Calling inequality unnatural, Thomas Piketty shows a way forward – Asia Times
Book Review: Nature, Culture, and Inequality by Thomas Piketty, translated by Willard Wood ( Scribe )
Thomas Piketty’s Character, Society, and Inequality is a little guide that lists an issue of great value: Is the social injustice we observe every day normal?
Drawing on traditional economic data from all over the world, Piketty identifies a trend toward greater political and socioeconomic justice from the late 18th centuries. From 1914 to 1980, this was especially evident in Western nations. Since then, that craze has slowed significantly.
Piketty explains that injustice manifests in various ways in different cultures, as well as in various ways in the same societies throughout history. Disparity, he says, has “followed dramatically different trajectories – social, economic, cultural, civilizational, and religious”.
This shows us that people culture is more adjustable, and therefore more pliable, than some have assumed. ” It is society in the broadest feel”, he argues,” and more particularly political participation” that “provides an argument for the variety, education, and structure of the social inequalities we observe”.
There is no justification for us to maintain the 20th century episode of growth toward greater fairness in the present. In truth, without significantly addressing injustice, Piketty argues, we may wish to properly address the climate crisis.
Piketty is the co-director of the World Inequality Lab and a professor at the Paris School of Economics and the École des Hautes Études en Sciences Sociales ( EHESS). He is best known for his landmark 2013 book Capital in the Twenty-First Century, which became a bestseller and sparked a global conversation about capitalism, injustice, and tax policy.
Piketty argued using historical data and statistics that if the return on capital exceeds the economy’s growth rate, it follows that riches will become more and more focused. This, in turn, leads to disturbing rises in inequality, which are not only harsh but undermine democratic and normative values, trust in institutions and social cohesion.
Piketty’s new guide is designed to make his thought accessible to a wider audience. It is based on his book A Brief History of Equality ( 2021 ) and his lecture on inequality from the World Inequality Database in 2022.
Verbal in tone, and accompanied by attractive colour charts, the text moves rapidly through topics including income and wealth disparity, gender inequality, the rise of the welfare state, education spending, progressive taxation of income and inheritance, the collapse of imperial assets, public debt crises and the climate crisis.
Piketty presents what he believes to be the key to a more simply and lasting world by dissing some of his key insights about the evolution of income and wealth disparity throughout history.
Income and wealth disparity
When it comes to income ( who earns what ), the bottom 50 % of earners receive 5-6 % percent of total income in the most inegalitarian countries ( e. g. South Africa ). In more egalitarian countries ( e. g. those in northern Europe ), the bottom 50 % earn 20-25 % of total income.
The distribution of wealth ( who owns what ) is even less equal. In any nation on earth, the poorest 50 % do not own more than 5 % of the world’s total wealth.
Even though they have been significant, the main issues with reducing disparity in the 20th century were the distribution of income. ” When it comes to the transmission of wealth”, Piketty argues,” things have changed quite much”.
As he points out, the “great redistribution” of property in his native France, largely between 1914 and 1980, had” a significant impact on reducing disparity between the richest 10 % and the next 40 %”, via the emergence of a “property-owning middle class”. Despite this significant development,” the poorest 50 % have hardly ever benefited from the transfer of property in the last two decades.”
Piketty argues that, like the 20th century action towards greater justice, new styles of increasing injustice are not obvious. Nor are they explainable in terms of “personal talent, native endowment or natural temperament”.
The notion that “great disparities are somehow’natural’ because ability or entrepreneurialism is unevenly distributed across individuals ( or countries, or ethnic groups ) is frequently “used to argue that efforts to reduce inequality will either be ineffective or reduce growth and prosperity, or both,” as journalist Jonathan Portes once remarked.
This claim is not supported by the historical data, says Piketty. He refutes the notion that “very large inequalities are the inevitable outcome of a well-functioning market economy,” which predominates in much contemporary economic thought and policy discussion. The key to understanding reductions in inequality, he argues, is that they are directly related to a country’s political culture and institutions. They are primarily a result of the historical function of collective political mobilization to influence change.
What works: Sweden vs. the United States
Sweden in the 20th century, Piketty writes, is an example of the power of political organization, social struggle and” the ability to build new institutional outcomes”.
