Capital and Ideology
Thomas Piketty, translated by Arthur Goldhammer
Harvard University Press, $39.95 (cloth)

The 2014 English publication of Capital in the Twenty-First Century made the French economist Thomas Piketty a household name. The bestselling book, and the discussions that surrounded its release, decisively shifted the public conversation about economic inequality. The dominant narrative in the aftermath of the 2008 financial crisis portrayed dysfunction in Washington as the result of political polarization—a clash between the well-meaning liberalism of Barack Obama’s administration and Republican obstructionism in Congress. Piketty suggested a counter-narrative: everything happening in Washington, on both sides of the political aisle, was part of the same elite agenda—to roll back the New Deal and give capital free rein to go wherever it wanted without fear of taxes or regulation.

We tend to view the economy as a natural force, independent of our ideas about it. This book systematically demolishes that self-serving conceit.

At its core, Capital in the Twenty-First Century presented a mathematical model that shows inequality is inevitable when the economic system is left to operate on terms dictated by capitalists. When that happens, the stock of capital grows faster than the economy as a whole, and as a result, those whose income derives primarily from capital rather than labor gain a larger and larger share of the pie. The algebraic essence of this argument was symbolized by the inequality r > g, which says that, historically, the rate of return on capital is larger than the rate of economic growth. During the brief historical interlude in the twentieth century when that “law” did not hold, capitalistic forces of divergence were tamed by egalitarian policies such as strong progressive taxation of income and inheritance. Insofar as the book offered a political diagnosis of the subsequent reversion to the inegalitarian norm, it was that the transnational post–Cold War retreat from social democracy had re-created the economic conditions of the Gilded Age.

Six years later, Piketty returns with the thousand-page Capital and Ideology, a sweeping elaboration of his views on the global rise of economic inequality after 1980 and the twilight of social democracy. It occupies almost twice the size of his earlier work, ranging much more widely over space and time even as it remains grounded in a discussion of Europe and the United States. The new book loses much of the economic theory, but it gains a vast wealth of historical, sociological, and political detail, reflecting the progress and expansion of Piketty’s (and his collaborators’) empirical research agenda in the intervening years.

In this, it bears little resemblance to anything else written by contemporary economists, or even those of one or two generations past. The tendency in economics now—as well as in a great deal of public discussion—is to view the economy as a natural force, existing independently from our ideas about what it is and how it ought to work. This book systematically demolishes that self-serving conceit by charting in extensive detail how differently it has operated at different periods of time, and how its operation is conditioned by the ideologies with which it co-develops. “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,” Piketty insists. “All are social and historical constructs” that “depend entirely” on the “systems that people choose to adopt and the conceptual definitions they choose to work with.”

Piketty’s overarching “message” is that things can be different, because they have been.

Indeed, having lost the economic model, the new book is less a recognizable work of economics than an overarching political-economic-social history of much of the globe over several centuries, buttressed by an extraordinary command of the literature in economics, history, and political science. Which is to say, it’s a more successful mode of social science than what was offered in his earlier book, let alone the rest of economic scholarship on inequality. It fuses contemporary empirical economic analysis with the wide-ranging historical and political sensitivity of an older tradition of political economy. It is a token of Piketty’s inventiveness that this aspect of the book will strike many economists as less a feature than a bug. Paul Krugman, reviewing the book in the New York Times, went so far as to call it, with thinly veiled exasperation, “what amounts to a history of the world viewed through the lens of inequality.” He winds up bewildered by the “sheer volume,” bemoaning the absence of a clearer “message.” All these things are true—they are why the book is such a constructive and necessary contribution to academic and popular debate.

In its scope and scale, Capital and Ideology may indeed meet an audience that does not know what to make of either its ambition or its erudition. It calls to mind the bigger histories of a bygone era of historical writing, such as the French Annales school historian Fernand Braudel’s grand account of the Europe in the sixteenth century, The Mediterranean and the Mediterranean World in the Age of Phillip II (1949), albeit with a much larger dose of popular politics than appears in Braudel. The book is also beautifully written, and Arthur Goldhammer’s translation is a tour de force in its own right. The result is an embarrassment of riches, and the overarching “message,” such as it is, is that things can be different, because they have been.

