Capital and Ideology

by Thomas Piketty

Without a credible new universalistic and egalitarian narrative, it is all too likely that the challenges of rising inequality, immigration, and climate change will precipitate a retreat into identitarian* nationalist politics based on fears of a “great replacement” of one population by another. We saw this in Europe in the first half of the twentieth century, and it seems to be happening again in various parts of the world in the first decades of the twenty-first century.

Problem brought on my inequality Without a credible new universalistic and egalitarian narrative, it is all too likely that the challenges of rising inequality, immigration, and climate change will precipitate a retreat into identitarian* nationalist politics based on fears of a “great replacement” of one population by another. We saw this in Europe in the first half of the twentieth century, and it seems to be happening again in various parts of the world in the first decades of the twenty-first century.

For the purposes of this book, an inequality regime will be defined as a set of discourses and institutional arrangements intended to justify and structure the economic, social, and political inequalities of a given society. Every such regime has its weaknesses.

Inequality regime defined For the purposes of this book, an inequality regime will be defined as a set of discourses and institutional arrangements intended to justify and structure the economic, social, and political inequalities of a given society. Every such regime has its weaknesses. From this historical analysis one important conclusion emerges: what made economic development and human progress possible was the struggle for equality and education and not the sanctification of property, stability, or inequality.

From this historical analysis one important conclusion emerges: what made economic development and human progress possible was the struggle for equality and education and not the sanctification of property, stability, or inequality.

Taking Ideology Seriously Inequality is neither economic nor technological; it is ideological and political. This is no doubt the most striking conclusion to emerge from the historical approach I take in this book. In other words, the market and competition, profits and wages, capital and debt, skilled and unskilled workers, natives and aliens, tax havens and competitiveness—none of these things exist as such. All are social and historical constructs, which depend entirely on the legal, fiscal, educational, and political systems that people choose to adopt and the conceptual definitions they choose to work with.

Taking Ideology Seriously Inequality is neither economic nor technological; it is ideological and political. This is no doubt the most striking conclusion to emerge from the historical approach I take in this book. In other words, the market and competition, profits and wages, capital and debt, skilled and unskilled workers, natives and aliens, tax havens and competitiveness—none of these things exist as such. All are social and historical constructs, which depend entirely on the legal, fiscal, educational, and political systems that people choose to adopt and the conceptual definitions they choose to work with.

The study of these different historical pathways, as well as of the many paths not taken, is the best antidote to both the conservatism of the elite and the alibis of would-be revolutionaries who argue that nothing can be done until the conditions for revolution are ripe. The problem with these alibis is that they indefinitely defer all thinking about the postrevolutionary future.

Why study historical pathways The study of these different historical pathways, as well as of the many paths not taken, is the best antidote to both the conservatism of the elite and the alibis of would-be revolutionaries who argue that nothing can be done until the conditions for revolution are ripe. The problem with these alibis is that they indefinitely defer all thinking about the postrevolutionary future.

Today, the postcommunist societies of Russia, China, and to a certain extent Eastern Europe (despite their different historical trajectories) have become hypercapitalism’s staunchest allies. This is a direct consequence of the disasters of Stalinism and Maoism and the consequent rejection of all egalitarian internationalist ambitions. So great was the communist disaster that it overshadowed even the damage done by the ideologies of slavery, colonialism, and racialism and obscured the strong ties between those ideologies and the ideologies of ownership and hypercapitalism—no mean feat.

Peril of communist collapse Today, the postcommunist societies of Russia, China, and to a certain extent Eastern Europe (despite their different historical trajectories) have become hypercapitalism’s staunchest allies. This is a direct consequence of the disasters of Stalinism and Maoism and the consequent rejection of all egalitarian internationalist ambitions. So great was the communist disaster that it overshadowed even the damage done by the ideologies of slavery, colonialism, and racialism and obscured the strong ties between those ideologies and the ideologies of ownership and hypercapitalism—no mean feat.

From “facts” alone we will never be able to deduce the ideal political regime or property regime or fiscal or educational regime. Why? Because “facts” are largely the products of institutions (such as censuses, surveys, tax records, and so on). Societies create social, fiscal, and legal categories to describe, measure, and transform themselves. Hence “facts” are themselves constructs. To appreciate them properly we must understand their context, which consists of complex, overlapping, self-interested interactions between the observational apparatus and the society under study. This of course does not mean that these cognitive constructs have nothing to teach us. It means, rather, that to learn from them, we must take this complexity and reflexivity into account.

