There is only one economist who could begin his latest work with: “This book offers a comparative history of inequalities among social classes in human societies.” That is Thomas Piketty and we are at peak Piketty with such an opening.
He possesses the rarest of abilities to analyse staggering quantities of information and offer original insights into the structures that underpin our economies. Celebrity is not at the expense of scholarship. His works are testament to the belief that arguments are won through the weight of evidence and the power of reason.
In his latest book, the ambition is again impressive given that the title of this book is A Brief History of Equality. Piketty is an unlikely writer to combine breadth of ambition with brevity of explanation. His masterpiece, Capital in the Twenty First Century, is a huge work. The desire to more succinctly present his research is the motivation of this book.
The tone is positive: progress has happened, further progress is possible. Piketty asks the reader to keep faith, despite the severity of the challenges
“Let’s start at the heart of the matter. Human progress exists,” is the opening and crucial contention. In making this argument the author introduces themes that are central to his earlier works.
The tone is positive: progress has happened, further progress is possible. Piketty asks the reader to keep faith, despite the severity of the challenges.
He argues that “inequality is first of all a social, historical, and political construction”. It is a consequence of political choices. But this view does not lead to any weariness or pessimism. Instead, the conclusion is that “since the end of the eighteenth century there has been a long-term movement towards equality”.
The opening chapters present the evidence of progress. Life expectancy has risen from 32 years in 1820 to 73 years in 2000. The ownership of wealth broadened due to the impact of world wars and the development of states with the ability to tax and redistribute income.
A summary of how European economic development overtook China and Japan in the 18th century leads to an analysis of the impact of colonialism and slavery on economic growth. The abolition of slavery and the demise of empires further weakened the grip of global inequality.
‘The Great Distribution’
This precedes the “Great Distribution”, the era between 1914 and 1980, when inequality significantly decreased. The modern state developed differently to other moments of change.
Previous periods of government expansion were led by commercial or colonial priorities. The catalyst for this modern growth were the needs of lower- and middle-income groups. The National Health Service was founded in the United Kingdom. Similar developments occurred in America and Europe.
Two other developments had significant consequences. The first was the collapse in the value of private assets due to the impact of world wars. The annual value of private property was between six to eight years of national income between 1870 and 1914. This reduced to about two to three years of national income by the 1970s, before increasing again.
The second development was restructuring of public debt through the use of exceptional wealth levies.
Piketty makes the case for a new policy agenda. His conclusion is emphatic: “We have to deepen and generalise the institutions that made the movement towards equality, human progress, and prosperity possible over the course of the twentieth century, starting with the welfare state and progressive taxation.”
An increase in global trade and integration also played a critical role in reducing inequality. This receives little acknowledgement in this and previous books
Familiar propositions are advanced, including very high marginal tax rates, heavier inheritance taxes and the overhauling of economic international treaties. These are accompanied by policies to change access to education and increase the participation of women in senior corporate and political life.
National sovereignty is not an adequate catalyst for this change. Transnational assemblies are proposed that “would ideally be entrusted with global public goods and common policies of fiscal and environmental justice”.
If this volume offers familiar Piketty arguments, then the weaknesses are also familiar. An increase in global trade and integration also played a critical role in reducing inequality. This receives little acknowledgement in this and previous books.
Current levels of political integration, global and European, are excoriated. But the author gives no recognition to the immense development of the regulatory powers of the Commission of the European Union in areas from climate policy to the regulation of data.
If the benefits of current levels of integration are not even referenced, how can a giant leap in economic co-operation be made? Indeed, this vision is not welcoming to small and open economies that value competitiveness.
But, at a time when the concept of objective truth is under assault and when the nuance of argument can be drowned out by the shouting of slogans, there is something glorious about the scale of the work of Thomas Piketty. His arguments are vast in their detail, ever ambitious and always hopeful.
This elegant and (by his standards) short book will allow any reader to understand the glory.
Paschal Donohoe is the Minister for Finance and President of the Eurogroup.