As the coronavirus pandemic ravages the globe and exposes dysfunction in Western capitalist democracies, intellectuals are intoning in near unison: “Government is back. The Reagan-Thatcher revolution is dead. Capitalism as we know it is passé.” And particularly exposed is the once preeminent United States. It is paying a high price for having become, as the novelist Martin Amis once wrote, “land of the profit-making casualty ward, home of the taxi-metered ambulance.” 

Yet trendy as it is to skewer the profit motive, capitalism is not lacking for saviors, who come in different guises, hawking particular cures. Some want to adjust incomes after the market’s verdict (redistributors); others want to influence market outcomes (predistributors). There are those who want to raise minimum wages and change antimonopoly laws, or to reform corporate governance and socialize medicine. And then there is the French economist Thomas Piketty, who wants to overhaul capitalism beyond the point of recognition by abolishing permanent private property altogether. 

Capital and Ideology is an expansive sequel to Piketty’s best-selling Capital in the Twenty-first Century. Any author who is willing to follow up an 800-page book with an equally dense and significantly longer one must either be extremely self-confident or possess extraordinary faith in the stamina of his readers. And then there is the sheer brazenness of the U-turn Piketty takes in the new book. The earlier book was premised on the idea that an iron law of capitalism, captured in the expression r > g—meaning that the returns on capital would exceed overall economic growth—has doomed societies to ever-greater degrees of inequality. Essentially, r captures the income made by capitalists, and g, that made by society as a whole; if the expression holds, inequality will rise in favor of the former group.

The new book reverses course, dustbinning destiny in favor of agency and choice. Societies, it argues, are not helpless victims of exogenous forces; they get the inequality they choose. Politics, not technology—which determines the return on capital—is the real culprit. The sequel never even refers to the immutable law of capitalism that was the core argument of its predecessor. Economists and theorists continue to debate whether r is greater than, less than, or equal to g. But Piketty couldn’t be bothered. He has moved on.

Still, Capital and Ideology is a magisterial history of economic development as seen through the prism of inequality. It is breathtaking in its scholarship and sweep (almost no corner of the globe is left unvisited) and incandescent in its insights, which emerge from the data that Piketty and his collaborators have spent decades collecting. 


Piketty raises a fundamental question: Why have all the revolutions and upheavals of history, which were intended to overthrow an unfair social order, ended up changing so little for those at the bottom of the pyramid? Inequality in France on the eve of World War I was much greater than it was before the French Revolution: in Paris, for example, the share of total private property of the top one percent was about ten percentage points greater in 1910 than in 1780. Whatever may have happened to liberté and fraternité, it is clear that égalité ended up serving more as a rousing call to arms than as a realized outcome. 

Piketty explains this puzzle through historical examples drawn from the aftermath of upheavals in Brazil, France, Haiti, India, the United Kingdom, and the United States. In all those cases, societies were keen to compensate owners of property—land, capital, and slaves—but never the peasants or the slaves themselves. In his discussion of reparations after the Haitian Revolution, Piketty quotes the nineteenth-century French poet Alphonse de Lamartine, an abolitionist, who wrote that it was absolutely necessary to grant “an indemnity to the colonists for their legally owned property in slaves, which is to be confiscated. . . . Only revolutions confiscate without compensation. Legislators do not act that way; they change, they transform, but they never ruin. They always respect acquired rights, no matter what their origin.” 

Why have history's revolutions ended up changing so little for those at the bottom?

The impulse Piketty describes stems from the sacralization of property. Those in power, even if they had gotten there by means of a revolutionary overthrow of the previous political order, feared that if property rights were seriously violated, the economic and social order would collapse. And so the contest between justice and property rights was never really a contest: around the mid-1800s, the British preferred to pay wealthy slaveholders in the Caribbean about five percent of the United Kingdom’s GDP to compensate for the abolition of slavery rather than direct that money to education and public health to improve the circumstances of the poor in the United Kingdom itself. 

Emmanuel Polanco

Capital and Ideology presents some striking new facts about economic history, too. For example, for most of its pre-1400 history, the Chinese state is generally understood to have been strong. But Piketty shows that in terms of fiscal capacity, successive dynasties (the Ming and the Qing, specifically) levied taxes that were a fraction of what their counterparts in western Europe were able to extract, which helps explain China’s vulnerability to the depredations of British imperialism beginning in the early 1800s. 