Facts aren’t facts but made up with social constructs From “facts” alone we will never be able to deduce the ideal political regime or property regime or fiscal or educational regime. Why? Because “facts” are largely the products of institutions (such as censuses, surveys, tax records, and so on). Societies create social, fiscal, and legal categories to describe, measure, and transform themselves. Hence “facts” are themselves constructs. To appreciate them properly we must understand their context, which consists of complex, overlapping, self-interested interactions between the observational apparatus and the society under study. This of course does not mean that these cognitive constructs have nothing to teach us. It means, rather, that to learn from them, we must take this complexity and reflexivity into account.

The simplest type of ternary society comprised three distinct social groups, each of which fulfilled an essential function of service to the community. These were the clergy, the nobility, and the third estate. The clergy was the religious and intellectual class. It was responsible for the spiritual leadership of the community, its values and education; it made sense of the community’s history and future by providing necessary moral and intellectual norms and guideposts. The nobility was the military class. With its arms it provided security, protection, and stability, thus sparing the community the scourge of permanent chaos and uncontrolled violence. The third estate, the common people, did the work. Peasants, artisans, and merchants provided the food and clothing that allowed the entire community to thrive. Because each of these three groups fulfilled a specific function, ternary society can also be called trifunctional society. In practice, ternary societies were more complex and diverse. Each group could contain a number of subgroups, but the justification of this type of social organization generally referred to these three functions. In some cases, the formal political organization of society also invoked the same three functions.

Ternary Societies Explained The simplest type of ternary society comprised three distinct social groups, each of which fulfilled an essential function of service to the community. These were the clergy, the nobility, and the third estate. The clergy was the religious and intellectual class. It was responsible for the spiritual leadership of the community, its values and education; it made sense of the community’s history and future by providing necessary moral and intellectual norms and guideposts. The nobility was the military class. With its arms it provided security, protection, and stability, thus sparing the community the scourge of permanent chaos and uncontrolled violence. The third estate, the common people, did the work. Peasants, artisans, and merchants provided the food and clothing that allowed the entire community to thrive. Because each of these three groups fulfilled a specific function, ternary society can also be called trifunctional society. In practice, ternary societies were more complex and diverse. Each group could contain a number of subgroups, but the justification of this type of social organization generally referred to these three functions. In some cases, the formal political organization of society also invoked the same three functions.

Before proceeding further, however, I need to answer an obvious question: Apart from historical interest, why study ternary societies? Some readers might be tempted to think that these relics of the distant past are of little use for understanding the modern world. With their strict status differences, aren’t these societies diametrically opposed to modern meritocratic and democratic societies, which claim to offer equal access to every occupation—that is, both social fluidity and intergenerational mobility? It would be a serious mistake, however, to ignore ternary society, for at least two reasons. First, the structure of inequality in premodern ternary societies is less radically different from the structure of inequality in modern societies than is sometimes imagined. Second and more importantly, the conditions under which trifunctional society came to an end varied widely by country, region, religious context, and colonial or postcolonial circumstances, and we see indelible traces of these differences in the contemporary world.

Why study Before proceeding further, however, I need to answer an obvious question: Apart from historical interest, why study ternary societies? Some readers might be tempted to think that these relics of the distant past are of little use for understanding the modern world. With their strict status differences, aren’t these societies diametrically opposed to modern meritocratic and democratic societies, which claim to offer equal access to every occupation—that is, both social fluidity and intergenerational mobility? It would be a serious mistake, however, to ignore ternary society, for at least two reasons. First, the structure of inequality in premodern ternary societies is less radically different from the structure of inequality in modern societies than is sometimes imagined. Second and more importantly, the conditions under which trifunctional society came to an end varied widely by country, region, religious context, and colonial or postcolonial circumstances, and we see indelible traces of these differences in the contemporary world.

All societies have two essential needs—meaning and security. This is true in particular of less developed societies, where the territory is fragmented, communication difficult, instability chronic, and existence precarious. Pillage, mayhem, and disease are constant threats. If religious and military groups can provide credible responses to these needs by supplying institutions and ideologies adapted to their time and place, it should come as no surprise that trifunctional order emerges and is accepted as legitimate by the people.

livres tournois* to wealthy private landowners (both bourgeois and noble).

