Thomas Piketty on Equality

Thomas Piketty, welcome to the Democracy Paradox.

Thomas Piketty

Thanks for your invitation

jmk

Well, Thomas, I am an enormous fan of your work and I found your new book, A Brief History of Equality, very enjoyable. One vignette that really stood out to me though involved Haiti. It’s revolution was a truly remarkable event. But your account focuses on events that come after its revolution. So, I’d like to start there. I like to start with stories. Thomas, tell me about the debt that Haiti had to pay to France.

Thomas Piketty

Yes, this is quite an incredible story. So, what happened, you know, basically is that you have this slave revolt in Saint-Domingue, you know, which was the name of Haiti before the independence of Haiti. And so, you have this slave revolt, which happens during the French revolution in 1791. And this is a successful slave revolt and, you know, that’s one of the messages of my book, of my Brief History of Equality, is that the movement toward equality is not something that’s happening, because the elite decide that it should happen or that it is happening in a natural way in any meaningful sense. You know, it happens out of social mobilization, social struggle.

It starts very much at the end of the 18th century. And the abolition of the privileges of the aristocracy and the slave revolt in Haiti are both the starting points of a movement toward the end of societies based on privileges. So, you know, this is this long-run perspective on the big picture equalities that I’m trying to describe. Now, returning to the case of Haiti, the French state and particularly the French elite of property owners including the people who used to own slaves in Haiti, because Saint-Domingue was really the jewel of the French colonial empire. This was the highest concentration of slaves, there were half a million slaves in Saint-Domingue. Much more than all of the British slave islands in the Caribbean and much more at the time than in the south of the U.S.

So, this was really the center of the plantation of economy and French property owners were very unhappy to lose this property. So, the deal that was decided at the end was that the French state, which was back to a monarchical state in 1815 and in 1825 the French monarchical state agreed to recognize the independence of Haiti with one condition. Which was that Haiti had to repay to France a huge compensation in order to compensate the French slave owners for their loss of property. And so, this was an enormous sum. This was the equivalent of three years of national income of Haiti in 1825. We would say 300% of GDP today which, of course, you cannot reimburse immediately because they did not have the money. So, French bankers came in, proposed to refinance the debt with a very high interest rate. It was 7%, 8%.

And in the end, the state of Haiti had to reimburse this debt between 1825 up until the 1950s. The last recorded payment to the bank of France was in 1957. So, for almost a century and a half, Haiti had to repay an enormous payment to France in order to compensate French slave owners for their loss of property. And this is indeed quite an incredible episode for a number of reasons. First it shows the very extreme sacralization of properties that existed back in the days in the 19th century. This also shows that extreme concentration of property is intimately related to extreme concentrations of power and very harsh social relations. So, this is not a spontaneously harmonious social relation when you have this kind of extreme property relation that’s extremely violent.

And this also shows the kind of historical amnesia which we sometimes have. Because today this is a story which people in France don’t know very well. People around the world don’t know very well. And when you tell the story to people and you tell them, ‘I believe that the French state today should actually pay your reparation to the state of Haiti for these exorbitant tributes that was extracted from Haiti for almost a century and a half.’ You know, many people say, ‘Oh, look, this was a long time ago. That’s complicated.’ Well, yes, it’s complicated.

But if you say, ‘That’s too long ago. We cannot do anything.’ But at the same time you still have compensation for expropriation of properties that happened during World War II or sometimes even during World War I. There were property expropriations including from a very wealthy family which we compensate today. And you tell to people of Haiti. ‘Well, look, you make payments until the 1950s,’ which are very well documented. You know, nobody is questioning the reality of this payment. And if you’d say, ‘Okay for you it’s too long. You put yourself in a very complicated position because then when it comes to trying to build some universal or knowns of social justice and global justice for the future.

You know, you have to treat different injustices of the past, different expropriations of the past in a way that is more or less consistent. So, it’s complicated to set the right numbers. I discuss this in my work. You know, it’s not a reason not to do anything. We need to trust, at the end of the day, democratic deliberation in order to define a collective norm of justice. And, you know, that’s a general theme that I pursue in my book.

jmk

The specifics are complicated, but I think some of the basics are just that. They’re pretty basic. They ask people in Haiti to be able to pay back the slaveholders who had done an injustice over the course of generations to their people and then said on top of that you need to pay us and work for us effectively deep into what was quote unquote, ‘Their freedom.’ They were still working for those slave holders all the way until 1957 as you say. And 1957, that’s post-World War II era, you would think that we would have moved beyond that and recognized that people shouldn’t have to repay somebody else for their freedom.