The most daring parts of the book relate to Piketty’s prescriptions, especially his proposal to abolish permanent private property. Piketty, along with his collaborators Emmanuel Saez and Gabriel Zucman, has blueprinted arguably the most imaginative and radical alternative to traditional capitalism. Every citizen, on reaching the age of 25, would get a capital endowment that was roughly 60 percent of the average wealth in society. This would be financed by progressive taxes on wealth, income, and inheritance. The young could start life with a sense of new possibilities, “such as purchasing a house or starting a business.” Capital would circulate because excessive accumulation would be taxed by the state both during a person’s life and at death via inheritance taxes. 

One might call Piketty’s concept “Patek Philippe custodialism,” after the luxury watch company’s famous catch phrase: “You never actually own a Patek Philippe. You merely look after it for the next generation.” That is Piketty’s goal for capital—with the crucial difference that the transfer of wealth would happen not within a family but between citizens and the state. 

Interestingly, Piketty’s aversion to private property comes with absolutely no wistfulness about the Soviet or the Chinese communist model. In fact, he attributes the rise of the Reagan-Thatcher revolution in part to the Soviet Union’s economic failure. And for all of China’s economic miracles, its undemocratic, nontransparent, repressive approach is not to his taste, either. 

Piketty joins a chorus of left-wing thinkers who decry “billionairism”—the most egregious manifestation of private property—as a social pathology, an immoral blight that should never be allowed to come into being. Their policy proposals, including the imposition of wealth taxes, are as much about eliminating that blight as about tempering capitalism. That might be why Piketty neglects what economists call “size-of-the-pie effects”: Wouldn’t the vast redistribution he advocates be so damaging to incentives, entrepreneurship, and capital accumulation that it would leave little pie left to redistribute? 

Piketty’s inattention to that problem comes across as deliberate and almost disdainful. One suspects that he wants to rectify an imbalance. He devotes more energy to critiquing the neoliberal purveyors of the Third Way—Presidents François Mitterrand and Emmanuel Macron in his own country; British Prime Minister Tony Blair and U.S. Presidents Bill Clinton and Barack Obama in the Anglo-American world—and their intellectual enablers. These leaders and thinkers, Piketty claims, were so enamored with markets and incentives that they pied-pipered the developed world into its current predicament. His epithet for Macron is revealing: “an inegalitarian internationalist.” 

Still, there is no question that Piketty’s proposals are impractical. Most societies would balk at the level and progressivity of the taxes—reaching up to 90 percent—that Piketty and his colleagues propose. On the other hand, Piketty’s main goal is to confront complacent centrism; he is outlining a vision and calling for experimentation in helping achieve it. And the U.S. presidential campaigns of Senator Bernie Sanders, Democrat of Vermont, and Senator Elizabeth Warren, Democrat of Massachusetts, serve as reminders that important elements of Piketty’s vision are not as far from political realization as his critics might claim.


One area in which Piketty parts ways with others on the contemporary left is in his thinking about the role that race and identity play in the politics of inequality. Less educated and less well-off white Americans were once an important part of the Democratic Party’s base in the United States. When trying to understand why so many of them now act against their own economic self-interest by voting for Republicans who do things that either don’t help them (cutting taxes for the rich) or actively hurt them (reducing the welfare state), many left-leaning thinkers point to racism as a driving force, arguing that polarization around identities, especially race, drives voting behavior. Piketty concedes that racism may well be a strong pull factor in explaining these voters’ rightward shift, but he argues that there was also a push factor: center-left parties betrayed them by doing little to arrest the problems that have afflicted them for nearly four decades now, such as wage stagnation. 

Race has always divided the United States, he notes, and accounting for this political shift requires explaining change—something that a constant factor cannot do. As he sees it, the change that occurred was in the fortunes of the white working class, whose lives have been buffeted by technological advances and globalization but who have received little help from their political leaders. Piketty implies that these people did not leave the Democratic Party; the party deserted them. “To summarize: the Democratic Party, like the parties of the electoral left in France, changed its priorities. Improving the lot of the disadvantaged ceased to be its main focus,” he writes. The Democratic Party has increasingly become a party serving what he calls “the Brahmin left”—the more highly educated, aspirant class. 

