This evening in Copenhagen, the 59th Eurovision Song Contest will choose a winning act that may either secure a lasting place in the affections of a continent or – more probably – sink without trace within a year. Fame can be fickle, too, in those parts of the culture that don’t depend exclusively on hooks, spangles and schmaltz.
Thomas Piketty sounds like a well-informed and level-headed guy, as well as someone who knows an awful lot about unfair competition. So perhaps the bestselling professor at the Paris School of Economics will be pondering whether his rocket-like ascent to celebrity will in the long term make him the Abba or Celine Dion of political economy – or a shooting Euro-star akin to Ell & Nikki and Marie N.
Since its English translation appeared in mid-March, the economist’s brick-like study, Capital in the Twenty-First Century, has sold more than 200,000 copies. This week, only a few days after the official UK launch, it stands at No 11 in Waterstones’ non-fiction chart, moving up fast on Wisden Cricketers’ Almanack if still a fair way south of Mary Berry Cooks.
The surprisingly accessible fruit of 15 years of research into growing inequalities, Piketty’s epic alloy of historical analysis and redistributive tract calls for a global wealth levy and a top tax rate of 80 per cent for the highest incomes. To widespread surprise, the forty-something researcher now makes the intellectual weather on both sides of the Atlantic.
Nobel laureates such as Paul Krugman salute him (with reservations). Ed Miliband’s inner circle devours his book. The FT cheers “a transformation in what we know about the evolution of income and wealth”. Lord Turner bows to “a remarkable piece of work”. As for Branko Milanovic, until recently lead research economist at the World Bank, he hails “one of the best books in economics written in the past several decades”.
What is going on here, when a heavyweight journey through the history of wealth accumulation brings plaudits from those who might be expected to slap it down with nul points? After all, Piketty’s dense work of statistical interpretation advocates taxation levels steeper than any major party in the West supports. Even the much-reviled François Hollande fixed his ceiling at 75 per cent on French salaries above €1m.
Yet Piketty has free-market right as much as egalitarian left falling over each other in the rush to pay homage. In part, his book has fleshed out, with evidence that spans centuries and continents, a widespread popular intuition. The world of Downton Abbey is returning, at least in the US and UK. The super-wealthy 1 per cent entrench their growing privilege and threaten to ensure that inequality will cascade down future generations. “Patrimonial capitalism” has come back with a vengeance in our new gilded age.
In this respect, his arguments for confiscatory taxes on top-earning “super-managers” become a sideshow (as Krugman, for one, has shown). The nub of the Piketty approach involves not overpaid “hedgies” and bonus-guzzling casino bankers but the consolidation of a rentier elite and the “drift towards oligarchy” via inheritance. The bonus barons, of course, aspire to join and breed this new hereditary plutocracy, digging the foundations of their loot as deep as a multi-storey designer basement in the stucco villas of Notting Hill or Belsize Park.
Inequality has become structural rather than cyclical in contemporary capitalism, Piketty maintains. He revises the economist Simon Kuznets’ curve, which showed that wealth differentials tended to decrease in the modern world. Yet his own sudden glory can be explained according to a cyclical model. By the late 1980s, the successors to Thatcher and Reagan had indicated that they would not do very much to reverse the free-market revolution. The Blairs and the Clintons, at least in their critics’ eyes, finessed the mood music but never changed the tune.
Since then, at regular intervals, the intellectual protest vote against the “Washington consensus” of neo-liberal policy has hailed one dissident guru after another. Paul Krugman himself set down an early marker with The Age of Diminished Expectations in 1990. In 1995, economist-journalist Will Hutton made a short-lived British splash with his neo-Keynesian polemic The State We’re In. Since then, the foes of neo-liberalism have been able to pick and mix their dissident sages for every new season.