• • •

An exhaustive assessment of Capital and Ideology would require more space and expertise than I have, but the basic contours of the book are easy enough to describe. “Every human society must justify its inequalities,” the book begins. What follows is a comprehensive investigation of how different societies have done precisely that, ranging through what the book terms various “inequality regimes.”

Piketty schematizes world history into four epochs: “ternary” or “trifunctional,” “proprietarian” (later “capitalist”), “social democratic,” and “hyper-capitalist” or “meritocratic”—the last being our own. By ternary societies, Piketty means those consisting of the three estates of the French ancien régime: those who pray, those who fight, and those who work. In the dramatic transition from the ternary to the proprietarian regime that unfolded over the eighteenth and nineteenth centuries, the rights of the nobility and clergy with respect to the third estate, and also their obligations to protect, adjudicate, educate, and service its spiritual and health needs, were surrendered to a central state (what Piketty calls “regalian powers”), and their remaining powers to command resources from the working population were codified as private property.

Having lost the economic model, the new book is less a recognizable work of economics than an overarching political-economic-social history of much of the globe.

In this new proprietarian system, unlike in the ternary world, everyone has the legal right to any status in the social hierarchy. But, Piketty argues, that scheme serves at the same time to rationalize disparities of wealth and power that result: since anyone can, in principle, occupy any social position, inequalities that emerge must be “natural.” Over time the effects of unrestrained property ownership were reined in by social democracy, which succeeded capitalism by enforcing democratic limits on capitalists’ power through many mechanisms: expropriation, taxation, inflation (eroding the value of nominal obligations), public goods provision, and collective organization by workers among them. Then, following the stagflation of the 1970s, a macroeconomic crisis seemingly brought about by the over-generousness of the New Deal state and its international counterparts, the social democratic era gave way to contemporary hyper-capitalism. The latter is defined by unlimited international capital mobility to evade regulation and taxation at the national level, alongside definite limits on the ability of labor to act in the same autonomous way. It is justified by appealing to human capital as the source of all social distinction and derogating collective action as inefficient and uneconomic special pleading.

Although this division of world history passes mostly through Western Europe and North America, the book explicitly embraces a “a transnational perspective” and delves into economies outside the contemporary developed world—from Latin America to Asia, Russia to the Islamic world—as well as to political systems that don’t conform to Western liberal-democratic capitalism. The book also tracks the economic effects of slavery and colonialism. It explains in detail, for example, how chattel slavery was converted to a hereditary race hierarchy at the moment of emancipation through public compensation to slave owners but not to enslaved people, and how hereditary legal inferiority in other social systems—serfdom and castes, among them—have been incorporated into a proprietarian and even hyper-capitalist contemporary world economy.

One of the revelatory aspects of Capital and Ideology is that it grabs hold of the concept of ideology—an oversight of the earlier book, as I argued in After Piketty: The Agenda for Economics and Inequality (2017)—and uses it to great effect. The word makes it into the title, after all, and it serves as a crucial component of his analysis of transitions between inequality regimes, correcting the tendency to view inequality as a natural fact rather than a policy choice. “Inequality is neither economic nor technological,” he writes. “It is ideological and political.” The notion of ideology is the essential tool in the book’s overarching project of demystification.

Piketty distinguishes his conception from that of another important theorist of ideology, Karl Marx, by emphasizing the “truly autonomous” nature of ideology in relation to economic and social arrangements. The latter, he insists, do not determine a “superstructure” of beliefs and ideas in “almost mechanical fashion.” Instead, Piketty uses the word “in a positive and constructive sense to refer to a set of a priori plausible ideas and discourses describing how society should be structured.” In other words—unlike most economists—Piketty uses the idea not as a pejorative or smear with which to tar his opponents, but as a force that exerts itself on historical outcomes and is thus a worthy object of historical analysis. “Ideas and ideologies count in history,” he states forthrightly. Among other things, “they enable us to imagine new worlds and different types of society. Many paths are possible.” In this respect, Piketty is unusual among practicing historians and completely unique among practicing economists. This analytical framework not only provides the basis for a more convincing historical account. It also serves the larger goal of demystifying the inequality regimes he analyzes.

The notion of ideology is the essential tool in the book’s overarching project of demystification—correcting the tendency to view inequality as a natural fact rather than a policy choice.

