With all the furore surrounding Thomas Piketty’s Capital in the 21st Century my aim here is to carry a weekly focus on the book . The purpose is modest. There is already in existence some rather excellent coverage and detailed engagement with the book both in the general media and on specific blog sites. I am thinking here of the analyses by Michael Roberts on his blog site; the competing viewpoint or ‘afterthoughts’ of David Harvey; Benjamin Kunkel’s assessment in ‘Paupers and Richlings’ for London Review of Books matched by Knox Peden’s great essay on ‘The Abstractions of History’; or Paul Krugman’s rather different tone in ‘Why We’re in a New Guilded Age’ for The New York Review of Books. My own endeavour is much less ambitious than any of these engagements. It seeks to offer a weekly equivalent to the ‘Pocket Piketty’ provided by Duncan Green. Each week my intention is to carry a blog post that summarises my notes on each chapter in just a few hundred words that can be read quickly. The purpose of these summaries is to produce an interpretative synopsis of each chapter drawn from my more detailed notes.
These interpretative digests will also enable me to formulate my engagement with a reading group on Piketty’s Capital in the 21st Century, organised by Chris Hesketh at Oxford Brookes University. They will also provide a quick précis for teaching purposes at the University of Sydney and through this novel pedagogical exercise conclude with a question each week to be developed in my Department of Political Economy classes on ‘The Political Economy of Global Capitalism’ (linked to the Twitter hashtag #ECOP2613). Such short interpretative digests may thus provide a different and original form of engagement with the book. Without attempting to rival or replace the importance of detailed engagement, these ‘Piketty digests’ will facilitate a quick and accessible read for people ‘on the go’. The posts will be formulated and produced after reading each chapter, in dialogue with the Oxford Brookes University reading group and colleagues at the University of Sydney, rather than polished after completing the reading of the whole book and then subsequently edited; although I may tidy up a little week-to-week. Perhaps these ‘Piketty digests’ will also provoke some wider resonances and points of contact. Here is the fourteenth ‘Piketty Digest’ on ‘A Social State for the Twenty-First Century’.
Chapter 13: A Social State for the Twenty-First Century
Getting to Part IV of Capital in the Twenty-First Century felt like a bit of a slog but here we are! — This section of the book is on regulating capital with Piketty focusing on recovering a ‘social state’ for the twenty-first century — The chapter starts with a significant question ‘Can we imagine a twenty-first century in which capitalism will be transcended in a more peaceful and more lasting way, or must we simply await the next crisis or the next war (this time truly global)?’ — But my view is that this is not a book interested in transcending capitalism but rather ensuring the survival of capitalism — Witness here Piketty’s own statement in a recent interview with Renewal: a journal of social democracy, where he confesses that:
From my viewpoint there is no problem with inequality per se. I think that inequality is okay up to a certain point, as long as it is in the common interest, as long as it promotes growth, innovation and entrepreneurship, and as long as it benefits in particular the most disadvantaged groups in society.
These points are in no way related, then, to transcending capitalism — As argued by Tad Tietze on Left Flank, the approach to inequality that best exemplifies Piketty’s is one that represents the last sigh of social democracy that has reached the point of exhaustion — In this chapter, this is best evidenced by Piketty’s focus on a progressive global tax on capital promoting the general interest over private interests while preserving economic openness and the force of competition, which he regards as a more suitable instrument than a progressive income tax — Further, Piketty asks: what kind of social state (not socialist) is most suitable for the present age? — Here the construction of a ‘social state’ refers to the regalian missions of the police, courts, army, foreign affairs, general administration, which command about 10 percent of national income with the broader social functions consuming about a quarter to a third of national income, depending on the country, broken into two roughly equal halves: health and education, on one hand, and incomes and transfer payments on the other hand — Spending on education and health consumes about 10-15 percent of national income in all the developed countries today — Replacement incomes and transfer payments generally consume 10-15 (or even 20) percent of national income in most of the rich countries today — Pensions account for the highest share (two-thirds to three-quarters) of total replacement income and transfer payments — Unemployment insurance payments are much smaller (typically 1-2 percent of national income) with income support outlays even smaller (less than 1 percent of national income) — Added up, state spending on health and education (10-15 percent of national income) and replacement transfer payments (another 10-15 percent or perhaps as high as 20 percent) total social spending of 25-35 percent of national income means that the growth of the fiscal state reflects the constitution of a social state — Piketty states that ‘there is no significant support for continuing to expand the social state at its 1930-1980 growth rate (which would mean that by 2050-2060, 70-80 percent of national income would go to taxes)’ — Besides this controversial viewpoint, Piketty also indicates that the question of equal access to higher education and the future of pay-as-you-go retirement systems in a world of low growth are go far beyond the scope of the book — Although he mentions it in passing, also left out of the chapter is the question of what kind of fiscal and social state will emerge in the developing word — These oversights alongside a failure to account for the societal forces for change bringing about a more ‘social state’ are crucial factors in the current debates about inequality and transcending capitalism today.
Question: What is more utopian, to assume that a better life within capitalism is economically-environmentally-socially sustainable, or that a radical departure beyond capitalism is possible?
Note: Permission to use the set image was given by the artist, which is entitled ‘Book’ by Pawel Kuczynski.