Capital and Ideology

Rough Summary

At over 1000 pages, this is very far from a light read. Probably the funniest comment in the entire book is in the introduction (page 47!):

“Hurried readers might be tempted to turn directly to the final chapter and conclusion. Although I cannot stop them, I warn that they may find it difficult to follow without at least glancing at Parts One through Four …”

Having now completed the book, I probably agree that maybe all the details are useful, but I don’t agree that they are necessary. If you happen to have this book at hand, then certainly I think there’s value in skipping to the end and reading those few chapters.

That said, I certainly got a lot out of reading the entire thing! While it’s obviously hard to compress this entire book into a few thoughts, here’s what I got:

• There’s been a strong history of respecting property rights to the exclusion of all else. In part this is because of fear about what will happen if we stop doing that,
• There was a period of progressive taxes for a while and life was good. Now, they are mostly gone and life is certainly more unequal,
• If you have a flat tax, almost certainly it’s probably regressive in practice,
• We should have more progressive taxes,
• There should be a yearly progressive tax on wealth,
• If we implement these taxes we can:
  • Fund a large social state,
  • Fund a universal income,
  • Fund a large capital endowment for every person when they turn, say, 25.
• In order to support these we should also have changes to our democracies,
• All of these needs to be open and up for public debate,
• “Capitalism” as it stands isn’t the best we have and the only way it could’ve turned out.

Amusingly, after reading for so long, I was a little surprised at the lack of detail on the latter part re: democratic structure and also the practicalities of implementing these new social measures. I think his intention is to leave that up for specific debate and elaboration.

Overall, I really enjoyed this book and can’t wait to see what Piketty, and the field as a whole, comes up with next!

Specific Notes

Introduction

• Page 2 - Definition of an inequality regime:

  A set of discourses and institutional arrangements intended to justify and structure the economic, social, and political inequalities of a given society.

• Page 25 - Graph showing how inequality has changed over the period 1980-2018. Result: The top 1 percent of income earners have captured more than double what the bottom 50 percent captured. I.e. the rich got significantly richer. This imbalance is repeated consistently throughout the book.

• Page 27 - Observation that if we improve curtail the top, things get significantly better for the bottom.

• Page 35 - Impressive graph showing that, in the US, the relationship between university access and parental income is a straight line: The more your parents earn, the more likely you’ll go to higher education. I did not guess this would be so precise.

Part One. Inequality Regimes in History
Ternary Societies: Trifunctional Inequality

• Page 60

  Political leadership always requires some level of moral and intellectual leadership, which depends in turn on a credible theory of the public good or general interest.

  I found this comment particularly interesting/inspiring, because it suggests among other ideas that it’s not necessary to get into politics in order to influence politics; i.e. you can just do as Piketty does and present well-researched and coherent arguments and then push for their adoption.

The Invention of Ownership Societies

• Page 90 and 91

  … one can estimate that the Church held 30 percent or more of all property in Spain in 1750.

  …

  For the sake of comparison, it may be useful to note that nonprofit organizations today own a much smaller share of all property: 1 percent in France, 3 percent in Japan, …

  Wow!

• Page 104 - The origins of “Terra nullius”:

  … This approach was often summed up by the famous adage “nulle terre sans seigneur,” no land without a lord.

• Page 118 - Thomas Paine, in Agrarian Justice, proposed a 10 percent tax on inheritances to fund a universal income, in 1795.

• Page 120 - A recurring observation in the book: history shouldn’t be read deterministically; many different outcomes are possible.

• Page 123 - The claim that we shifted away from idolising religion to idolising property.

Ownership Societies: The Case of France

• Page 133 - Ownership inequality in France

  … almost no one in Paris owned an individual apartment before World War 1. In other words, one normally owned the entire building (or several buildings), or else owned nothing and paid rent to a landlord.

Ownership Societies: European Trajectories

• Page 183 - Pandora’s property box

  In the Irish land debate we hear the same argument …: namely, that any attempt to question the legitimacy of existing property rights threatened to open Pandora’s box; no one could say where the ensuing crisis would end of whether society would emerge unscathed.

  This is another recurring theme: fear of rethinking property ownership has lead to some objectively terrible outcomes.

• Page 185 - Observation that the social democrats in Sweden were in power essentially from 1932 to 2006, and thus able to developed a strong social state.

Part Two: Slave and Colonial Societies
Slave Societies: Extreme Inequality

• Page 208 (and friends) - Discussion of how the British government reimbursed slave owners when slavery was abolished, due in part to thinking around Pandora’s property box.

  If the British government had decided in 2018 to spend a similar proportion of national income, it would have to disburse 120 billion euros, or an average of 30 million euros for each of 4,000 slave owners.