Until around 1920, Sweden, like other European countries, was “extremely inegalitarian”. Its political system was elitist. Only the richest 20 % of men could vote. Votes were distributed based on individual wealth: the more votes you could cast, the wealthier you were.
The Social Democratic Party and the trade unions then “put the state capacity of Sweden in the service of a different political project” through” collective mobilization.” Instead of “using the records that had made it possible to allocate the right to vote,” they instead used them to “impose a progressive tax, with the aim of funding access to education and healthcare.”
The Swedish example, according to Piketty, is instructive on a number of fronts, according to Piketty. Firstly, it shows that” a country is never inegalitarian or egalitarian by nature”. That “depends on the government’s power and goal.” Secondly, Sweden’s social democratic policies led to it becoming both one of the most equal societies in the world, as well as one of the richest.
The United States makes an interesting comparison. In recent history, the wealth of its middle class has been shrinking. Having at one point reached wealth distribution patterns similar to Europe’s, it is now headed in the direction of” Europe’s pre-World War I levels”.
Between 1932 and 1980, inequality decreased in the United States. The nation’s prosperity and rising income levels were present during that time, which” stifled neither economic growth nor innovation.” The totemic Reagan-era reduction of high tax rates in the 1980s failed to deliver on its promises to its backers. Economic growth in the United States in the period 1990-2020 was half what it was in 1950-1990. Inequality accelerated.
Addressing inequality
Despite how imperfect the process has been, the welfare state’s creation was the most crucial factor in addressing inequality in the 20th century. Progressive taxation was used to fund increased spending on healthcare, pensions, housing, infrastructure and education. According to Piketty, the roughly tenfold rise in public spending over the past century was a significant contributor to promoting individual freedom, reducing inequality, and raising productivity and living standards.
The question of what might represent “acceptable levels” of income disparity, according to Piketty, is” clearly a question that a democratic process and public deliberation should deicide”. However, he suggests a ratio of 1 to 3 or 1 to 10 between the richest and the poorest. These levels can accommodate diversity of aspirations, while maintaining the incentives “necessary for social and economic organization”. Nothing, economically or socially, justifies ratios of 1 to 50 or 1 to 100.
Low tax rates and astronomical corporate incomes were not a key component of the United States ‘ historical advantage over its competitors in terms of productivity, especially in the industrial sector. It was its lead in education. The “near-universal” access to secondary education the United States achieved in the 1950s was not realised in Germany, France and Japan until the 1980s and 1990s.
Since then, despite the significant expansion of access to tertiary education, with its acknowledged advantages, spending on education across Western countries has stagnated.
Inequality and the climate crisis
Returning to the “nature” theme at the conclusion of his book, Piketty argues that understanding inequality makes it easier for us to comprehend the problem of climate change and what we need to do in response. He succinctly summarizes his main point in an interview with Manuela Andreoni, a reporter for the New York Times:
If we don’t address our inequality challenge at the same time, there’s no way we can preserve… planetary habitability in the long run.
This is a result of the Global North’s comparatively high carbon emissions in comparison to those of the Global South. However, it is also a result of global carbon emission disparities, particularly the large carbon footprints of the wealthiest 10 %.
According to Piketty,” It is obvious that we’re going to have to change our production and consumption regime throughout the world.” This will need to be society-wide, but with particular focus on the rich and the middle class:
If you don’t demand a lot more effort from the people at the top, there is simply no way for the middle-class and lower-income groups to accept the kind of transformation that is needed.
According to Piketty, the climate crisis “may result in a greater demand for equality than we’ve recently seen.” In the 20th century, many countries achieved the expansion of access to health care and education – and,” to a lesser extent, transport, housing and energy” – by taking these parts of the economy out of market frameworks and viewing each of them as a public good.
” A similar shift”, he suggests,” could help the world curb climate change and stop biodiversity loss”. Piketty responds to Andreoni’s question about sceptical and cynical responses to a proposal like this:
that’s what we did for education and health. We recently decided that learning about this and that was important for all children at the ages of 6 and 10, 15, and then 18, respectively. And we didn’t let the market system decide this. And now, no one wants to return to the previous circumstance.
At Deakin University, Christopher Pollard is a sessional academic in sociology and philosophy.
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