Confidence in the state’s ability to render justice fairly and impartially throughout a vast territory, to guarantee security, collect taxes, and provide police, educational, and medical services more justly and efficiently than the old privileged orders was not something that could be decreed from an academic chair. It had to be demonstrated in practice. At bottom, Montesquieu’s fears of a potentially despotic state (which led to his defense of local seigneurial courts) are not very different from the suspicions of various forms of supranational state power that one sees today. For instance, many defenders of interstate competition ignore the fact that some states establish opaque laws that allow them to function as tax or regulatory havens (of particular benefit to the wealthy), justifying their position by pointing to the risk to individual freedom that would result from overcentralization of information and judicial authority under the aegis of a single state. Such arguments are of course often covertly self-serving (as in Montesquieu’s case). Nevertheless, their (at least partial) plausibility makes them that much more politically effective, and only successful historical experimentation can lead to a radical shift in the political and ideological balance of power with issues of this type.

Comparison between state gaining power in 18th century and an interstate gaining more power now. Confidence in the state’s ability to render justice fairly and impartially throughout a vast territory, to guarantee security, collect taxes, and provide police, educational, and medical services more justly and efficiently than the old privileged orders was not something that could be decreed from an academic chair. It had to be demonstrated in practice. At bottom, Montesquieu’s fears of a potentially despotic state (which led to his defense of local seigneurial courts) are not very different from the suspicions of various forms of supranational state power that one sees today. For instance, many defenders of interstate competition ignore the fact that some states establish opaque laws that allow them to function as tax or regulatory havens (of particular benefit to the wealthy), justifying their position by pointing to the risk to individual freedom that would result from overcentralization of information and judicial authority under the aegis of a single state. Such arguments are of course often covertly self-serving (as in Montesquieu’s case). Nevertheless, their (at least partial) plausibility makes them that much more politically effective, and only successful historical experimentation can lead to a radical shift in the political and ideological balance of power with issues of this type.

Nevertheless, it is a fact that wealth inequality has decreased over the long run. However, this profound transformation has not benefited the “lower classes” (the bottom 50 percent), whose share remains quite limited. The benefits have gone almost exclusively to what I have called the “patrimonial (or property-owning) middle class,”* by which I mean the 40 percent in the middle of the distribution, between the poorest 50 percent and the wealthiest 10 percent, whose share of total wealth was less than 15 percent in the nineteenth century and stands at about 40 percent today (Fig. 4.2). The emergence of this “middle class” of owners, who individually are not very rich but collectively over the course of the twentieth century acquired wealth greater than that owned by the top centile (with a concomitant decrease in the top centile’s share), was a social, economic, and political transformation of fundamental importance.

PATRIMONIAL MIDDLE CLASSS Nevertheless, it is a fact that wealth inequality has decreased over the long run. However, this profound transformation has not benefited the “lower classes” (the bottom 50 percent), whose share remains quite limited. The benefits have gone almost exclusively to what I have called the “patrimonial (or property-owning) middle class,”* by which I mean the 40 percent in the middle of the distribution, between the poorest 50 percent and the wealthiest 10 percent, whose share of total wealth was less than 15 percent in the nineteenth century and stands at about 40 percent today (Fig. 4.2). The emergence of this “middle class” of owners, who individually are not very rich but collectively over the course of the twentieth century acquired wealth greater than that owned by the top centile (with a concomitant decrease in the top centile’s share), was a social, economic, and political transformation of fundamental importance.

Even with universal suffrage, a majority coalition in favor of progressive taxation does not come magically into existence. Because political conflict is multidimensional and the issues are complex, coalitions cannot be assumed and must be built; the ability to do so depends on mobilizing shared historical and intellectual experience.

Even with universal suffrage, a majority coalition in favor of progressive taxation does not come magically into existence. Because political conflict is multidimensional and the issues are complex, coalitions cannot be assumed and must be built; the ability to do so depends on mobilizing shared historical and intellectual experience.

Generally speaking, whether we are talking about the capitalism of the first industrial and financial globalization (in the Belle Époque, 1880–1914) or the globalized digital hypercapitalism that began around 1990 and continues to this day, capitalism can be seen as a historical movement that seeks constantly to expand the limits of private property and asset accumulation beyond traditional forms of ownership and existing state boundaries. It is a movement that depends on advances in transport and communication, which enable it to increase global trade, output, and accumulation. At a still more fundamental level, it depends on the development of an increasingly sophisticated and globalized legal system, which “codifies” different forms of material and immaterial property so as to protect ownership claims as long as possible while concealing its activities from those who might wish to challenge those claims (starting with people who own nothing) as well as from states and national courts.22