The second half of Capital and Ideology provides a much more detailed political interpretation of the waning of social democracy and the advent of hyper-capitalism than appears in his earlier book. The incredibly wide geographic, temporal, and methodological range serves Piketty’s aim of denaturalizing inequality and economic outcomes more broadly, and it brings to the fore the potential of alternatives that have never been tried. It would be a mistake to interpret the book either as a narrative of historical inevitability or as a mere pining away for a lost social democratic era. In fact, his discussion of how the last such era came to grief makes it quite clear that that alternative isn’t on the table today, even if it were desirable. Contemporary societies are too interconnected by international capital and labor flows—and the challenges they face too global—to make re-erecting a New Deal nation state a real option.

• • •

What explains Piketty’s turn to the political? Brexit and the election of Donald Trump appear to have significantly influenced the trajectory of his scholarship toward greater engagement with the political science of inequality. The hallmark of his and his collaborators’ scholarship is exactly this fearlessness in looking wherever they have to for answers to the questions they pose: tax returns, probate records, wealth surveys, the Forbes 400 list, international financial flows, and, now, data more frequently examined by political scientists, namely, public opinion and voting behavior in democratic elections. Few economists are as methodologically curious and versatile, much less as adept.

When it comes to contemporary politics, Piketty’s central puzzle is why social democracy failed after the end of the Cold War. Did elitist politics exclude the working class from representation, undermining mass left politics from above? Or did the working class itself defect from the social democratic (and in the United States, the New Deal) consensus for identitarian reasons, in a racist-nativist backlash to the civil rights movement? Piketty argues for the former—elite alienation from the top rather than defection from below.

The book has an outsider’s sensibility, providing the reassurance that an intellectual giant has put his vast resources to work on behalf of those who aren’t used to hearing their story told and validated.

Part of his evidence is declining voter turnout among the working class during the same period that a nationalistic backlash has taken shape in the United States, France, and the United Kingdom. Rather than flock to the nativist banner, many working-class voters, it appears, simply withdraw altogether from a political system they perceive to be dominated by elites. This analysis runs contrary to the beliefs of many mainstream economists. (Krugman, for example, casts suspicion on Piketty’s account by alleging that “most political scientists” in the United States “stress the importance of race and social issues in driving the white working class away from Democrats, and doubt that a renewed focus on equality would bring those voters back.”) But one of the reasons Piketty remains such a vital public voice is that he is willing to take sides, in public, on controversial issues both inside and outside his home academic discipline. This gives the book both an outsider’s sensibility as well as the reassurance that an intellectual giant has put his vast resources to work on behalf of those who aren’t used to hearing their story told and validated.

The mechanics of the alienation of the working class forms a central thread of the book’s second half. Piketty traces the rise of an elite consensus between what he terms the “Brahmin Left” and the “Merchant Right.” By the Merchant Right, he means a financial and business elite that has typically supported the deregulation of markets, the slashing of public budgets, and the disempowerment of organized labor. By the Brahmin Left, he means the highly educated professionals who have come to form the voting base of mainstream left political parties across major developed economies, forsaking the earlier affiliation of the left with the poorly educated working class. In the United States in 1948, for example, support for the Democratic presidential candidate was highest among voters with less than a high school education and declined as you moved up the educational hierarchy. The reverse was true in 2016: the more education a voter had, the more likely he or she was to vote Democratic. Generally lower levels of educational attainment among Black and immigrant voters mitigated this trend for a while, but that effect has ebbed with the diffusion of higher education across the population.

Piketty attaches a great deal of significance to this conversion. “Like left-wing parties in France,” he writes, “the Democratic Party in the United States transitioned over half a century from the workers’ party to the party of the highly educated.” Elites’ distance from working-class interest, he contends, led the Democratic party and its ideological counterparts abroad to accede to a policy program betraying the values of social democracy: regressive taxation, elite domination of higher education systems, and forms of globalization that enabled the wealthy to hide their assets from tax authorities and trade agreements that facilitated outsourcing. The culmination of this trend, Piketty argues, is especially apparent in the “progressive” coalition of Brahmin Left and Merchant Right underwriting the French presidency of Emmanuel Macron, with both groups united against what they perceive as a nationalist opposition comprising the mass of economic losers. The danger is that this nationalist opposition might be able win elections by reconstituting itself as politically populistic, reaping rich electoral and political returns among the very voters on whom elites have pinned labels like “racist” and “unskilled,” and who well understand the contempt with which they are disdained by those interested in rationalizing their own power.

