Escaping Our Depressing Plutocracy with Thomas Piketty

Is the celebrity French economist reinventing the left with his controversial new book, or just hypnotizing us with fantasy while corruption gets worse than ever?

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Apr 24 2014, 5:00pm

Many Americans continue to delight in ridiculing Karl Marx, a German philosopher who died 131 years ago, because revolution failed to overwhelm the rapidly industrializing world as he so famously predicted. Leaving aside the fact that this mockery often reeks of spiking the football decades after the end of the Cold War, and for a while there, Marx's critics had a point. The emergence of the modern welfare state, along with the incredible destruction of two world wars and the disaster that was the Soviet Union, seemed by the close of the 20th century to herald the "End of History" and the permanence of a globalized free market economy.

These days, of course, Marx is looking pretty fucking spot on. Our century has been defined so far by exploding income inequality both in the US—where it's gotten way worse under Barack Obama than George W. Bush—and around the world. Welfare regimes are being cut back across Europe, leaving the EU's brand in tatters and its future murky at best.

Swooping in to the rescue is French economist Thomas Piketty, picking up where the left's heavily bearded intellectual Godfather left off. His new book, Capital in the Twenty-First Century, uses reams of income tax data to show that the planet's wealthy will continue to accrue more and more assets and pass vast riches on via inheritance, far outstripping the ability of economic growth to distribute income as it did during that unique, magical stretch between the late 1930s and mid 1970s that Americans tend to be super nostalgic about. During that time, the smell of the Great Depression's bread lines still lingered, which helped convince many to ditch their qualms about European socialism and embrace programs that might keep them alive, along with the labor unions that could agitate for their interests in Congress. Marxist clubs and parties popped up around the country, which would ultimately get a lot of people in serious trouble when the Red Scare took off in the 1950s. For a time, though, life was good—assuming you were white and male.

At a mid-April lecture in Manhattan with a coterie of fellow white male economists like Paul Krugman and Joseph Stiglitz, Piketty was greeted like the global celebrity he has become since the book was translated into English earlier this year (it's on the New York Times bestseller list and has been sold out on Amazon for days). Indeed, the excited stories about the French intellectual's meteoric rise to fame are coming out at a rapid pace, heralding the arrival of a new economic prophet.

But at the risk of being a buzzkill, I have to say Piketty's prescription for stopping the inexorable march toward oligarchy with a global wealth tax strikes me as rather naive (even he acknowledges it is a lofty, utopian goal). For one thing, if the rich are hoarding their money and we hope to drastically alter the economic landscape, a tax on wealth—even an annual confiscatory one like Piketty proposes—that pays for public goods like healthcare may not be enough. When millions are out of work or barely scraping by, why not cut to the chase and have the government give poor people money directly?

During a brief press availability following the lecture, I asked Piketty that very question: Why doesn't he support a guaranteed basic income, or income floor—an idea that none other than Richard Nixon tried to push through Congress in 1969?

"I talk about a social state for the 21st century and I talk about access to basic goods such as education, health, pension, social security, and so forth," Piketty told me. "I am more favorable to this approach—financing access to basic goods—than the income floor. Yes, the income floor approach was defended by Nixon, but also by Milton Friedman. The problem is that it can be good if it's a complement to access to basic goods, but very often the way it is sold is as a substitute for access to basic goods. And then I am a bit skeptical."

The Friedman reference is interesting, because to some experts on the Left, that's exactly the kind of figure Piketty is beginning to represent: a spokesman for the once excluded fringe who has the credentials and star power needed to elevate the cause into the mainstream.

"Piketty is the Milton Friedman of our moment," said Todd Gitlin, professor of journalism and sociology at Columbia University who served as president of Students for a Democratic Society in the 1960s. Which is to say Piketty offers something you just can't find much of in most economic discourse. The entire field seemed to lose credibility, in fact, after many of its leading figures failed to anticipate the financial crisis (some of them even profited).

