Piketty and the history of inequality

Thomas Piketty, the influential French economist, has just published A Brief History of Inequality, in Editorial Deusto. It is actually a condensed version of his previous text, Capital and Ideology, but with a greater emphasis on public policy recommendations. Piketty’s argument is that although, in the long term, there are reductions in inequality, mainly because the middle class becomes property owners, inequalities are still enormous, so more radical mechanisms are required to reduce them. The changes towards greater equality occur after phenomena such as wars, political movements and the development of progressive political ideas, that happened during the 20th century, until neoliberal ideas prevailed.

Piketty calls for the resumption of democratic socialist ideas, to which we owe the states with the greatest fiscal capacity, capable of financing the welfare state, which in fact managed to reverse the concentrations of income and capital. These ideas came in decline due to the paradigm shift in favor of the market economy and because they were confused with what was Soviet socialism. In addition, Piketty abounds in the fact that inequalities between countries are based on phenomena such as colonialism, slavery, the operation of financial markets from the metropolis and the way in which globalization has developed in recent decades. This opens the debate to issues such as compensations to colonized countries, or that the cost of policies against climate change falls fundamentally in countries that took advantage of other territories when their countries’ resources ran out. Piketty calls for new forms of international cooperation, such as the distribution of the income of multinationals, to recognize this reality and prevent the Chinese model of state capitalism from prevailing.

Piketty proposes an alternative that in the definition sums up all his proposals: democratic, participatory and federal socialism, ecological and with social miscegenation, based on progressive taxation, the distribution of the power of companies, postcolonial reparations and the fight against discrimination. , educational equality and the universal inheritance system, the drastic reduction of monetary inequalities and an electoral system free from the influences of money. The idea would be to take up the debates on egalitarian, or socialist alternatives, which arose at the end of the 18th century and which lost strength in the 90’s, but have been retaken as a result of the financial crisis of 2008. Specifically, it proposes, for example, a system , the universal inheritance, so that at age 25 each person receives the equivalent of 25% of the country’s average assets, in order to acquire a home or start a business. These policies would be financed by a strongly progressive tax system, with very high rates, for property and income, of millionaires and billionaires.

Piketty is not concerned about the current expansionary monetary policies, but warns that inflation will at some point be the limit. In other words, the solution to increase the State’s capacity for action in the long term lies in progressive taxation. He considers that, regarding public debt, the current balance is precarious, since at some point rates will rise, with significant costs for the indebted States. In addition, the lower rates have not served to reduce the debt of the countries of the global south. It says that zero or negative rates have affected the saving capacity of ordinary citizens and benefited those who have access to financial values. He warns that the new role to be given to central banks, such as improving the debt profile of countries, investing in green company bonds, or in infrastructure with high social impact, or even transferring money to citizens, may be useful and viable, but requires democratic control mechanisms. If now they are going to decide on the use of significant amounts of public resources, evaluations, expert opinions, public and parliamentary deliberations are required before designing and implementing these new monetary policies.

Twitter: @vidallerenas

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Guest column

Graduated in Economics from the Autonomous Technological Institute of Mexico (ITAM), he has a Master’s Degree in Public Policy and Management from the University of Essex, United Kingdom and a Ph.D. in Public Administration and Management from the University of York.


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