What struck me the most too was how the Haitian Revolution comes on the tails of the French Revolution. It comes in an era where we begin to talk about equality. And the reparations begin, I believe you had said, in 1820 and that’s right about the point that you begin the tale of the convergence towards greater equality during the 19th and 20th centuries. It’s during this exact period that the French and the Americans too are enforcing this debt payment upon a people. It is exacerbating inequality throughout the world. It’s remarkable and it’s very ironic.

Thomas Piketty

Yes. It is, but this is a legacy that we have to confront. You know, I think that the solution… again, people who are alive today, you know, nobody’s responsible, of course, for what happened 200 years ago. But at the same time, we are all responsible for taking into account this legacy into our thinking on how to build global justice and adequate reparation for the future. So, we have to take into account this legacy, but I understand that you are surprised. At the same time, after World War II you still have forced labor including the French colonies in Ivory Coast and you really need to wait until after World War II. You know it’s only when the colonial powers realized they’re going to lose the empire anyways that they accept the need to put an end to forced labor.

In the U.S. you have to wait until the 1960s to see the end of racial discrimination, you know, which is also a huge prejudice each, you know, when your children cannot go to the same school as other children. It’s a huge prejudice which has never been compensated. You know, there are some cases of prejudices like in the U.S. like the Japanese Americans that were interned during World War II which is a different kind of prejudice, shorter, but, of course, very bad as well which was compensated finally. There was a law that was passed in the U.S. Congress in 1988 giving $20,000 for each Japanese Americans was interned. It took a long time, but what this exemplifies is that there are instances where compensation is finally adopted.

So, I think the discussion is not over either in France or in the U.S. or in Britain or other places in the world. And I think it will be much easier for Western countries to confront the future, to confront development issues in Africa, South Asia, and also to confront the growing influence of China in this region of the world if we start by recognizing this legacy and trying to find meaningful solutions for these kinds of reparations.

jmk

So, I’d be amiss if I don’t take a moment to talk about some of the bigger concepts within the book for just a moment here. The book’s obviously about equality and what I find remarkable within really all of your work, to be honest, is that you approach it very much as an economist. I mean, your earlier book, Capital in the 21st Century, is very much an economist’s book.

But you definitely view the idea of inequality, the idea of economics, as something that’s also political. And in the book, you write, “Inequality is first of all a social, historical and political construction.” What I found most interesting about that quote, though, is that you left out economics. It feels very deliberate when an economist leaves out economics as one of its causes. So, let me ask you, is inequality an economic construction as well?

Thomas Piketty

Well, what I find in my historical data… You know, let me say that all of my work is based upon a very large, collective comparative historical program of data collection on income and wealth distribution. And so, what I have found with all this work of data collection is that pure economic factors or technological factors or the level of economic development or level of technological development cannot explain the diversity of levels of inequality and structure of inequality that we observe throughout history.

So, of course, economic forces matter, technology matters, but for a given set of economic forces and the given state of technology, it really depends on what kind of legal regime you choose, what kind of political system, what kind of property regime, fiscal, educational system, and there are so many variables, so much imagination by the elite sometimes, not to protect their position, but also by other social groups to try to undo this construction and replace them by other institutions. And there are many cases that I stress in the book which show that we should not have a sort of deterministic view of inequality which would be based on purely economic or technological factor or even a purely cultural factor.

Because you sometimes also people say a story about inequality where it’s all based on culture. So, like Swedes have a very egalitarian culture. And we are not Swedes so we will never be as egalitarian as this. And that’s often a way to have a very conservative conclusion and say, ‘Well, look, we cannot do anything because we don’t have this egalitarian culture of the Swedes.’ Except that what you find in history is that Swedes have not always been Swedes. In fact, until the end of the 19th century and the beginning of the 20th century, Sweden was actually one of the most unequal countries in Europe and in many ways one of the most unequal countries in the world at least in the sense that codification of inequality was particularly sophisticated.

So, you know, the number of votes that you could have in Sweden until 1910 was proportional to your wealth. So, it’s not only that just the top 20% of male voters could vote, which sort of standard in 19th century Europe, but in Sweden it goes like this until 1910, which is pretty late in the day. But in addition, within this top 20% of male voters in terms of property you would add between one and 100 votes depending on how wealthy you are within this top 20%. And in municipal elections there was actually no upper bound in the number of votes you could add so that in effect in several dozen municipalities, you had only one individual with more than half of the vote and was a perfectly legal dictator.

