In his famous essay The Hedgehog and the Fox , the British philosopher, Isiah Berlin, observed that unlike foxes in Greek lore which know many things, the ‘hedgehogs’ know only ‘one big thing’, since they ‘relate everything to a single central vision, one system, less or more coherent or articulate, in terms of which they understand, think and feel...’
The French economist, Thomas Piketty, is clearly the hedgehog of Berlin’s essay, having made the study of inequality the centrality of his professional life. In so doing, he has locked onto the flavour of the decade worldwide and for good reason. It has been identified as the principal economic issue of our time.
Inequality today stands at unprecedented levels. A 2012 survey by The Economist noted that ‘the numbers of the ultra-wealthy have soared around the globe’, and that the world is witnessing ‘a dramatic concentration of incomes over the past 30 years, on a scale that matches, or even exceeds, the first Gilded Age with ‘the share of national income going to the richest 1 per cent of Americans,’ doubling ‘ since 1980, from 10 per cent to 20 per cent.’
Gabriel Zucman from the University of California, according to Bloomberg Businessweek , , has computed that at least $7.6 trillion has been stashed away by the world’s richest in offshore accounts. That is the kind of transformational money — more that what America has expended in all its wars since 1950 — that could have created a better and fairer world. It is the injustice of such inequality and its debilitating impact on the less fortunate in society that engages Piketty. His 2013-14 best-seller Capital in the 21st Century , which focussed on inequality, now has a weightier and longer sequel in Capital and Ideology . It is dauntingly massive, comprising 17 chapters, nearly 1,100 pages and is chock-full with graphs and tables. Is this overkill? Hardly, for not even such a voluminous study is enough to cover so vast a topic.
Piketty’s book is in parts a compelling read. It melds history with economics and literature, even pulling in Jane Austen and Balzac, to better illustrate the social and economic inequalities of a time and an age. Piketty classifies his book as ‘the history and evolution of inequality regimes.’ Through it he seeks to establish that ‘Inequality is neither economic nor technological; it is ideological and political’, with rich and powerful minorities invariably laying the rules of coexistence for everyone to follow. He covers a lot of ground.
In the four parts the book is partitioned, Piketty gives us a detailed account of the evolution of inequality through history, from slave and colonial societies to ternary systems (pre-French Revolution social hierarchy) in which clerical and religious classes combined with nobles and warriors to constitute powerful special interest groups everywhere.
The shift from ternary to ownership societies — Karl Polanyi’s Great Transformation — saw new elites owning much of a country’s wealth and property, which even the French Revolution standing for liberty equality and fraternity, could neither abolish nor circumscribe. Piketty’s contention that historically the rules of engagement in society have always been loaded against the small man is spot on. It is common knowledge that it is the hard-working grossly under-compensated masses who suffer the consequences of inequalities of wealth.
Peaceful transition possible
However, to Piketty this condition is not so hopeless as to necessitate a Marxian revolution. Peaceful transitions are possible as in the case of Sweden which went from being one of the most unequal regimes in Europe in the early 20th century to emerge as one of the most egalitarian later. Other European nations too achieved similar transformations, not the least aided by huge transfers of wealth from their colonies as in the case of England, France as well as Belgium, the Netherlands and Japan.
Piketty’s preferred means of reducing inequality is through taxing the rich heavily. The US is a case in point. It cut its robber barons to size in early 20th century, boosted public spending on education and laid the foundations of a great state that continues to dominate the world. More recently, between 1950 and 1980, the rich were again taxed heavily yet it was also a period of high growth for America. In Capital and Ideology , Piketty attempts to recast himself as the global authority on inequality, up from being merely a western-centric one. He does not wholly succeed in this. He gives us a passable but never profound account of the depredations Western nations wrought on India, China, and other parts of the world they colonised and pillaged. Piketty comes close to, but stops short of, demanding that France and England amongst others, pay up for having devastated and traumatised whole continents.
In his book, Piketty brings out something not commonly known, that there was nothing altruistic about the abolition of slavery considering how generously western slave owners were compensated for giving up their slaves. Piketty’s shocking account of how France forced Haiti to compensate it financially over decades for the freedom it achieved through ‘reparations,’ right up to 1950 constitute some of the most engaging portions of Capital and Ideology.
Piketty dwells on India at length in his book, sadly superficially. His take on caste and inequality (“blame it all on the British”) borders on tripe. On the positive side, unlike his other western colleagues, Piketty generously acknowledges that there is much for the European Union to learn on state building from India’s integration experience.
Piketty is also clearly impressed by how India has sought to mitigate inequalities by bringing to the fore its historically disadvantaged communities through affirmative action programmes which were the biggest in scale and intent in human history. Unlike most of his Western counterparts, India’s political process impresses Piketty. His admiration for the country’s democracy — especially universal adult franchise — is not the least bit condescending.
While the book has been gushingly received in the West, some well-known economists have not missed its serious shortcomings. Raghuram Rajan observed in his Financial Times review that Piketty ‘while calling for greater democratic participation actually pushes for grand elite-devised centralised schemes that suggest a tin ear to the protest movements that have roiled the world.’
Most of those who would have read his last chapter ‘Elements for a Participatory Socialism for the Twenty-First Century’ will agree. It is not enough for Piketty to say, “Tax the rich to the bone and pare down inheritances.” He needs to come up with something practical to make that work.
Paul Krugman, one of Piketty’s admirers, is sadly disappointed by Capital and Ideology . Reviewing the book in The New York Times , he wryly observes: “There are interesting ideas and analyses scattered through the book, but they get lost in the sheer volume of dubiously related material. In the end, I’m not even sure what the book’s message is.”
Capital and Ideology is indeed a bit of a waffle. It lacks the succinct brilliance of similar works by the likes of John Kenneth Galbraith and Amartya Sen. With the kind of data he has amassed one would have expected Piketty to have done a lot better. Disappointingly he does not.
The reviewer, a former civil servant and visiting fellow at NIAS, CEU and CCS-IISc, teaches at IISc Bengaluru.