Joerg Rieger on Thomas Piketty’s Capital in the Twenty-First Century
There may be no more important topic to discuss at present than that of capital. It might not be surprising to hear such a statement from the mouth of an economist but, coming from someone who studies religion and theology, it may seem excessive. Capital is indeed more important than most people realize, and it matters to all of us in every respect, as it tends to influence not just matters of economics and politics but also culture and religion. Even some of our deepest beliefs might be shaped by the flows of money.
Let’s take a look at some possible reasons why a book called Capital in the Twenty-First Century can make it to the New York Times bestseller list. Thomas Piketty’s volume is not a shoo-in: it contains a wealth of complex information on nearly 700 pages, is not an easy read, and does not give away its main concerns quickly and easily. The success of the book shows that the topic of capital fascinates many of our contemporaries, drawing attention far beyond the circle of experts. Perhaps this is a sign that people are waking up to one of the subjects of our time that might be considered truly matters of life and death: as the rich get richer, others get poorer and — not mentioned by Piketty — tens of thousands of people are dying every day from lack of food and from preventable diseases.
The overall message of the book may account most for its popularity. Piketty shows that growing inequality is the historical legacy of capital. Despite some reduction of inequality in the middle of the twentieth century, inequality has grown substantially since the 1970s, and there is no end in sight. This is what increasingly worries people today, even though not all are ready to discuss it openly. That Piketty presents his case in a well-documented study without rival, rather than as an alarmist manifesto, adds to the attraction. No one can easily dismiss all these numbers.
For those aware of the basic orthodoxies of contemporary economics, Piketty’s work presents substantial arguments. The most important of these is a well-documented rejection of the widespread assumption that capitalism leads not only to greater economic success but also to greater equality in the long run. This now-questioned belief is the reason for current economic policies like tax cuts to corporations and to the wealthy. Piketty turns things around by showing that concentrations of capital in the hands of a few do not lead to the common good but to imbalances that hurt not only economic growth but also democracy.
Another economic orthodoxy Piketty calls into question is the common belief that capital is tied to merit. Even though he does not seek to discredit merit altogether, he makes it clear that accumulation of capital also includes “luck” and sometimes “outright theft.” And while labor contributes to the formation of capital — Piketty zeroes in on the exorbitant salaries of top managers that are subject to few checks and balances but has little to say about the contributions of ordinary workers — in the long run capital perpetuates itself. Concentrated capital begets even more capital and, as a result, the greatest fortunes grow exponentially without the need for the wealthy to work. This is true not only for obscure heiresses and heirs of fortunes who never worked a day in their lives but also for Bill Gates.
One of the great merits of Piketty’s project is that he seeks to break out of the narrow schemes of contemporary economics by paying attention to history and politics, as well as social and cultural factors. From the other end of the spectrum, this is similar to what I have tried to do in my book No Rising Tide: Theology, Economics, and the Future. Capital has implications not only for economics but also for politics, society, and culture. Even religion, which Piketty ignores, is linked to capital for good or for ill, as religious beliefs and practices never shape up in a vacuum.
Piketty’s “meritocratic worldview” and “meritocratic hope” serve as an example. The growing inequality of capital is supported by the cultural belief that wealth is earned and deserved, which justifies the wealthy and gives hope to others that they, too, might be wealthy some day. It does not matter that this belief hardly corresponds with reality. (The greatest accumulation of wealth is not earned and social mobility is surprisingly low in the United States.) Religious beliefs shape and are shaped by these attitudes as well. In a recent survey, a large percentage of people wrongly assumed that “God helps those who help themselves” is a quotation from the Bible. Facts like this illustrate how the growing inequality of capital is supported by culture and religion and shapes them in turn — with consequences for everyone. Those who are less fortunate are left to struggle not only economically but also culturally and religiously: they are blamed for their misfortune in ways that would have never occurred to previous generations, as Piketty notes. Not even members of the middle class are immune: they have no one else to blame but themselves if their fortunes take a hit, as they increasingly do.
The growing concentration of capital also has political consequences. Piketty is well aware of the often-overlooked fact that capital is not merely about money and economics but also about power and politics. Great concentrations of capital endanger democracy, as they enable the people who hold them to exercise influence in all kinds of ways. The much-discussed matter of campaign financing is merely the tip of the iceberg.