"If you take an Econ-101 course, chances are you're going to end up in a class that is completely out of touch with reality," said Kshama Sawant, the Indian-American economist and Seattle City Councilwoman who made national headlines when she won election as an avowed Socialist last year. "It doesn't even matter which side of the political debate you're on, it really doesn't match up with what you see out there in the real world."

That the word "capital" appears in all caps on his book's title has invited many comparisons of Piketty to Marx, whose most important work may have been his epic tome Das Kapital. But Piketty makes no bones about the fact that he is no Marxist, and instead is interested in finding a way to make capitalism more sustainable. In that sense, he is looking for ideas that can pass muster not just in continents and countries with a history of flirtation with socialist revolution like his own, but even strongly individualistic cultures where "freedom" reigns, such as the relatively fat and disengaged one that is still obsessed with race across the Atlantic.

The US conservative movement has thrived for decades by stoking resentment of the poor and brown, who are supposedly chilling around the house on your dime watching Richard Pryor (or maybe these days it's Key & Peele). These are the so-called "welfare queens" Ronald Reagan loved to talk about on the campaign trail in southern cities with a history of racial terrorism, and while the right's leaders aren't quite that shameless anymore, they continue to dominate the rhetorical wars.

"It's much easier for people on the Left to want to take money from the rich than to give it to the poor and working class," said Michael Kazin, a social-movement historian at Georgetown University and co-editor of Dissent magazine. "Democrats are spending more time attacking the Kochs than they are talking about how we need to restore unions and institute a $16 minimum wage."

But while cartoonish plutocratic villains like the Republican Party's 2012 nominee Mitt Romney are fun to laugh at (and the idea of taxing their wealth year after year sounds awesome), what remains unknown is how to propel change through a rigged system that—breaking news—works primarily to serve the rich. I don't think it's a coincidence that Piketty's book is being received so warmly a few weeks after the US Supreme Court handed down yet another one of those depressing opinions that will make it easier for the rich to dominate our political system. Many on the Left, it seems, would prefer to stop worrying about what the world is like and go back to thinking about how it should be.

The reality is just too unpleasant to bear. Self-proclaimed progressive saviors like Barack Obama sold themselves as agents of change but quickly became creatures of the establishment. More broadly, the Democratic Party's future—at least in the short term—is really just a blast from the past in the form of Hillary Rodham Clinton, an unabashed neoliberal whose husband hangs out with shady Eastern European business tycoons while she rakes in $250,000 per paid speaking engagement courtesy of banks like Goldman Sachs. (That whole Elizabeth Warren thing doesn't seem to be panning out, at least not yet.)

So to some campaign finance reformers, the Piketty boomlet is kind of irksome in the sense that he's providing an outlet for escape, even avoidance.

"He's returning us to a world in which the political problems have hypothetically been solved, and now comes the question of what policies are needed," said Gitlin, "which for a rationalist is a more joyous prospect than imagining how you get a grip on the plutocratic money-politics nexus, how you rouse a cynical and rearguard people."

None of this is to deny Piketty's incredible contribution to the field of economics. His valuable provision of a model and the hard data needed to show that capitalism inevitably breeds inequality ought to be celebrated. But if we're serious about figuring out a way to stop the past from devouring the future—a formulation Piketty uses to describe old wealth begetting future inequality—we need to get a handle on our corrupt political culture. The problem is an urgent one that cannot be delayed until the citizens of Earth (or Europe, as Piketty concedes is more realistic) join hands in favor of taxing wealth.

"The Occupy movement, politically speaking, was far more significant than Thomas Piketty's book," Sawant, the Seattle Socialist councilwoman, told me. "What we need is a fundamental shift away from capitalism. And for all the people who are skeptical about that or find that insurmountable, let's not forget, we have another ticking clock that is climate change. Capitalism has shown itself to be completely incapable of solving that problem."

To his credit, Piketty did devote a small subsection of his book's final chapter to climate change. But man, getting those politically hyperactive oil barons to part ways with $10 trillion in wealth in a system where money counts as speech is going to be a slog—even with the Frenchman's book in hand.

Follow Matt Taylor on Twitter.

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