Paris School of Economics - École d'Économie de Paris

Economics serving society

Thomas Piketty: “The crisis we are going through is a profound challenge to every national model”

June 2015

More than a year ago, Thomas Piketty’s Capital in the Twenty-First Century was published in French (Le Capital au XXIe siècle). This work of almost 1,000 pages, which synthesises fifteen years of collection and analysis of data on the changes in wealth and its distribution, has met with phenomenal success (1.5 million copies sold so far). At the end of 2014, it is published – after meticulous translation – in Germany, China, Japan, Spain and India. We met the author, researcher and teacher at the Paris School of Economics and director of studies at the École des hautes études en sciences sociales.

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It is not an exaggeration to say that, for you, there is “before and after” Capital?
Not at all! But, in many ways, the long-term, collective work that this book is based on is far from finished. I see it as a real source of motivation: partly scientific, in the extension of the current WTID-World Top Incomes Database to wealth data, to geographical areas and to periods not yet covered; and partly pedagogical and democratic, in the need to offer more tools and “fact files” to citizens and leaders. This is a major project, especially as its intellectual and methodological challenges mean that we must find additional funds to carry it out. The publication of Capital was an exceptional moment, I am fully aware, but it is a safe bet that this work and my other research will one day resume their normal course.

But not before 2015 in any case? Japan, Brazil and Greece are still on the agenda...
Indeed and I am doing my best to respond to the requests from universities and media abroad who are interested in this work. So, my week is quickly taken up in travelling to give presentations, then coming back to Paris and teaching at PSE.
What strikes me is the picture of our globalised world we get through the subject of the distribution of wealth. In every place I have been so far, the interest among the general public in the question is clear: the crisis that we are going through now is a profound challenge to each national model, though according to their different modalities, and ordinary people want to understand and discuss what is at stake. Capital, and of course other works, perhaps respond in some way to that desire for accessible knowledge that feeds democratic and transparent debate. If the subject of inequality is particularly understandable on the individual level, because it is an almost daily experience for everyone in one way or another, it is also so on the level of a country or a continent. But this “experience” is not, in my opinion, enough: my work as a researcher is to place the current situation not only in the longest possible historical perspective, but also in demographic perspective, and to point out the fundamental rôle that public power can play in the face of market dynamics.

Yet responses from political leaders have been very varied
Yes, there is a considerable gap between, for example, Michelle Bachelet, who evokes Capital to carry out tax reform in Chile and the fact that it fell out of Michel Sapin’s hands... On the other side of the Atlantic, the media have highlighted a political timing: I see there also an example of the American progressive tradition as much as a collective dynamic giving way to sensitive debates. In China, a sort of frantic university activity has emerged recently, as the authorities gradually open the door: to measuring inequalities, hypothesising about a wealth tax, etcetera. As in dozens of other domains, power oscillates between inevitable modernisation and a rather unyielding past.

You are a convinced European: but does the current socio-economic situation lend itself more to concern than to optimism ?

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Most of the large economic zones have raised their heads and regained a growth rate similar to that of before the 2008 crisis. Except Europe. Everything is happening as if we can no longer identify our real strengths – and our real weaknesses. For example, the European public debts are a non-problem in the context of modern history, or in comparison with other regions ; contrary to the now deeply-entrenched collective fantasy, these debts belong to Europeans themselves: our economies hold more assets abroad than foreign entities hold in Europe. And as private wealth is thriving, we have our fate in our own hands: this is why I particularly support the idea of a progressive wealth tax. For all these reasons, and unlike inflation (too unjust for small asset-holders) and austerity (too slow and puts future growth at risk), which are other means of reducing public indebtedness, this policy tool responds in a way that is modern, transparent and fair given our current constraints.
The corporations tax is another example. We have in Europe almost twenty different tax structures, which are de facto in competition with each other. In the end, we have a total level of tax on businesses in Europe that is lower than it is in the United States: is this a conscious choice ? Is this even a well-known fact about our economy? I don’t think so and the tax schemes revealed by “Luxleaks” are proof of that. We need to come to grips with this problem and I propose, among other things, that a full mandate be given to a European assembly made up of national deputies to deal with different economic subjects such as stimulus measures and deficit levels – and in the first place, a unified business taxation scheme. To have renounced our monetary sovereignty without creating new spaces of economic sovereignty was a blunder, but history teaches us that political will can shift horizons very quickly.
Europe and France have considerable resources for succeeding in the world of today and tomorrow: one must be highly gifted to predict the future, but heavy investment in training, education (at all levels, including primary, secondary and tertiary), research and health, would certainly put us in the best position for the decades to come.

This interview has been conducted in December 2014
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Personal web page of Thomas Piketty :

World Top Incomes Database :