Capitalism defined Generally speaking, whether we are talking about the capitalism of the first industrial and financial globalization (in the Belle Époque, 1880–1914) or the globalized digital hypercapitalism that began around 1990 and continues to this day, capitalism can be seen as a historical movement that seeks constantly to expand the limits of private property and asset accumulation beyond traditional forms of ownership and existing state boundaries. It is a movement that depends on advances in transport and communication, which enable it to increase global trade, output, and accumulation. At a still more fundamental level, it depends on the development of an increasingly sophisticated and globalized legal system, which “codifies” different forms of material and immaterial property so as to protect ownership claims as long as possible while concealing its activities from those who might wish to challenge those claims (starting with people who own nothing) as well as from states and national courts.22

In this respect, capitalism is closely related to proprietarianism, which I define in this study as a political ideology whose fundamental purpose is to provide absolute protection to private property (conceived as a universal right, open to everyone regardless of old status inequalities). The classic capitalism of the Belle Époque is an outgrowth of the proprietarianism of the age of heavy industry and international finance, just as today’s hypercapitalism is an outgrowth of the era of the digital revolution and tax havens.

Proprietarism defined In this respect, capitalism is closely related to proprietarianism, which I define in this study as a political ideology whose fundamental purpose is to provide absolute protection to private property (conceived as a universal right, open to everyone regardless of old status inequalities). The classic capitalism of the Belle Époque is an outgrowth of the proprietarianism of the age of heavy industry and international finance, just as today’s hypercapitalism is an outgrowth of the era of the digital revolution and tax havens.

has been estimated that in 1880, nearly 80 percent of the land in the United Kingdom was still owned by 7,000 noble families (less than 0.1 percent of the population), with more than half belonging to just 250 families (0.01 percent of the population), a tiny group that largely coincided with the hereditary peers who sat in the House of Lords.7 By comparison, on the eve of the Revolution the French nobility owned roughly 25–30 percent of French land; recall, however, that the clergy in France had not yet been expropriated.

1% in England has been estimated that in 1880, nearly 80 percent of the land in the United Kingdom was still owned by 7,000 noble families (less than 0.1 percent of the population), with more than half belonging to just 250 families (0.01 percent of the population), a tiny group that largely coincided with the hereditary peers who sat in the House of Lords.7 By comparison, on the eve of the Revolution the French nobility owned roughly 25–30 percent of French land; recall, however, that the clergy in France had not yet been expropriated.

In 1945, a little more than thirty years later, an absolute majority of Labour deputies came to power for the first time. They issued from a political movement whose purpose was to represent the working class, and the new Labour government they established would proceed to establish the National Health Service and implement an array of social and fiscal policies that radically transformed the structure of inequality in Britain, as we will see in what follows.

Labour big year NHS etc In 1945, a little more than thirty years later, an absolute majority of Labour deputies came to power for the first time. They issued from a political movement whose purpose was to represent the working class, and the new Labour government they established would proceed to establish the National Health Service and implement an array of social and fiscal policies that radically transformed the structure of inequality in Britain, as we will see in what follows.

In any event, the very rapid transformation that took place in Sweden demonstrates the importance of popular mobilization, political parties, and reformist programs in the transformation of inequality regimes. When conditions are right, these processes can lead to rapid radical transformation by legal parliamentary means, without violent upheaval.

Sweden social change In any event, the very rapid transformation that took place in Sweden demonstrates the importance of popular mobilization, political parties, and reformist programs in the transformation of inequality regimes. When conditions are right, these processes can lead to rapid radical transformation by legal parliamentary means, without violent upheaval.

end of the system. The population of the southern states was 2.6 million in 1800: 1.7 million whites (66 percent) and 0.9 million blacks (34 percent). By 1860 the population had increased nearly fivefold to more than 12 million: 8 million whites (67 percent) and 4 million blacks (33 percent; Table 6.1). In other words, the system was experiencing rapid but relatively balanced growth, and nothing portended impending doom. In some states, to be sure, the population was as much as 50–60 percent black, but nowhere did the black share of the population attain the levels seen in the West Indies (80–90 percent). Between the 1790s and the 1850s, land use in the United States became