• Page 221 - The mind-boggling insanity of asking the slaves themselves to pay for their liberation by refunding their owners to due loss of property because, after all, weren’t they the ones to gain?

  Alexandre Moreau de Jonnès … proposed in 1842 that slaves should reimburse the entire amount … by performing “special work projects” … without pay for as long as necessary.

• Page 226 - Discussion of the relationship between France and Haiti and how France, to this day, doesn’t agree it owes any financial debt (after enforcing incredibly harsh extractions justified by the loss of income from abolition of slavery.)

• Page 248 - Observation that in Brazil in 1891 they decided to ban the illiterate from voting, which in the 1950s excluded more than 50 percent of the population.

Colonial Societies: Diversity and Domination

• Page 272 - Observation that colonized populations paid taxes to finance the lives of the colonizers.

Ternary Societies and Colonialism: The Case of India

• Page 315

  One finds in all civilizations the idea that strict assignment of social positions and political functions can serve as a check on hubris and ego; this is often used as a defence of hereditary hierarchies, especially in monarchic and dynastic systems.

• Page 342 - Comment that measurement of the caste systems by the British enforced more social disharmony by making these differences salient.

• Page 349 - Discussion of affirmative action in India w.r.t. the caste system and reservation of spots in government and education; implemented by the federal government.

Ternary Societies and Colonialism: Eurasian Trajectories

• Page 369 - Characterising state development in terms of taxes collected; 1-2 percent of national income, to 6-8 percent in 1500 to 1800, in 1910 to 1980 8-10 percent to 30-50 percent.

• Page 376 - Comment that China gave Hong Kong to Britain as a form of financial tribute coming about because Britain saw China as ignoring some property rights and started a war.

Part Three. The Great Transformation of the Twentieth Century
Social-Democratic Societies: Incomplete Equality

• Page 492 - Graph showing global divergence of top and bottom incomes over 1980-2015. The bottom 50 percent is going down or stable, the top 10 percent is going up. At the start of the period they were close; now they are quite separated.

• Page 494 - First proposal of his grand plan: rethink ownership. There is some discussion also on page 502 about what it means to own something; i.e. you can control it, but here he discusses other options of co-ownership, social ownership and temporary ownership; i.e. ownership that is redistributive.

• Page 511 - Discussion of how share ownership of companies should fit in. Does one person one vote make sense, or the more standard one dollar one vote?

• Page 513 - Linking the failure of useful thinking about social states with the failure of communism globally.

• Page 513 - Claim that we haven’t yet had a successful “second” educational revolution in terms of free and equal access to tertiary education, when compared to primary and secondary education. Piketty believes education lies at the heart of improving inequality regimes.

• Page 524 and friends - Another graph showing the extreme divergence of the incomes of the top 1 percent compared to the bottom 50 percent.

• Page 533 - Top tax rates going down and and executive salaries going up.

• Page 539 - Secretive donations to universities causing inequality.

• Page 553 - Note that in the 1980s when trade agreements allowed for more globalisation, people were unprepared. It’s interesting to see these kinds of comments, because he’s clearly trying to demonstrate the value of works like this book; i.e. build up a specific agenda backed by research so that it can be followed when the time is right.

• Page 559 - Elaboration of progressive tax schemes; on income, on inheritance, on wealth.

• Page 561 - Push for an annual wealth tax.

• Page 569 - Calculation demonstrating that certain property taxes that are flat end up being regressive insofar as they don’t consider if people owe money on the property.

Communist and Postcommunist Societies

• Page 591 - Bringing it back again to Pandora’s property box and showing how that came up in enforcement of laws in Soviet communism; i.e. locking up small-time traders.

• Page 595 and friends - Comments on private ownership and how it relates to individual preferences; i.e. it’s not a “preference” to attend a better university? It’s certainly an acceptable preference to wear difference clothes.

• Page 611 - A little bit of discussion of land ownership in China, specifically when moving between the country and the city (the government doesn’t allow arbitrary ownership).

• Page 642 - Comment about the EU and the expectation that simply having a market will lead to equality (it doesn’t).

Hypercapitalism: Between Modernity and Archaism

• Page 662 - Suggestion that we stop tracking GDP and track national income instead (which he discussed in Capitalism in the 21st Century book).

• Page 665 - Discussion of private companies profiting from public investment (i.e. PhDs, etc) in a similar vein to Mazzucato.

• Page 666 and friends - Discussion of carbon taxes and progressive carbon tax options.

• Page 674 and friends - Criticisms of the EUs financial makeup; i.e. it can set prices of things, but can’t measure anything (i.e. there’s no EU-level tax), and the need for a large register (you may recall this being some of the main advice of his prior book; i.e. just have a small tax so we can track things.)