The rising fortunes of people outside the West are the result of some of the very factors that have led to soaring inequality in advanced countries.

He also notes that the flight of working-class voters from center-left parties is not solely an American phenomenon. It also occurred in western Europe, where ethnic identity is arguably less salient. “It would be a mistake,” he argues, “to reduce everything to the race factor, which cannot explain why we find an almost identical reversal of the educational cleavage on both sides of the Atlantic.” 

Piketty’s discussion of caste in India is instructive. His surprising finding is that since 1950, India has done somewhat better on caste inequality than either the United States or South Africa, even postapartheid, has on racial inequality. The ratio of lower-caste to upper-caste incomes is higher in India than the ratio of black people’s incomes to white people’s incomes in the two other countries, and India has posted stronger improvements over time, as well. 

That achievement elicits a positive assessment from Piketty of India’s attempt to redress caste inequality via affirmative action or “reservations”: a euphemism for strict, constitutionally enshrined quotas for certain castes in public-sector jobs, government, and educational institutions. At the country’s independence, such quotas were set at about 22.5 percent for “scheduled castes” (the so-called Untouchables) and “scheduled tribes” (indigenous communities). Over time, they have been extended to different social groups, such as “Other Backward Classes,” and they now reach as high as 60 percent in some sectors. Among Indians, especially those from upper castes, such reservations have become increasingly controversial as their reach has expanded. But Piketty has a nuanced assessment, hinting at the system’s possible inspiration for other countries seeking to reduce inequality: “Taking the full measure of the successes and limitations of the Indian experience (of reservations) will be useful in thinking about how one might do more to overcome long-standing social and status inequalities in India and around the world.” 


The more serious flaw is that despite its admirable attempt to discuss the world and not just the West, the book in one sense distorts history. A reader could come away from Piketty’s book thinking that the post-1980 period constitutes a dark age that witnessed the reversal of a decades-long trend toward economic equality. But for the average citizens of China, India, and dozens of other countries, this has been a golden age, when standards of living soared rapidly, reversing a 200-year history of stagnant growth, persistent deprivation, and poverty for the vast majority. Where Piketty laments, nearly half of humanity would rejoice. 

If Piketty had a more international, cosmopolitan perspective, he would have a more upbeat story to tell. Inequality may be increasing within countries, but it has sharply declined globally, as the economist Branko Milanovic has shown. By focusing on relative performance, it is easy to miss big improvements in absolute performance; emphasizing inequality within countries, especially rich ones, leads Piketty to a grimmer global picture. 

There is also a tricky normative issue. The rising fortunes of people outside the West are the result of some of the very factors that have led to the soaring inequality in advanced countries. Countries such as Singapore and South Korea, then later China and India, and more recently Bangladesh and Vietnam have advanced rapidly because open global markets have allowed them to export their way to prosperity. This puts liberal Western economists in a bind. If globalization sometimes takes a job from a white man without a college degree in Lille or Pittsburgh and gives it to his more educated counterpart in Bangalore or Hanoi, then whom should liberals stand for—or, rather, whom should they stand up for? Piketty does not confront such uncomfortable questions.

Capital and Ideology can be methodologically shaky, too. Although Piketty rejects the idea of historical inevitability, his arguments for societal agency and choice are weak. They mostly consist of glib assertions that things could have been otherwise, as if the mere possibility of counterfactual histories is evidence for agency. If the depressingly consistent historical pattern is one of rising inequality and a lack of serious redistribution, it is difficult to digest the claim that societies could have made different choices. If that were true, then why didn’t they? 

Despite these flaws, the book’s grand encapsulation of the history of inequality and its daring prescriptions make it a dazzling addition to the list of major works of economic history and development. And as economists take ever-narrower approaches to development—fretting to prove incontrovertibly that in one place, at one point in time, one policy intervention can work—one has to admire Piketty for defying the dominant trend. In the great tradition of the Annales school of history, he casts his discerning gaze on history’s sweep, not just to understand the world but also to transform it.

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  • ARVIND SUBRAMANIAN is Visiting Lecturer in Public Policy at Harvard University’s Kennedy School of Government. He previously served as Chief Economic Adviser to the Government of India.
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