Piketty and a potential big bump for our movements


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Movements Moving Together 18.

In a recent article in the Nation a “socialist feminist,” Lisa Featherstone makes the following statement:

…in a primary against an independent socialist who has been attracting an astonishing level of grassroots support, there are no socialist-feminist reasons to support Hillary Clinton. Socialist feminism assumes that redistribution is the best way to begin improving life for the vast majority of women, both materially and socially. (emphasis added)

From a strong radical perspective, this is a mild position. It’s very center-left. Fortunately, in Thomas Piketty’s Capital in the Twenty-First Century,* which came out in 2014, we now have a mainstream smash hit, to frame and back-up more radical proposals. A large number of well-respected economists have strongly endorsed the central thesis of his book, including economics Nobel winners Robert Solow, Joseph Stiglitz, and Paul Krugman.

Martin O’Neill, an economist from the University of York, develops the radical implications of Piketty. He elaborates on some “radical forms of predistributive institutional innovation” for “a comprehensive democratic capture of capitalism” that flow from his work.

First, he lays out the bad news:

Thomas Piketty’s Capital in the Twenty-First Century1 presents a troubling puzzle for social democrats and for parties of the centre-left, as well as for academics interested in developing a more egalitarian public policy agenda. Supported by a previously unimagined wealth of statistical detail, gained through the archival labour over many years of a large team of researchers, Piketty’s book confirms profound concerns about the long-range dynamics of capitalism. Wealth does not naturally disperse down to the many, but sticks to the few, and especially to those who carry the arbitrary advantages of patrimonial inheritance. The facts of inequality are devastating, and come with an accompanying sense of deflation at the level of policy and political action. We may have come to see the grim facts of capitalism’s internal dynamics more clearly than ever before, but it is much less clear that we have the tools to cure capitalism’s disfiguring disease of accelerating inequality. Hence we see that a common reaction to Piketty’s work on the left is one of resignation or even despair. (Emphasis added)

He is not the only one saying this. S. Abbas Raza, founding editor of an interesting web site, 3QuarksDaily.com, makes the same claim. In addition, he focuses on a bone-chilling formula —r > g— Piketty uses throughout his book that is “an internal feature of capitalism which increases inequality:”

as long as the rate of return on capital (r) is greater than the rate of economic growth (g), wealth will tend to concentrate in a minority, and that the inequality r > g always holds over the long term.

And then the blood-chilling observation that confirms what many of us think: “political policy-making is itself greatly affected by the level of inequality. This creates a vicious positive feedback loop which is making things even worse.”

 

Now back to the good news (and all emphases are added). Paul Krugman makes this point:

Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.

Martin O’Neill goes further and begins to focus on policies that go far beyond simple redistribution of income:

…it is no part of Piketty’s view that we can rely on a simple technocratic fiscal fix to solve the problems ahead of us. Mechanisms of redistribution will not be sufficient, but will have to be supplemented by more radical forms of predistributive institutional innovation. If solutions to the problem of inequality are to be as radical as reality now demands, what is instead required is a reimagining of what would be involved comprehensively to tame capitalism through democratic means.

He gets more specific:

Pinketty calls for a comprehensive democratic capture of capitalism, in which “the concrete institutions in which democracy and capitalism are embodied need to be reinvented again and again”. This would involve “the development of new forms of property and democratic control of capital”, with regard to which “new forms of participation and governance remain to be invented”

A major part of his article draws on the writings of a radical economist from mid-20th century, James Meade. He summarizes Meade’s “predistribution” approach:

Meade’s view was that attacking fundamental inequalities of wealth had to involve a double-barreled strategy, consisting in the creation of a range of private and public institutions and policies, which he brought under the headings of

(i)  a property-owning democracy and

(ii) liberal socialism. Instead of the role of the state being to sweep in as an ex post fiscal authority, reallocating the hugely unequal rewards of economic activity, the state’s function in shaping the economy should instead be to restructure the rules of the capitalist game from the very start, through these varieties of both private and public forms of what I’ll call “capital predistribution”.

It seems to me that some heavyweight mainstream economic thinking is emerging that might be very supportive co-operative/solidarity and other movements for alternative economics. But that still leaves us with the problem of how do we generate the power to move our movements more dynamically.

*Apparently he pronounces his name like “pick-a-tea.

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