Calhoun’s rural republican ideal had points in common with Thomas Jefferson’s ideal of a democracy of yeoman farmers but with one essential difference: Jefferson saw slavery as an evil he did not know how to eliminate. “I tremble for my country when I reflect that God is just, and that his justice cannot sleep forever,” worried the man who wrote the Declaration of Independence

and who nevertheless could not imagine the possibility of a peaceful emancipation. “We have a wolf by the ears, and we can neither hold him, nor safely let him go. Justice is in one scale, and self-preservation in the other.” For Jefferson, who was speaking at the time in the 1820 congressional debate about extending slavery to Missouri (which he supported, as he supported the right of Missouri settlers to refuse to admit free blacks to the new state), emancipation could be envisioned only if it was accompanied not only by just compensation for the slaveowners but also by immediate expatriation of all former slaves.50

This project was a resounding failure. Between 1816 and 1867, the ACS relocated fewer than 13,000 emancipated African-Americans to Liberia, less than 0.5 percent of the total number of slaves (which was nevertheless enough to seriously perturb the subsequent development of Liberia, which has remained divided between “Americos” and natives to this day).51 Whatever Jefferson may have thought, emancipation could

The failed experiment with abolition of serfdom in Russia reminds us of a crucial fact: the transformation of trifunctional and slave societies into ownership societies requires the formation of a centralized state capable of guaranteeing property rights; exercising a monopoly of legitimate violence; and establishing a relatively autonomous legal, fiscal, and justice system—otherwise local elites will continue to wield power and maintain subaltern classes in a state of dependence. In Russia, the transition was made directly to something new: a communist society of the soviet type.

Inequality of wealth is above all inequality of power in society, and in theory it has no limit, to the extent that the owner-established apparatus of repression or persuasion (as the case may be) is able to hold society together and perpetuate this equilibrium.9

Inequality of wealth is above all inequality of power in society, and in theory it has no limit, to the extent that the owner-established apparatus of repression or persuasion (as the case may be) is able to hold society together and perpetuate this equilibrium.9 More generally, it is easy to show that the maximal materially possible level of inequality in any society increases with that society’s average standard of living (Fig. 7.6).10 The “material” determinants of inequality should not be exaggerated, however. In reality, history teaches us that what determines the level of inequality is above all society’s ideological, political, and institutional capacity to justify and structure inequality and not the level of wealth or development as such.

More generally, it is easy to show that the maximal materially possible level of inequality in any society increases with that society’s average standard of living (Fig. 7.6).10

The “material” determinants of inequality should not be exaggerated, however. In reality, history teaches us that what determines the level of inequality is above all society’s ideological, political, and institutional capacity to justify and structure inequality and not the level of wealth or development as such.

Inequality is determined primarily by ideological and political factors, not by economic or technological constraints. Why did slave and colonial societies attain such exceptionally high levels of inequality? Because they were constructed around specific political and ideological projects and relied on specific power relations and legal and institutional systems. The same is true of ownership societies, trifunctional societies, social-democratic and communist societies, and indeed of human societies in general.

When one country is required to pay another country profits, rents, and/or dividends over a long period of time, however, property relations can become even more complex and explosive. Constructing norms of justice acceptable to a majority through democratic deliberation and social struggle is already a complex enough process within a single political community; it becomes practically impossible when the owners of property are external to the community. In the most common and likely case, such external property relations will be regulated by violence and military force. In the Belle Époque, the colonial powers made ample use of gunboat diplomacy to ensure that interest and dividends would be paid on time and that no one would think of expropriating creditors. The military and coercive dimension of international financial relations and investment strategies also plays an essential role today, even though the interstate system has become much more complex. In particular, two of today’s leading international creditors, Japan and Germany, are states without armies, whereas the two principal military powers, the United States and to a lesser degree China, are focused more on investing domestically than on accumulating external financial claims. This may be due to the continental dimensions of both of these states as well as to their demographic dynamism (which may be about to change in China and may someday change in the United States).

explain the exceptional population densities in China and India, many authors have followed the lead of Fernand Braudel, who insisted in Civilisation matérielle, économie et capitalisme on the importance of different dietary regimes: the reason for Europe’s lower population density, Braudel argues, is that Europeans are too fond of meat, since it takes more acres to produce animal calories than to produce vegetable calories.

Inequality is not simply a matter of social disparities within countries; it is also at times a clash of collective identities and models of development. Their respective merits and limitations might in theory be subjects for calm and constructive debate, but in practice they are often transformed into violent clashes of identity. This is as much the case today as in centuries past, despite important contextual changes. Hence it is essential to describe the historical genealogy of these conflicts to gain a better understanding of what is currently at stake.

