The winner of the 2019 Nobel Prize in Economics, Esther Duflo, argued that economists should adopt the mindset of plumbers. This suggests placing a higher value on the detail of policies and on how their adjustment can create change.
Thomas Piketty is an architect of cathedrals, not a plumber of pipes. He constructs huge structures of argument based on vast amounts of data, social history and cultural insight. His landmark works are Capital in the Twenty-First Century and Capital and Ideology. The first of these books was a publishing and academic phenomenon, selling more than two million copies.
Both Capitals are huge books, totalling 1,618 pages. A reader looking for a more accessible introduction to his thinking could be interested in Time for Socialism. This shorter book is a collection of articles from the French newspaper Le Monde.
The EU is not a social paradise, but neither is it a neoliberal utopia. Piketty's sweeping arguments for democratic renewal and change are undermined by such a suggestion. This is a pity, as he is such a convincing advocate for international co-operation
Piketty describes his political journey in the introductory essay. He recollects that, “Like many, I was more liberal than socialist in the 1990s, as proud as a peacock of my judicious observations.” This world view was changed by the excesses of global capitalism. The author is now committed to “a new form of socialism, participative and decentralised, federal and democratic, ecological, multiracial, and feminist”.
A positive conclusion in this essay might surprise some readers, as it concludes that inequalities have been sharply reduced over the long term. This is due to the welfare state and higher levels of general taxation. However, it is the pace of reduction that concerns the author: while the concentration of ownership of wealth and property has significantly reduced, it still stands at a high level.
Piketty argues for fundamental changes in tax regimes. These essays are replete with arguments for wealth taxes: higher corporate tax and inheritance taxes. The essays cover a wide variety of topics, from inequality and trends in productivity to political analysis of Europe, China and the US. The core theme is constant – that our economic model is broken.
This leads to fierce criticism of the European Union. Piketty argues: “It is not possible to define a political project and a model for development by relying simply on free trade, everyone competing with everyone else, and market discipline.”
Such a description of European integration does not resemble the reality. The dense and effective policy framework of the single market regulates trade. The state aid and competition policies of the European Commission constrain unbridled competition. Financial markets do play a powerful role, but their role is not unique to the EU.
The EU is not a social paradise, but neither is it a neoliberal utopia. Piketty’s sweeping arguments for democratic renewal and change are undermined by such a suggestion. This is a pity, as he is such a convincing advocate for international co-operation.
Steve Bannon observed that politics is downstream of culture. Piketty has shaped the culture of political economy, with a significant impact on European politics. He is a flag bearer of the Enlightenment tradition
In the essay Reconstructing Internationalism, Piketty argues for a model of positive global co-ordination, as “historical experience demonstrates that nationalism can only lead to exacerbating inegalitarian and climatic tensions”.
The author offers proposals for fundamental change of the EU. They are best summarised in What Would a Democratic Eurozone Assembly Look Like? This collection make clear that this assembly would be the engine for the harmonisation of tax rates and economic policy.
There is little reference to entrepreneurship or to the positive benefits of investment by larger companies. National economic models that value either would be quickly sacrificed on a variety of altars that this assembly would quickly build. Economies are static, and only to be taxed.
Piketty is clear on how dissent would be dealt with. Countries should just move on and leave others in their wake. The author argues for “launching a process of partial ratification, which would enable increased pressure to be put on the countries which might refuse any discussion”.
In this call for socialism, workers of Europe should unite, but particularly if you are a worker in a larger country. For the rest of us, his Europe could be a cold house.
Piketty, however, is an essential thinker. Steve Bannon (I never thought I would quote him) famously observed that politics is downstream of culture. Piketty has shaped the culture of political economy, with a significant impact on European politics. He is a flag bearer of the Enlightenment tradition, sensing that change is possible and basing his arguments on history and data.
This is an interesting collection, but a little slight to get a perspective on the grandeur of his vision. Start instead with the second chapter of Capital in the Twenty-First Century, in which the novels of Jane Austen are used to demonstrate stability in the value of money. Then move to the brief conclusion of that extraordinary book. This collection could be an accompaniment to, but not substitute for, a more effective and wonderful introduction.
Paschal Donohoe is Minister for Finance and president of the Eurogroup