And even corporations had the right to vote in Swedish municipal elections at the time on the basis of their capital in the municipality which is something large multinational corporations today would love to have this, but they don’t even dare ask for it. Sometimes they find other ways to get the same outcome, but still it makes a difference when you ask for it and you get it. So, this was Sweden until 1910. And then you had a huge mobilization by the Swedish working class, trade unions, Social Democratic party in a country that was quite illiterate for the time. And clearly the literate working class was very upset with the way the property owners in the country used their political advantage to obtain extremely favorable institution from their viewpoint.

And the Social Democrats took over in 1932 and put the state capacity of Sweden to the service of a completely different political project. So, they used the same register to measure property, wealth and income. But instead of distributing voting rights in proportion to those. They will make people pay a very high progressive tax to pay for a system of relatively equal access to health and education, which is far from being perfect, but which was better and is still better than any other system we’ve seen in the history of mankind.

So, this is one of the examples that I use in my book to show why I claim, as you say, that inequality is a political construction. Because in the end the elite in every country, every time they will always say, ‘Oh, no. This is impossible. It is not in American culture to have a wealth tax. This is not in Swedish culture to have more equality. This is not in French culture, in Indian culture..’

You know, in every country, at every time period you will always find some conservative people who will say, ‘Things never change. Things cannot change.’ That the reality of history is that things keep changing all the time. And they will continue in the future and it will not always go in the right direction, but I think in the end over the long run, you have this movement toward more political equality, social equality, economic equality. And I think one of the best ways to prepare ourselves for the next steps is to look carefully at the historical experiences, at all these different national trajectories from which I think we can learn a great deal. If we forget about the intellectual nationalism and the kind of historical amnesia which sometimes unfortunately prevents us from moving in the right direction as quickly as we could and should.

jmk

So, a theme within all of your work is obviously the idea of inequality. The idea that we need to do something to be able to, I don’t want to say eradicate it, but alleviate it to be able to make a more equal society. And in the book, you write, “In itself the state is neither egalitarian nor any inegalitarian. Everything depends on who controls it and for what purpose.” And that’s a really important quote and in the context of it is that this book gives a much more optimistic view about the idea of equality, because for a significant part, you’re tracing the history of how things got gradually more equal in politics and economics, even within society, whereas in your other books they’re more focused on more recent events that have actually exacerbated inequality.

But to just get at the heart of the thing that really drives you, the real theme that’s at the heart of all of your work, I’d like to know, should the just state view its primary purpose to facilitate an egalitarian society?

Thomas Piketty

Well, I think it should view its best mission as promoting the right to happiness as the revolutionary events of the late 18th century in the us in France, you know, tried to promote this view that governments are supposed to protect the right of everybody to happiness, so not only of white men, but also women, people of color, whatever your origin. So, of course, it took a very long time from the theoretical idea of everybody’s right to happiness and the real, more universal approach to this, you know, covering all parts of the population. And I think this process is still going on. So, the right to happiness includes the right to access fundamental goods including access to education, access to health, access, to participation. So, participation to the political life, of course, this includes the electoral right.

But this is, in my view, a much broader view of participation that we need to develop. It’s also participation in the economic life. So, the possibility to participate in the decision-making process in your company or the possibility to start a firm, develop your own project. So, this is a concrete application of the universal right to happiness, which I think drives modernity. And so, you know, it’s a very deep movement. You know, I did not create this notion. This started in many different national contexts, you know, more than 200 years ago or 250 years ago. And this is not over yet. Because if you think of something as simple as democratic equality, you know, you can say, ‘Okay, we have equal voting rights today. That’s it.’ But no. It’s not enough.

Because if you have very unequal political influence through the financing of political parties, political campaigns, through the financing of the media, maybe one day 50 years from now, or 100 years from now, when people look at what we call electoral democracy today, they will look at it a little bit in the way we look today at Sweden one hundred years ago where only property owners could vote. Of course, today it’s a bit better, but you know, the fact that you have no limitation on how much private money can influence politics in many countries including in the U.S. today. You know, after all one could think that the principle of one man, one woman, one vote should come with a very strong and drastic limitation on how much private money can influence politics.

Maybe, you know, everybody should have $100 to spend on the political campaigns and political parties and think tanks or media of their choice. And that’s what political equality means. And, you know, I think maybe one day we will come to this conclusion and to me, the sooner, the better. And we have made already some progress. Some countries have developed a system of public political finance and nonprofit structure for the media, a neutral public media like the BBC. So, there has been a movement in this direction. But this long run movement around basic political equality is still going on.

jmk

So, to kind of wrap things up, I already mentioned that this book is much more optimistic because you take a much longer historical view. Instead of just looking at very recent events, you’re looking across a history of progress towards equality. And you see a lot of progress over two centuries, maybe even three centuries throughout the book. But obviously you also have made proposals for a number of different reforms to try to get us back on track towards having a more egalitarian society. Do you feel optimistic that the world can get back on track? It doesn’t have to be like in the next year. But do you feel optimistic that in the near future voters in different democracies and in different parts of the world will start moving back towards creating a more egalitarian society?

