Thomas Piketty’s Vision for Modern Socialism

December 8, 2022

Summary: Economist Thomas Piketty alerted us to accelerating economic inequality over the last 40 years. Now he proposes the solution: a revived socialism that embraces public-spirited investment in health and education for all, while adopting modern equity and ecological values.

Time for Socialism
Yale University Press
2022
By Thomas Piketty

Born in 1971, I belong to a generation that did not have time to be tempted by communism, and which became adult when the absolute failure of sovietism was already obvious. I was more liberal than socialist in the 1990s. I could not stand those who obstinately refused to see that the market economy and private property were part of the solution.

But now, thirty years later, in 2020, hypercapitalism has gone much too far, and I am now convinced that we need to think about a new way of going beyond captalism, a new form of socialism, participative and decentralized, federal and democratic, ecological, multiracial, and feminist.

History will decide whether the word “socialism” is definitively dead and must be replaced. For my part, I think that it can be saved, and even that it remains the most appropriate term to describe the idea of an alternative economic system to capitalism. In any case, one cannot be just “against” capitalism or neoliberalism: one must also and above all be “for” something else, which requires precisely designating the ideal economic system that one wishes to set up, the just society that one has in mind, whatever name one finally decides to give it. …

Between 1930 and 1980, the (tax) rate applied on the highest incomes was on average 81% in the United States, and the rate applied to the highest inherited estates was 74%. Clearly, this did not destroy American capitalism, far from it. It made it more egalitarian and more productive, at a time when the voters in the United States had not forgotten that it was their level of educational advancement and their investment in training and skills that was the backbone of their prosperity, and not the religion of property and inequality.

Reagan, then Bush and Trump subsequently endeavored to destroy this heritage. They turned their backs on the egalitarian origins of the country, by counting on historical amnesia by fueling identity-based divisions. With the hindsight we have today, it is obvious that the outcome of this policy is disastrous. …

The challenge of global warming and the international awareness of the growing inequalities do act as leverage for change, but we are still far from that goal. The Organisation for Economic Co-operation and Development (OECD) projects for the taxation of the profits of multinationals only concerns a small fraction of the latter, and the scale of the contribution proposed is much more favorable to the rich countries than to the poor ones. “The Triumph of Injustice,” a book published in the United States by Emmanuel Saez and Gabriel Zucman, demonstrates that there are more ambitious solutions with the key element being financial transparency and the return to fiscal progressivity in order to finance health and education for all, and the ecological transition. The success of these ideas among the American Democrats (in particular, Warren and Sanders) does allow for optimism. …

Let it be said at once: The treatment received by Bernie Sanders in the leading media in the United States and in Europe is unjust and dangerous. Everywhere on the main networks and in the major daily papers we read that Sanders is an “extremist” and that only a “centrist”candidate like Biden could triumph over Trump. This biased and somewhat unscrupulous treatment is particularly regrettable when a closer examination of the facts actually suggests that only a full-scale reorientation of the type proposed by Sanders would eventually rid American democracy of the inegalitarian practices which undermine it and would deal with the electoral disaffection of the working classes.

To say emphatically, as Sanders does, that a public, universal health insurance would enable the American population to be cared for more efficiently and more cheaply than the present private and extremely unequal system is not an “extremist” statement. It is on the contrary a declaration perfectly well documented by many research studies and International comparisons. In these difficult times when everyone deplores the rise of “fake news,” it is right and proper for some candidates to rely on established facts and not resort to obscure language and complex tactics.

Similarly, Sanders is right when he proposes large-scale public investment in favor of education and public universities. Historically, the prosperity of the United States has relied in the twentieth century on the educational advance of the country over Europe and on a degree of equality in this field, and definitely not on the sacralization of inequality and the unlimited accumulation of fortunes which Reagan wished to impose as an alternative model in the 1980s. The failure of this Reagan-style rupture is evident today with the growth of national income per capita being halved and an unprecedented rise in inequality. Sanders simply proposed a return to the sources of the country’s model for development: a very wide diffusion of education. …

If the Democrats [DM: choose your own nonpartisan label] want to regain the socially disadvantaged vote, whatever its origin, then more needs to be done in terms of social justice and redistribution. The road ahead will be long and arduous. All the more reason to get started now.

Comment by: Don McCanne

Just think of what a great society we could have if we all joined together in support of a government designed to serve all of the people. In the excerpts from his book, Thomas Piketty describes accessible and affordable health care for all of us. He also describes large scale investment in education and public universities that have been shown to be the source of a prosperous society as opposed to policies that are merely designed to accumulate greater fortunes for the wealthy.

Yet at election time, what happens? Some of us seem to get hung up on… what shall we say? Rhetoric? One term that seems to turn off many voters is “socialism,” when that term basically means that we are joining together to make this a better place for all of us. Yet when it comes time to vote, roughly half of us vote the Reaganesque or Trumpist ticket. What is their rhetoric? Freedom? What does that mean? Freedom to have the wealthy take even more of our assets and leave much of society in a compromised state without high performance health care or education systems that would be designed to serve all of us well?

Piketty tells us that we don’t have to use the term “socialism” but that we have to acknowledge an alternative economic system to capitalism and not merely be against capitalism or neoliberalism. Shall we name our system “utopia”? It would probably not take long for “utopia” to come to define the luxurious retreats for the wealthy that lock out the rest of us.

The other day I was looking at a photograph of participants in a panel discussion in San Francisco several years ago. I was standing next to Milton Friedman and I couldn’t help but notice how true it was that he was not a giant in economics – his small physical stature (5’0”) reminded me of his small intellectual perspective, fixated on markets as the antithesis to, not ally of, government.

But then, whether or not we use the word “socialism,” Piketty reminds us that we do need to do more in terms of social justice and redistribution, and WE NEED TO GET STARTED NOW!