone in society should have access to property ownership. The current extreme concentration of wealth and property makes that impossible for the majority of the population. I propose a progressive tax going from 0.1 % for small property owners up to 90 % for those who own property worth more than two billion euros. It would be a matter of extending the experiences of the 20th century in progressive taxation, especially in the English-speaking countries. Among similar experiments carried out in the 20th century, the case of the US is noteworthy: there, the progressive tax on income and inheritance that was imposed between 1950 and 1980 reached up to 90% for billionaires and yet growth was never as strong as in that period.
However, to introduce that kind of taxation, it is essential to know where the assets are, and tax offices are not in a position to tell us that. From this point of view, the suppression of the ISF (Impot Sur la Fortune, French Wealth Tax) was disastrous precisely because that tax allowed traceability. Today, it seems to me urgent to establish an international registry of assets.

All those measures that would make possible, for example, the funding of a universal capital endowment, wherein each citizen would receive around 120,000€ at the age of 25, which would allow a real circulation of property within the society.

In Capital and ideology, you also develop recommendations about other real issues, such as the environment; what are they?

As I showed in a study with Lucas Chancel in 2015 (2), the 10 % of individuals who emit the most are today responsible for 45 % of global emissions, while the least-emitting 50% are responsible for less than 13 % of emissions. This crisis, one of the most pressing issues of our time, calls for the most polluting individuals to be held accountable. Consequently, I propose the introduction of an individual carbon card, which would define the annual amount of green-house gases that each citizen is authorised to emit. The carbon card would be introduced at the same time as an individual and progressive carbon tax, aimed at financing the ecological transition, in order to spread the effort in a more equitable manner than the French government’s 2018 carbon tax plan. We must move towards transnational taxation in order to protect our planet effectively.

If you had one ambition for this book, what would that be?

As I say in the conclusion to the book, if this book has one aim, it is to contribute to the re-appropriation of economic and historical knowledge by citizens. These questions are so complex that nothing should be left to a small group of experts or decision-makers. It is essential that the social sciences inform public debate so that citizens can grasp the fruits of the research and appropriate them. Personally, I invest a lot in this, in the series « Debates on Equality » that we organise at PSE, in the media, and in public events. It is only by reflecting and deliberating together that we can go beyond our current economic system and evolve towards a more just society for all.

(1)The English translation of this work will be published in March 2020 by Harvard University Press.
(2) Lucas Chancel and Thomas Piketty, Carbon and inequality: from Kyoto to Paris?, 2015.

Copyright des visuels utilisés - Aurélie Boivin 2019, ECINEQ conference, Paris.

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