Piketty’s central puzzle is why social democracy failed after the end of the Cold War. Did elitist politics exclude the working class, from above? Or did the working class defect in an identitarian backlash, from below?

Piketty calls the ideology of the Brahmin Left distinctively “meritocratic,” founded on the idea that higher education determines social worth. Capital and Ideology takes pains to historicize and denaturalize this notion, distinguishing it from the guiding ideology of earlier societies. “In previous inequality regimes,” he writes, “the poor were not blamed for their own poverty, or at any rate not to the same extent.” Instead earlier narratives of social organization “stressed instead the functional complementarity of different social groups.” And the meritocratic emphasis on the importance of education had real effects. Many countries, including the United States, expanded higher education on a seemingly egalitarian basis in the mid-twentieth century. The United States started to do so at more or less the same time that secondary education became universal, in the aftermath of Brown v. Board of Education and the postwar economic boom—the high water mark of the social democratic era as Piketty conceptualizes it. The California Master Plan—like its equivalents in other states, culminating in the federal Higher Education Act of 1965—was enacted as a public good on the theory that higher education was the “next” universal benefit that affluent societies should provide.

After the civil rights backlash of the late 1960s and 1970s, however, institutional funding gave way to individual-level financing and the ideology of “human capital.” Because higher education provided individual students with increased lifetime earnings, the reasoning went, it could be financed individually through subsidized loans to pay tuition. That reasoning led to the dramatic expansion of higher education we have seen since the 1970s, and other developed countries have done likewise. But, as Piketty notes, in Britain, France, and the United States, spending on students in the lower reaches of the higher education system significantly trailed the resources available at the richest and most elite institutions—those with admissions policies intended to keep out all but a tiny, largely hereditary few.

This story of higher education crystallizes Piketty’s interpretation of the failure of postwar social democracy. If access to the best higher education is the sole determinant of social status, and if it  is available only to a tiny elite, then our ideology of meritocracy is even more politically dangerous than it would be in a traditional aristocracy, where entitlement by birth is openly acknowledged rather than obscured under layers of pretense. Political elites believe their status has been “validated” by the higher education they have obtained—in turn fueling the resentment of those at the bottom, who have been excluded from economic security and political influence thanks to having failed to attend the right institutions. “Nearly everywhere a gaping chasm divides the official meritocratic discourse,” Piketty stridently sums up,

from the reality of access to education and wealth for society’s least favored classes. The discourse of meritocracy and entrepreneurship often seems to serve primarily as a way for the winners in today’s economy to justify any level of inequality whatsoever while peremptorily blaming the losers for lacking talent, virtue, and diligence.

One upshot of Piketty’s argument about the Brahmin Left—that elites are to blame for alienating working-class voters—is a sense of opportunity: it is meant to combat the fatalism that presumes they are permanently lost to the nativist right. A renewed politics of social democracy, he suggests, might draw those voters back to the left. “The problem” with the story of a bottom-up defection “is not just that it depends on the notion that the disadvantaged classes are by their very essence permanently racist. . . . More importantly, the theory is unconvincing because it fails to account for the observed facts.” Piketty goes on to point to the trans-regional, transnational, and trans-racial universality of the educational reshuffling of the electorate, as well as the fact that it played out over a longer period of time than the civil rights movement, even under the most generous possible dating.

Yet Piketty’s narrative does seem to be missing something about educational attainment and politics. As higher education has expanded, more of it has filtered “down” to the traditional working class. This happened precisely because higher education expansion was re-conceived as a labor market policy, a scheme for promoting “human capital”—but one whose cost could safely be transferred onto the backs of its beneficiaries, at least those of them excluded from the best-resourced institutions. This fact complicates the empirical picture. By catering to those with education, parties of the left are not simply abandoning the working class, because the working class is getting more educated.

One upshot of Piketty’s argument about the Brahmin Left—that elites are to blame for alienating working-class voters—is a sense of opportunity: it is meant to combat the fatalism that presumes they are permanently lost to the nativist right.

A related complication for his Brahmin Left thesis is that age polarization in voting behavior has accompanied education polarization: left parties are simultaneously parties of the young and parties of the educated. But the significance of higher education is very different in successive age cohorts: among older voters, it signifies elite status, but among young voters, some experience of higher education is becoming universal (and thus elite status attaches to higher and higher levels of educational attainment, amounting to a credentialization rat race). Because of this filtering down and widening of education, we cannot conclude from the fact that they are parties of the educated that left political parties are not parties of the working class.

