Capital and Ideology
By Thomas Piketty
Translated by Arthur Goldhammer
The Belknap Press of Harvard University Press, 2020

In his improbable best-seller Capital in the 21st Century, Thomas Piketty argued that “when the rate of return on capital exceeds the rate of growth of output and income. . .capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

In his new book Capital and Ideology, Piketty declares inequality as being “neither economic nor technological; it is ideological and political.”

So how is it that capitalism can generate inequality and undermine social values when inequality itself is the product of ideology and politics, not economics? Is Piketty contradicting himself?

Of course not. You see private property, the foundation of the market order, is itself an ideology and so capitalism is simply one of its regime manifestations:

I have defined propietarianism as a political ideology based on the absolute defense of private property; capitalism is the extension of proprietarianism to the age of large-scale industry, international finance, and more recently to the digital economy.

This taken with the first sentence of the book gives us a pretty good sense of Piketty’s approach: “Every human society must justify its inequalities: unless reasons for them are found, the whole political and social edifice stands in danger of collapse.” That is, because inequality is the product of ideology and can undermine “the meritocratic values” supporting the “political and social edifice” it demands accounting for. Capital and Ideology is in large part a history of “inequality regimes” and their justifications.

This has several notable consequences, let’s take two:

Because Piketty believes, first of all, that inequality is manufactured, disruptive, and requiring justification, he never satisfyingly rationalizes egalitarianism. The nearest he gets is a very contestable demonstration that “what made economic development and human progress possible was the struggle for equality,” with an emphasis on progressive taxation, “and education” - hardly the working out of a world view. It would seem he doesn’t think it necessary for a few reasons: He says flat out the that “book has only one goal: to enable citizens to reclaim possession of economic and historical knowledge.” After arguing for “participatory socialism,” additionally, he reminds the reader his proposals are only meant “to show that human societies have yet to exhaust their capacity to imagine new ideological and institutional solutions.” Lastly, confirming a non-commitment to details, at one point he observes how social justice is “respectable but always imperfectly defined and contested.” In short, given the troublesome consequences and ideological basis of private property, the superiority of egalitarianism should be obvious - the burden of proof is entirely on one side.

To see the second consequence we need to come at it from a bit of distance: near the end of the book he sums up his findings informing the reader that “the whole history of inequality regimes shows that what makes historical change possible is above all the existence of social and political mobilizations for change and concrete experimentation with alternative arrangements.” Well of course inequality regimes shift because of ideological and institutional changes, that’s how he defined them.

Now to be clear, proposing a theoretical architecture where social interaction occurs within an institutional framework, then tracing the evolution of that framework and the concomitant consequences with empirical inquest could be a rough definition of political economy. But what makes Piketty’s whole enterprise offensive, the second consequence of his approach, is that the history flows from his categorical assertion that inequality is strictly a product of ideology and politics. Friedrich Hayek succinctly summarizes the issue in his Capitalism and the Historians: “historical beliefs which guide us in the present are not always in accord with the facts; sometimes they are even the effects rather than the cause of political beliefs.”

So is he right about inequality? Obviously not. Anyone lucky enough find themselves outside such a narrow academic coterie knows this. Explaining how inequality is the result of politics and ideology he writes:

the market and competition, profits and wages, capital and debt, skilled and unskilled workers, natives and aliens, tax havens and competitiveness – none of these things exist as such. All are social and historical constructs, which depend entirely on the legal, fiscal, educational, and political systems that people choose to adopt and the conceptual definitions they chose to work with.

To refute this in detail would require a great deal of clean, white paper, but happily it can be refuted without much detail at all: It should suffice to point out that even if the above is correct, what matters is that different factors, including undeniably inegalitarian features such as geography (which we must never be deterministic about), interact in an infinite number of combinations and permutations to produce complex outcomes; so even with egalitarian adjustments to institutions there is no guarantee of egalitarian results, far from it.

But we’re not here to be generous to error, and as ever a reductio ad absurdum can be clarifying: If a dunce trading along the commercially propitious Mississippi River is more successful than a genius trading on a river with a greater number of cascades and waterfalls, then with his wealth affords his children the circumstances to accumulate skills, where the genius might not, Thomas Piketty must deny it happened because it’s an inequality in wealth (and eventually skills) from the interaction between innate differences, geography, commerce, and individual choices, in other words, with non-ideological and non-political origins.

We have seen that the premise of the book is a falsehood, the term “inequality regime” is at best pleonastic, and that he not only builds a narrative from, but judges societies on the basis of 21st century socialist egalitarianism. Is it therefore a doomed reading experience? An entirely disreputable project? Not quite, but very nearly, so let us close with some general observations.

Something like just over half of the book seems to be reasonably well done, if somewhat warped, history; parts one and two are genuinely interesting and many readers will find them useful. After this the subject matter becomes more partisan and technical with remaining flashes of interesting arguments and their associated scholarship, but too much material is suspect and from ideological sources. At worst his deconstruction of the period since around the start of the 20th century reduces to an undependable, unfocused farrago of absurdities, asides, technical issues, and narrow interests somehow working toward an overall point. Particularly embarrassing and telling are his comments on the former Soviet Union that should make even sympathetic readers blush (it was interesting to read that Soviet expansion doesn’t count as colonialism). Finally, the prose is rather ordinary and repetitive making short sections feel like long sections, and he “recapitulates” enough to make it sound like an obscene exercise routine. Very little of this is endearing to the reader.

Despite an interesting start, Capital and Ideology is a thousand-page book with flaws that make its arguments feel remarkably emaciated.

—David Murphy holds a Masters of Finance from the University of Minnesota.