Avant-garde campus rebels can applaud the eccentric neo-Marxist cabaret staged over dozens of books by the prolific Slovenian theorist Slavoj Zizek. Nostalgists for a classic revolutionary analysis swear by the works of Alain Badiou. Young activists from the (paradoxically) worldwide movement against globalisation who have marched or sat against the Washington consensus from the 1999 “Battle of Seattle” through to the Occupy movement’s coups at Wall Street and St Paul’s often go armed with Naomi Klein, author of No Logo and The Shock Doctrine.
Joseph Stiglitz, another Nobel laureate, has in salvo after salvo trained his fire on the abuses of the runaway market before and after the 2008 financial meltdown, covering some of the Piketty terrain in The Price of Inequality. Meanwhile, British non-conformists who fear the cost to community well-being of yawning wealth gaps have selected as their scripture The Spirit Level: Why Equality Is Better for Everyone, by Richard Wilkinson and Kate Pickett.
The manifestos multiply. In pure market terms, some of them do very well indeed. Yet most of the principles they target remain, even after the financial crisis, as rock-like as the Bank of England’s walls. In spite of its passion for Piketty, don’t wait around for the Miliband crew to add the demand for an 80 per cent top rate or a 15 per cent tax on assets to Labour’s electoral platform.
To hazard a generalisation, we might conclude that, since around 1980, the English-speaking liberal-left has become accustomed to winning the intellectual battles at the same time as it loses the political wars. The Piketty cult follows in the wake of the Hutton hoo-ha, the Zizek razzmatazz, the Klein carnival and half a dozen other fads.
These waves of cerebral protest may serve as safety valves, as outlets for frustration, even as fantasy triumphs in times of setback and stagnation. Note that in his native France, where even now redistributive ideas can break out from fantasy politics into real legislative plans, Piketty has failed to cast anything like the same public spell. In fact, for much of the media there, he has never quite shrugged off the acrimonious end of his relationship with Aurélie Filippetti, now culture minister in Hollande’s socialist government.
For the architects and enforcers of free-market fundamentalism, these intermittent downpours of outrage can also fulfil a purpose. They show the strength of the headwind against them, correct glaring flaws, and suggest the tweaks and nudges that might keep the neo-liberal show on the road. Bear in mind that only a minority of these critiques come from a revolutionary position.
A proud empiricist, Piketty reports that he simply gave up on trying to fathom Marx the theorist: Das Kapital is “very difficult to read and for me it was not influential”. Most of his Anglophone equivalents count as mainstream social democrats, rebooted Keynesians or New Deal liberals. However much they deplore the wreckage left by austerity and inequality, these reformist packages may still function as protein-packed food parcels for their antagonists.
The more thoughtful flank of politics and media likes to believe that ideas will change the course of history. John Maynard Keynes himself wrote in the peroration to his “General Theory” of 1936: “The world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Sadly, the data amassed by Piketty himself tends to throw doubt on the role of economic ideas – above all, those of Keynes. To Piketty, the now-reversed move towards greater equality that marked the mid-20th century came about not because politicians had read and applied Keynes but because annihilating world wars and depressions had destroyed so much old wealth.
Capital in the Twenty-First Century boasts a hoard of evidence and a force of rhetoric that lift it far above the thinner polemics that have caught a mood of grumbling discontent with our new Belle Epoque. All the same, it is difficult to see how and where the policy proposals will make the leap from seminar or studio to statute. For a start, a cross-border capital levy would require – at the very least – a level of European integration that the anti-EU left would find almost as hard as Ukip to digest.
None of this matters much if you survey the cycle of intellectual revolt against the legacy of Thatcherism and Reaganomics. It makes the critics feel better, and may also demonstrate to the engineers of wealth accumulation how to tinker with the mechanism to avoid a breakdown. As usual, capitalism feeds off its challengers, and embraces its star heretics. As for the thwarted witnesses of deepening inequality, an ideas idol such as Piketty can make them feel – in the title of Armenia’s much-fancied entry for Eurovision tomorrow tonight – “Not Alone”.