Thus the true elites of the Brahmin Left should be differentiated from the working-class members that comprise what we might call the Credentialized Left. There is a stark divide between those who view their elite education as constitutive of their professional status and those who view higher education as a necessary evil to preserve any semblance of labor market status (or alternatively, as having failed to fulfill its promise in the labor market) and who experience the debt they take on thereby as deeply burdensome and unfair. Within a generational cohort who might all report having a college degree, that divide is probably the salient electoral cleavage distinguishing supporters of Hillary Clinton and Bernie Sanders in 2016, or supporters of Macron in France and those to his left. Moreover, the striking losses of Jeremy Corbyn’s Labour Party in the December 2019 UK general election—failing to unite an international, multi-cultural young left and an older core of traditional, less-educated Labour voters outside metropolitan areas—casts doubt on Piketty’s optimism regarding a renewed left internationalism.• • •

Even if it misses these nuances, Capital and Ideology still makes clear that a political and ideological revolution is necessary in order to achieve a new era of economic justice. “The broadly social-democratic redistributive coalitions that arose in the mid-twentieth century,” he writes, “were not just electoral or institutional or party coalitions but also intellectual and ideological. The battle was fought and won above all on the battleground of ideas.” Unfortunately, saying, and even proving, that such a revolution is urgently necessary is not the same thing as making one happen, and on the latter count, there is little to be optimistic about.

Capital and Ideology makes clear that a political and ideological revolution is necessary in order to achieve a new era of economic justice.

One battleground where such revolution is badly needed is the economics profession itself. Indeed, Piketty’s new book shows that polarization is as rampant in academia as in society writ large, and his insights are often the most cutting when they are directed at the subject he knows best of all. One can see the prevailing ideology at work in responses to Piketty’s last book (which foretell a negative reception of this new one, too). As I wrote in 2017, Capital in the Twenty-First Century received a largely negative reception among economists, who sought to dismantle its conclusion that economic resources have been unjustly distributed, even if that was done according to “economic laws.” For such critics—who deploy many of the same meritocratic premises Piketty criticizes in the new book—the Amazons of the world are actually policy successes, and worker exploitation is actually just technological progress. All get their just deserts.

This reflexive tendency to defuse the critical force of the new scholarship on inequality has serious political ramifications. It is especially pernicious, not to mention hypocritical, because the economics discipline has worked very hard to be seen as above politics. Indeed, the American Economic Association was founded in 1885—amidst the excesses of the Gilded Age—precisely in order to portray the views and pronouncements of its members as authoritative and politically unmotivated.

Today the privileged status of the dispensations of mainstream economics looks increasingly suspect to many observers. The title of the economic historian Robert Skidelsky’s forthcoming book What’s Wrong with Economics? succinctly captures the popular mood. In the face of such criticism, many members of the profession resort to self-defense, denying or rationalizing popular dissatisfaction with both the nostrums of economic scholarship and the reality of economic outcomes. Indeed the self-image in much of the profession right now is that it has put to bed its past sins and ascended to a higher plain of scholarly rigor and fearlessness. As the book itself explains—in its careful analysis of the way political regimes are tied to ideological justifications—all this is likely to keep Capital and Ideology, along with similar scholarship, from getting the serious hearing it deserves, at least among Piketty’s own colleagues.

The transnational egalitarianism Piketty espouses will gain a hearing if only because it is the thing contemporary neoliberalism so clearly and ostentatiously defined itself against.

Ultimately, though, economists cannot be allowed to be the arbiters of the intensely political concerns Piketty takes up in the book, and the good news is that there is reason to believe they won’t be. The public is intensely dissatisfied with the alternatives on offer from the formal political system and most of what goes on in academia. In a crisis atmosphere like the current one, the transnational egalitarianism Piketty espouses will gain a hearing if only because it is the thing contemporary neoliberalism so clearly and ostentatiously defined itself against and sought to expunge completely from polite company. In that sense, at least, an ideological regime like hyper-capitalism does sow the seeds of its own destruction. In the meantime, as Antonio Gramsci observed, the old is dying but the new struggles to be born. Piketty is as good a midwife as we could want, and much better than we deserve.