We can easily relate to the implications of a growing inequality in capital because we live them out, and this contributes to the accessibility of Piketty’s volume despite the thickness of his argument. But yet another matter accounts for the popularity of the book: it enables us to envision an alternative future. One of the great merits of Piketty’s argument is that he investigates the history of capital. Inequality has a history, but it is not inevitable; the system needn’t collapse under its own weight. When the causes that have led to the current growth of inequality are seen, responses can be devised that lead to alternative outcomes.
Piketty’s Capital enables us to envision an alternative future.
Piketty’s main proposal to reign in runaway capital is to reassert democratic control of capital by imposing a global progressive tax. Such a tax would have the advantage of limiting the dangers of uncontrolled growth of capital without doing away with the positive contributions that capital can make. Piketty, unlike other critics of capitalism, wants to preserve private capital’s capacity to provide incentive, innovation, and leadership. Taxes thus appear in a new light, as a mechanism that — and this is a major insight especially in the United States, where taxes for the wealthy have been pushed to historic lows — can help strengthen democracy by leveling out-of-control power differentials and creating more level playing fields. Not only can progressive taxes limit the excesses of capital, they can also contribute to empowering people through education and provide a certain amount of social stability.
What is less clear, and here the limits of Piketty’s work come to view, is who might have the power to produce such major corrections to the current course of the globe. Piketty puts some hope in governments. But what if governments are by now so beholden to the power of concentrated capital that they will not be able to produce real change? Might one more sinister reason for the attractiveness of Piketty’s book have to do with how comfortable his solutions are to his readers? It all comes down to agreeing or disagreeing with him from the comfort of one’s armchair and to watching the debate unfold among experts, as Piketty suggests no specific course of action.
What would it take to move to the next step? Might there be hope in different numbers than the ones on which Piketty draws? What does it mean, for instance, that wealth is concentrated at the top, with the 0.1 percent being in charge? What about the 99 percent, or even the 99.9 percent? Those among the 99 percent that are doing fairly well for themselves may not care at the moment. But there are others who are more directly affected by the growing inequality and whose only hope is change. There are also large numbers whose parents, children, or friends are affected so that they, too, are touched by the urgent nature of the problem.
If the interests of capital can be organized, how about the interests of the people? People can pool their limited resources — not only economic but also political, social, and cultural. Here religion enters the fray once again. If concentrated capital shapes and uses religion, the concerns of popular communities can also shape religion and draw strength from it. Unfortunately, it is only on the very last page in the very last sentence of his book that Piketty mentions the “least well-off,” which is reminiscent of the commitment of many religions to care for what the Bible calls the “least of these.”
What Piketty misses for the most part, and what might in the end save us, are efforts to organize the power that emerges from below. There are many historical examples of how such power can be organized, including the Civil Rights movement in the United States and various global protest movements of recent years. The Abrahamic traditions have their own witnesses to power from below. According to one reading of the ancient Exodus story shared by Judaism, Christianity, and Islam, the ancient Hebrews enslaved in Egypt organize and, in collaboration with Moses and a God who supports their cause, accomplish their liberation. In our own time, we might do well to pay attention once again to those people on whose work the economy rests.
Another of Piketty’s most troublesome blind spots: while he notes that capital has two origins, work and interest, he forgets to discuss the work that is done by the majority of people. Although he is deconstructing the myth that the work of corporate leaders merits compensation hundreds of times greater than that of everyone else, Piketty fails to take a deeper look at the actual value of workers. This hampers not only the economic argument but also a clearer view of the alternatives. If workers indeed are making important contributions to the economy, which are worth much more than their salaries, we might have reason to expect that they can also make important contributions in politics, culture, social life, and even in religion.
This is not wishful thinking, as movements of workers have made contributions to a more equal world in the past and they continue to do so today. The “least of these” matter, therefore, not merely as recipients of service and care; to the contrary, when organized they have been essential parts of the solution throughout history. At one point Picketty does mention that workers might need to sit on corporate boards, but he gives his readers no clue as to how that might be accomplished or how, in Germany for instance, this has actually become a reality through organized labor struggles.
The good news is that this alternative formation of power is going on as we speak. The Occupy Wall Street movement has demonstrated some potential, which was great enough that the powers that be were forced to smash it. Even after dramatic efforts to suppress it, this potential endures and it shapes all areas of life. In our recent book Occupy Religion: Theology of the Multitude, Kwok Pui Lan and I talk about the deep solidarity emerging among the 99 percent. What if the real reasons for hope, which may ultimately inspire governments and hold them accountable, are to be found here?
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