Chronicles: On Our Troubled Times
By Thomas Piketty, Viking, 192 pages, £17
Thomas Piketty depresses as much as inspires. Read him and you become convinced that Western democracies have set themselves problems they no longer have the will to solve.
Democracy’s superiority to dictatorship is not that democratic leaders are necessarily more virtuous than dictators are. Nor can anyone but a cockeyed optimist believe that democratic publics are by definition always clever and benevolent. Democracies’ great advantage is meant to be that they have a rubbish chute. When leaders and policies fail, we shove them through it and replace them with something better.
Piketty’s work from the last decade, collected in “Chronicles: On Our Troubled Times”, throws into doubt democracy’s redeeming and most essential quality: the ability to acknowledge mistakes and reform.
He will be remembered, of course, for his masterpiece, “Capital in the Twenty-First Century”, which among its many virtues explained in encyclopaedic detail why the need for reform was urgent. The limited equality of the mid-20th century was an aberration, Piketty demonstrated to the satisfaction of all except the wilfully blind. It was the product of progressive taxation and, somewhat less cosily, the destruction of the fortunes of the wealthy brought about by revolution and World Wars. We are now living in a new gilded age. Not only do the children of the rich have the same advantages they possessed in the 19th century, but, in a modern twist, a new but equally undeserving class of “super managers” extract opulent “rewards” from their companies, which bear no discernible relationship to their less-than-super productivity or performance.
Capital created something close to hysteria among conservatives. The economics editor of the “Financial Times” turned from a sober correspondent of an apparently serious newspaper into a flaming troll. He found a misprint here, a mistake there, as anyone could find in a book of almost 600 pages packed with data. He and his fellow conservatives added them up, made howlers of their own and concluded that far from being an oligarchy in the making, the rich had suffered calamitous falls in their income.
No one believed them. I doubt if they believed themselves. You only had to see what was in front of your nose to know that Piketty was describing the world as it is. Conservatives’ ideological motives were as easy to discern. Piketty showed a future where their received wisdom would be little more than pious falsehoods. Unearned wealth would trump individual effort. If you did what politicians told you to do, and “worked hard and played by the rules”, the odds of you matching the unearned wealth of a plutocrat’s child would remain so vast as to be close to incalculable.
Speaking of trumping, the super-rich would have the funds to buy rightwing political leaders, or in the case of Donald Trump, become leaders themselves. The ease with which they can be bought is already before us, as Piketty’s analysis predicted. You see it in the willingness of conservatives in the US, Britain and France to reinforce the drive to oligarchy by cutting or abolishing inheritance taxes.
It is easy to forget that the banking collapse and bailout of the most vulturous and inept “super managers” in the world provoked a crisis of legitimacy for free market conservatism. I hope I am not making a cheap point when I say that the next crisis will reveal that many conservative thinkers and politicians have shamed themselves by doubling down on a failed ideology.
“Chronicles” is not a successor to “Capital” but a slim collection of Piketty’s pieces from the French press. Beyond the pleasure of hearing his thoughts, there is a dismal fascination in watching his instant response to events, and then realising that so many of his sensible proposals got nowhere.
Writing at the height of the banking crisis in 2008, Piketty deemed three reforms necessary: shareholders and managers bailed out by the public must pay a price. Financial regulators must stop toxic assets being sold in markets with the same aggression their colleagues apply to dangerous foods and medical treatments. (“This will never be possible” while we leave $10 trillion [Dh36.7 trillion] of assets in tax havens.) And we must end “the obscene compensation packages of the financial sector which helped stimulate risk taking”.
Eight years on, how’s that all going? Although the authorities did not seize the assets of the managers of Northern Rock and the Royal Bank of Scotland, they have now imposed criminal penalties and confiscation orders for the bonuses of bankers involved in new scandals. Nothing has been done to eradicate tax havens, however, even though Luxembourg, Monaco and Liechtenstein are in the EU and Guernsey, Jersey, Sark, Gibraltar, Anguilla, the Virgin Islands, Montserrat, Bermuda, the Turks and Caicos Islands and Cayman Islands are British overseas territories and crown dependencies. As for “obscene compensation packages”, they remain as much an affront to rational evaluations of alleged super managers’ performance as ever.
Piketty is as concerned about the crisis in the Eurozone as the crisis in global capitalism. He makes a fine point I have never seen argued before, that the idea for the single currency came from the holiday from history of the 1990s. The Berlin Wall was down, the Washington consensus was triumphant, and the wishful thinkers behind the euro assumed that the sole task of the central bank was to control inflation.
If they realised they would have to stabilise markets, avoid cascading bankruptcies and print money to subsidise governments, surely they would never have embarked on the folly of creating a single currency before they had a single country. You can make the same argument about the open borders brought by the Schengen Convention of 1990. It was also signed in the post-communist euphoria, when no one thought of the coming dangers of Islamists travelling across the continent through unmanned borderposts.
But Piketty’s rational solution that the Eurozone countries share their debts and become a single state strikes me as naive in the extreme. With uncharacteristic blindness he underestimates the unwillingness of the peoples of Europe to dissolve their national identities. Like the most wide-eyed euro enthusiast of the 1990s, he assumes that a new European state can be ordered into existence with a revolution from above.
Perhaps I am being too harsh. For all the rightwing attacks on him, and the claims by his admirers that he is the successor to Karl Marx, Piketty is anything but a revolutionary. His aims are modest. He wants a eurozone that isn’t a basket case, and a society that does not fix its rules to suit the trustafarian slob and the executive rent-seeker.
Is that too much to ask? Apparently in Western societies it is. Necessary reform is now a Utopian dream. We can barely contemplate it, let alone implement it.
–Guardian News & Media Ltd
