THE BIGGEST INTELLECTUAL TOPIC OF CONVERSATION IN THE WORLD TODAY IS SOCIAL INEQUALITY, THANKS TO THOMAS PIKETTY’S BLOCKBUSTER, CAPITAL IN THE TWENTY-FIRST CENTURY.
The book claims to define the ‘central contradiction of capitalism’: that social inequality has an unrestrained propensity to increase whenever the rate of return on capital is greater than the rate of national income growth.
The work’s power stems from the research it draws on. Capital in the Twenty-First Century is a big book based on the biggest store of data on inequality known to humankind.
Piketty argues that the world is now on a trajectory that may well soon lead to the most extreme levels of inequality ever seen. Income inequality in the US is already ‘higher than in any other society at any time in the past’, and Australia is on the same path. And since wealth begets power, we should brace for patrimonial capitalism, a form of society in which, as Piketty puts it ‘the past devours the future’.
The book’s style is scholarly, but the tone is cheery and outlook optimistic, despite the epic horror story it narrates. We’re on the highway to social hell, but Piketty’s message is that there are any number of ways of dealing with it. He thinks a modest tax at the top should do the trick.
I cannot rehearse the full argument here. The work is beautifully nuanced, and there are many illuminating passages on related issues along the way. One of the book’s charms is the way aspects of the thesis are illustrated with representations of the consciousness of inequality in contemporaneous novels (and more recently, on television).
Politically, the work has brought an international left to life that includes almost everybody except the neo-liberals, leaving the latter seriously on the defensive for the first time in recent memory. This is not to say that every non-neo- lib loves the thing. The jury is out on the question of whether the ‘elasticity of substitution is greater than one’ (the theoretical issueattheheartofthethesis). And even among the work’s strongest supporters, there are disagreements about the best solutions, and alternative policy proposals are tumbling out by the day.
The policy movements are likely to play out over some time, but there’s no doubting that the conversation is underway everywhere, and for this alone, Thomas Piketty warrants a good deal of congratulation. If the first step toward change is to raise our collective consciousness of the issue, he’s ticked the box.
Yet no book becomes a blockbuster unless it resonates with the spirit of the times. Capital in the Twenty-First Century has been brought to the surface by a steadily rising tide of concern about its subject worldwide. The odds for change look good, unless the wealthy already have the democracy sown up. It will be a devilish result if Piketty’s optimism proves to be misplaced because his thesis proves to have already come true.
CHRISTOPHER SHEIL IS THE PRESIDENT OF THE EVATT FOUNDATION, WHICH FEATURES A FULL REVIEW OF CAPITAL IN THE TWENTY-FIRST CENTURY ON THE EVATT WEBSITE.