Thomas Piketty

I am optimistic in the long run for one simple reason which is the other options won’t work and won’t be able to solve the big challenges we have to solve, you know, the social challenges, the environmental challenges we have to solve. I think it’s going to be one of the powerful forces that will make people reconsider their view about the economic system, because there’s a lot of inequality, of course, in the world like who’s going to suffer from global warming. There’s also a lot of inequality within each country about who is responsible for global warming. You know, you look at carbon emissions of the bottom 50% of the population in Europe or in the U.S. and they have reasonable carbon emissions. I mean, they have like four or five tons per capita in Europe or in the U.S. it’s a bit more.

So, this should be reduced even in Europe. But as compared to the top 10% was 40 tons per capita or the top 1% was 70 tons per capita in Europe. In the U.S., even the top 10% is 70 tons per capita. So, if you come up with a solution which asked everybody to reduce their emissions in the same proportion with a gigantic carbon tax, proportional carbon tax, or gigantic rising energy prices everywhere which is like the story that many economists tell to the world, you know, that’s not going to work. We are going to have some gigantic yellow vest movement everywhere, in the U.S., in Europe, everywhere. You know, people in the bottom 50% won’t agree to make an effort if you cannot guarantee that people at the top agree to make a much bigger effort.

They will tell you, ‘Look, you have these people who go to the moon or will go to space who emit 70 tons per capita and you’re telling me that I’m going to have to pay more and change completely my lifestyle.’ So, I think as the concrete consequences of global warming become more and more apparent in people’s lives, attitudes toward wealth inequality and toward globalization in the way it is organized today with these free capital flows and no collective redistribution of wealth. This will be questioned more and more. You know, I think we have already started to f exit the era of neoliberalism following the 2008 financial crisis, following the pandemic of 2020-2021. So for now the question is are we going to have neo-nationalism? You know, the Trump-kind, Le Pen-kind in my country in France.

You know, I think neo-nationalism provides an easier answer to the people than the kind of sophisticated, participatory socialism or system of progressive taxation, more workers’ rights, more democratic rights that I describe in my book. But in the end, in the long run, neo-nationalism is not going to solve the problem of global warming. It’s not going to solve this situation with the pandemic like the Trump experience with the pandemic showed. It just won’t solve the problems, so we’ll have to get back to more progressive universalist solution. Look at the U.S. discussion on the wealth tax. You know, this has changed so much in the past 10 years. We should remember the U.S. invented very progressive taxation in the 20th century with an 80-90% top tax rate for decades and decades.

And in fact, this was an era of maximum prosperity for the U.S. Why is it so? Well, because you don’t need income gaps of 1 to 100 or 1 to 200. You know, I’m not saying you want complete equality. Maybe you need an income gap of 1 to 5, 1 to 10, 1 to 20. But 1 to 100, it’s just not useful. And the reason why the U.S. was at maximum prosperity with an income tax rate of 80-90% in the middle of the 20th century is because, you know, the true force of economic prosperity in the long run is actually education and relative equality in education.

In the U.S., in the middle of the 20th century had a huge educational advantage as compared to Western Europe or Japan. And, you know, that was the true source of U.S. prosperity. And I think sometimes we feel we can shortcut them. But this is reality. And at some point, reality strikes back and this is what in the end makes me confident in the longer run.

jmk

Well, thank you for taking a few minutes to talk to me. I really did enjoy your book. Like I said, it’s shorter than the other books. It’s actually an incredibly quick read like really all of your works. I feel like they read faster than the number of pages. You know, I always enjoy reading them. This is actually the fifth book of yours that I’ve read.

Thomas Piketty

Oh, thank you. Thanks a lot. Well, I think for those of you who don’t have time to read long books. You should read this one, which is indeed much shorter and I think it also forced me to clarify many of my main conclusions and to emphasize indeed the optimistic dimension, which maybe in the previous books was a little bit obscured. So, thanks a lot for giving me the opportunity to talk about it. Thanks a lot.

Key Links

A Brief History of Equality by Thomas Piketty

Capital in the Twenty-First Century by Thomas Piketty

Follow Thomas Piketty on Twitter @PikettyLeMonde

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