A reader of Piketty is obsessed by inequality suggested that, although he conceded that my observations based on the Introduction were not without merit, at least I should read part IV to appreciate the ideas of Piketty for a better society. Unfortunately this doesn’t alter my critique one bit. I ended my critique with
Piketty misses the point that (for Marx) foremost, capital is power, so a large amount of capital stands for great might. Power is, by its nature unevenly distributed. This is a necessary condition for any kind of large scale division of labor, and in a worldwide capitalist division of labor power has to be concentrated in some way. In present-day capitalism power is organized around the goal of ever enlarging itself, ever having to grow and concentrate. That is the problem of Capital that should be addressed. The main part of the gigantic income of the rich is profit, supposed to be reinvested to realize the growth of capital and not personal income for consumption. In any case, Piketty’s constant moral excitement about inequality is not a good starting point for a serious analysis of the world order.
And started is with
In “Capital and Ideology” (2020), Piketty continues to see inequality as the evil to be fought. While sometimes it’s about extreme or increasing inequality, what degree of inequality is acceptable isn’t clear. The picture emerges that the only acceptable world for Piketty is an equal world, in which everyone participates and lives roughly in the same material circumstances.
After reading most of his suggestions in part IV, this doesn’t change my criticism. Still he generally treats “wealth” and “capital” as about the same thing: a quantity of property, measured in currency. This hides the most important property of capital, being the ability to control people by hiring (or bribing) them. In other words, the amount of capital equals an amount of power, or, in newspeak, control. The nominal owners of capital are not always the ones that have this control. In the case of multinational and other big capital, management has this control. Distributing ownership of big capital in small portions to the many —as Piketty suggests — makes management more powerful. The split between ownership and real control, when the owner is not the entrepreneur already has the effect that both are even more inclined to maximize profits. Insignificantly small stockholders (“capital endowment”, p 983) are even more restricted to rentseeking. Pension funds and life insurance firms for instance, who control a substantial amount of small investments for their clients, don’t have much choice; they have to go for the profit. When wealth is nominally distributed, this won’t change the modus operandi of big capital. It will probably lead to the appropriation of an even bigger part of profit by the management. As we can’t do without large worldwide operating organizations, thus with the concentration of power in a few hands, we have to come up with better ideas for democratic control of this power.
On p 968 Piketty sets his target for equality:
A just society organizes socioeconomic relations, property rights, and distribution of income and wealth in such a way as to allow its least advantaged members to enjoy the highest possible life conditions. A just society in no way requires absolute uniformity or equality. To the extent that income and inequalities are the result of different aspirations and distinct life choices permit improvement of the standard of living and expansion of the opportunities available to the disadvantaged, they may be considered just. But this has to be demonstrated, not assumed, and this argument cannot be invoked to justify any degree of inequality whatsoever, as it too often is.
This goal is moral and ideological. One is reminded of Marx’ From each according to their ability, to each according to their needs. It completely lacks foundation that such a goal is attainable. Many social-democratic reforms have shown that opportunities of the “disadvantaged” can’t be expanded. It results in a lowering of standards that is detrimental to society as a whole and more dependency on redistribution of income by the state. The best one can hope for is that anyone with enough talent can rise to an adequate position. More general “life conditions” in the material (income and wealth) sense is no measure for contentment or happiness. I guess the garbage collector seeing his favorite team win on TV in the pub could be happier, even on average, then some tycoon in his bath with his trophy wife and golden faucets. Here, the best one can wish for is that every citizen gets an adequate minimum.
The goal of maximized equality becomes even more problematic because Piketty wants to apply this to the whole world. Even within one state it isn’t a real possibility. The minimal cultural and ideological differences within Europe already pose enormous problems for unifying into a proper federation. On a world-scale these differences are prohibitive. A more uniform ideology and thus a unified world-culture doesn’t seem such a good idea. Probably only attainable by a few worldwars.
The idea of maximized equality is seemingly in harmony with the goals of capitalism, which wants standardized individuals that can be molded as needed. However, for capital this doesn’t mean the lifting of the lower classes, but degrading the (white) middle classes. Because Piketty doesn’t analyze the power relations within capital and between capital, the people and the state, his ideas are totally unrealistic and pose no danger to capital. This way his plea for maximized equality serves capital in the manner the church promises justice on judgement day.
For good measure I have looked at some other parts, especially what he has to say about the US and China, the two powers in struggle for world domination. He has gathered interesting quantitative material supporting what is already observed by other critical observers. However, he lacks any analyses or explanation for what he shows. For instance why the higher educated in the US are more and more supporting the democrats. For this one should read Christopher Lash’ The Revolt of the Elites (1992).