Thomas Piketty is an academic who specialises in the study of economic inequality and has written a number of books on the subject, the most well-known of which is the 700-page tome Capital in the Twenty-First Century (2013), which we reviewed in 2014. The most recent is A Brief History of Equality which first came out in French in 2021. Based on historical records such as the archives of legacies, property transactions and tax returns, Piketty identifies a trend since the beginning of the 19th century towards less inequality in wealth ownership, income, and access to education, health care and better-paid jobs. Describing himself as a socialist but in the gradualist, reformist tradition, he believes this can continue and lead to ‘a systemic transformation of capitalism’.
On wealth ownership, he takes as a measure of inequality the proportion of wealth owned by the top one percent compared with that of the bottom 50 percent. The figures for all forms of property are:
‘The wealthiest 1 percent held about 45 percent of total property in France in 1810, and about 55 percent of the total in 1910 …. Then, in the course of the twentieth century, we observe a very strong deconcentration of fortunes: in the whole of France, the richest 1 percent’s share fell from 55 percent in 1914 to less than 20 percent at the beginning of the 1980s, before beginning a slow increase; in 2020, that share was nearly 25 percent’.
But ‘this did not benefit much the poorest 50 percent, whose share rose from 2 percent in 1910 to 6 percent in 2020’ and ‘the richest 1 percent’s share of total private property is currently two times smaller than it was a century ago, but it still remains on the order of five times larger than the share held by the poorest 50 percent’.
The beneficiaries have been the middle 40 percent between the top 10 percent and the bottom 50 percent who Piketty calls the ‘patrimonial middle class’. Their wealth he finds is ‘held mainly in housing’. In fact, the monetary value of housing represents about half of that of all privately-owned wealth. The figures for the ownership of all wealth are interesting but the relevant one for socialists is the one for the ownership of means of production. Piketty usefully defines means of production as ‘all the goods necessary to produce other goods and services’ (‘agricultural land and equipment, factories and machinery, offices and computers, shops and restaurants, salary advances and working capital’). He doesn’t produce figures for this but says that ownership of these is more concentrated than for all wealth. But there is a table which shows that:
‘In France in 2020 (as in all countries for which such data are available), small fortunes are composed principally of cash and bank deposits, middle-sized fortunes of real estate, and large fortunes of financial assets (especially stocks)’.
It cannot be denied that the middle 40 percent — the vast majority of whom are members of the working class properly defined — have benefited, but this doesn’t mean that this group is not dependent, like the rest of the working class in the bottom 50 percent, on having to sell their ability to work in order to buy what they need to live. If they lose their job, they can survive for longer before they become destitute, perhaps a year or so after selling their house. But it does mean that we socialists should be careful when we say the working class is ‘propertyless’. We don’t mean that they literally own nothing but that they don’t own means of production.
There has also been a reduction in inequality of access to education and health care. But this can’t be seen as anti-capitalist, as a better educated and more healthy workforce became necessary as production methods became more complex. As Piketty himself points out:
‘During the second Industrial Revolution [chemicals, electricity, the car industry, household goods], it became essential that an increasingly large part of the labour force be capable of mastering manufacturing processes that required technical and digital education, and the ability to understand detailed equipment manuals’.
Nor is the lessening of discrimination over job opportunities for women and minorities incompatible with capitalism. Capitalism could cope with the abolition of discrimination and even benefit from it by being able to draw on a wider pool of trainable and competent workers.
As a gradualist, Piketty would like to see what he calls ‘the march towards equality’ continue and completely ‘transform capitalism’. Besides steep taxes on wealth and inheritance, he envisages changing company law to allow for more employee participation in decision-making and for a proportion of profits to be set aside for spending to benefit workers. Neither of these will change the workings of capitalism as an economic system which imposes on those who make decisions about production that the priority be making a profit. Widening the circle of those who make such decisions won’t alter this; even worker cooperatives have to obey capitalism’s basic economic law of ‘no profit, no production’. And, of course, from time to time companies go bust and there are no profits to set aside.
He also proposes a scheme to give everyone at age 25 a minimum inheritance equal to 60 percent of average wealth per adult (which is France in 2020 would have been about 120,000 euros, or about £105,000; more today of course). The aim, he says, would be to ‘increase the negotiating power of everyone who owns almost nothing (that is, about half the population)’:
‘Recipients could reject certain job offers, buy an apartment, engage in a personal project, or create a small business. This freedom, which is certain to delight some, may well frighten employers and property owners’.
Which, apart from the cost, is precisely why it will never happen; it would undermine the wages system by putting workers in a stronger bargaining position with employers and enable them to extract a higher wage, meaning less profits. It is rather surprising that anyone should seriously imagine that the capitalist state could be made to give half the working class a lump sum of at least £105k. In any event, such a redistribution of wealth would not affect the unequal ownership of means of production.
In short, the trend since 1800 towards less inequality has not undermined the basis of capitalism. Even less has it been an ongoing slow, gradual transition towards socialism. Not that socialism is a society with a more equal distribution of wealth. Its basis is the common ownership of the means of production which will allow everyone access on equal terms to education, health care, work and what they need to live.
Adam Buick
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