• Page 687 - Hyperconcentration of wealth graphs (top 10 percent compared to the lower groups). In the US now and Europe in 1913 the top 10 percent totally dominates. In Europe in 2018 the top 10 percent is still above, but it’s not as dramatic.

• Page 704 and friends - Discussion of the EUs inability to make financial decisions due unanimous vote requirement and hence veto power.

Part Four: Rethinking the Dimensions of Political Conflict
Borders and Property: The Construction of Equality

• Page 722 - The beginning of a great insight of “social voting cleavages” across different social axes such as education, income and wealth. Highlighting the shift in voting patterns of the highly educated from “the right” in the 1955 to the left starting around the 1980s.

• Page 744 - More of this:

  We come now to what is surely the most striking evolution in the long run; namely, the transformation of the party of workers into the party of the educated.

• Page 753 - Observation that the less advantaged groups (i.e. less educated or earning less income, etc) are feeling left behind the The Left. For me, in Australia, this feels like it’s changing but probably definitely true at some point; it certainly has felt like there is a big push for the left for a while to focus on richer people and their economic benefits. Or at least, I’ve noticed the less advantaged people not voting for the left-ish parties.

• Page 759 - Observation of the fact that better schooling is provided to students from a more privileged background, thereby strengthening inequality.

• Page 794 - Table demonstrating the (very surprising to me) total non-correlation between the answers to the questions:

  • “There are too many immigrants in France?”, and
  • “To establish social justice, one must take from rich and give to the poor”.

  and how the answers break down across criteria such as having a degree, having a large income, and home ownership.

• Page 801 - Tax competition in the EU and it’s relationship to inequality.

Brahmin Left: New Euro-American Cleavages

• Page 821 and friends - Talking about race and voting, and the shocking fact that, in the US:

  As for whites, since 1968 a majority of white voters have voted Republican: if only whites had voted, not a single Democratic president would have been elected in the last 50 years.

• Page 834 - Just a reminder that in the US the top federal income tax rate changed to 28 percent in 1986, down from an average of 81 percent. (!!)

• Page 859 - Social cleavage in the Brexit vote: Richer people (in income, wealth, or education) voted REMAIN.

Elements for a Participatory Socialism for the Twenty-First Century

• Page 895 - Looking at EU governance and how it isn’t democratic.

• Page 898 and friends - Discussion of the T-Dem proposal - a different structure sitting next to the EU that allows for representative government and taxation.

• Page 913 - Proposal to establish an European Parliamentary Union (EPU) to govern the EU.

• Page 927 - Argument that local action is good and necessary, but needs to be supported be federal/trans-national governance and policy (and, probably very importantly, funds).

• Page 968 - Again a comment that wealth inequalities because of different choices is okay, but must not be assumed to be the total explanation of equality.

• Page 971 and friends - Reminder that the ideas he’s about to present are not the endpoint in thinking; but to serve as an opening point for discussion.

• Page 973 - Argument for co-management in firms (equal ownership between shareholders, and employees (irrespective of if they are a shareholder or not). He’s mentioned previously that this has been done to some success in Germany and some other Nordic countries.

• Page 982 and friends - Big proposal of progressive tax rates which fund the social transformation of universal income, universal wealth endowment (a very large one, in my opinion!) and other aspects of the social state. Provided in terms of multiples of average incomes and wealth. Top tax rate is 90 percent for people with wealth or incoming 10,000 greater than the average.

  He also discussed the fact that more money to younger people could have interesting impacts on the makeup of who controls power/money presently.

• Page 986 - Observation about property taxes not being progressive. In this section I also started to realise that anything that isn’t progressive is probably regressive. For example, having educational content be the same for each student; this impacts those with learning difficulties negatively. So my thinking is that the answer is that everything needs to be progressive (or otherwise tailored to individual experience).

• Page 991 - Call to establish a transparent financial register internationally.

• Page 1003 - Call to end elitist education investment (i.e. more money/better education for rich students) for a more egalitarian approach.

• Page 1011 - Interesting comment that perhaps people that leave school early could still get access to some of the money that is spent on people that don’t leave early, but via other means. This is neat thinking.

• Page 1016 - Comment about Universities in the US growing apart due to access to more money. This reminds me of what happens in sport, at least in Football in Australia, where clubs have “salary caps” that limit how much they can spend on players. It prevents some clubs from just becoming rich and therefore always winning.

• Page 1022 - Call to a global movement towards this social state by forming “codevelopment” treaties with nearby countries. Relatedly he discusses how markets allow for movements of goods and services, but not people. So, why not allow people as well? I.e. full abandonment of borders, but still allow for local development and control. Very cool.