The century between the assassination of Archduke Ferdinand in Sarajevo on June 28, 1914, and the attack on New York on September 11, 2001, was one of hope for a more just world and more egalitarian societies and marked by projects that aimed at radical transformation of inequality regimes inherited from the past. These hopes were dampened by the depressing failure of Soviet Communism (1917–1991)—a failure that contributes to today’s sense of disillusionment and to a certain fatalism when it comes to dealing with inequality.

We will begin by measuring the extent to which income and wealth inequality decreased in Europe and the United States in the first half of the twentieth century, beginning with the collapse of private property in the period 1914–1945. Physical destruction linked to the two world wars played only a minor part in this collapse, though it certainly cannot be neglected in the countries most affected. The collapse was mainly the result of a multitude of political decisions, often taken in urgent circumstances; the common feature of these decisions was the intent to reduce the social influence of private property, whether by expropriation of foreign assets, nationalization of firms, imposition of rent and price controls, or reduction of the public debt through inflation, exceptional taxes on private wealth, or outright repudiation. We will also analyze the central role played by the introduction of large-scale progressive taxation in the first half of the twentieth century, with rates of 70–80 percent or more on the highest incomes and largest estates—rates that were maintained until the 1980s. From the distance afforded us by the passage of time, the evidence suggests that this historical innovation—progressive taxation—played a key role in reducing inequality in the twentieth century.

it is important to begin by taking the measure of the historic reduction of socioeconomic inequalities and the decline of private property in this period. Let us begin with income inequality (Fig. 10.1). In Europe, the share of the top decile (the 10 percent of the population with the highest incomes) amounted to about 50 percent of total income in Europe in the nineteenth and early twentieth centuries until the beginning of World War I. It then began a chaotic fall between 1914 and 1945, eventually stabilizing at around 30 percent of total income in 1945–1950, where it stayed until 1980. European income inequality, which was significantly higher than that of the United States until 1914, fell below US levels during the so-called Trente Glorieuses 1950–1980, a period of exceptionally high growth (especially in Europe and Japan) and historically low levels of inequality. In addition, the revival of inequality since 1980 has been much stronger in the United States than in Europe so that in the late twentieth and early twenty-first centuries the United States has taken the lead—the reverse of the situation at the turn of the twentieth century.

More generally, the problem with inflation is that it apportions gains and losses in a relatively arbitrary fashion, depending on who rebalances his or her portfolio at the right moment. Inflation is the sign of a society that is dealing with a serious distributive conflict: it wants to unburden itself of debts incurred in the past, but it cannot openly debate how the required sacrifices should be apportioned and prefers to rely on the vagaries of rising prices and speculation. The obvious risk of doing so is that a widespread sense of injustice will be created.

We have just examined the various mechanisms that explain the collapse of the total value of private property in Europe between 1914 and 1945–1950. This depended on several factors (destruction, expropriation, inflation) whose combined effects led to an exceptionally large fall in the ratio of private capital to national income,

Some scholars go so far as to conclude that such steeply progressive taxes could not have been implemented without World War I; without a similar (and at this point improbable) experience of mass military conscription in the twenty-first century, it is argued, no such progressive tax will ever again see the light of day.66

Conscription and progressive taxation Some scholars go so far as to conclude that such steeply progressive taxes could not have been implemented without World War I; without a similar (and at this point improbable) experience of mass military conscription in the twenty-first century, it is argued, no such progressive tax will ever again see the light of day.66 66 See esp. K. Scheve and D. Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton University Press, 2016). On the crucial role of war in the history of inequality, see W. Scheidel, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century (Princeton University Press, 2017).

Similarly, while World War II without a doubt played an important role in justifying new tax hikes on the ultrarich—especially the Victory Tax Act of 1942 (which raised the top marginal rate to 91 percent)70—the fact is that the change in attitude on taxation began much earlier in Roosevelt’s term at the height of the Depression in the early 1930s.

See esp. K. Scheve and D. Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton University Press, 2016). On the crucial role of war in the history of inequality, see W. Scheidel, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century (Princeton University Press, 2017). 67. V. I. Lenin, in his classic

Yellow Vests, Carbon, and the Wealth Tax: The Social-Nativist Trap in France

What is a just society? For the purposes of this book, I propose the following imperfect definition. A just society is one that allows all of its members access to the widest possible range of fundamental goods. Fundamental goods include education, health, the right to vote, and more generally to participate as fully as possible in the various forms of social, cultural, economic, civic, and political life. A just society organizes socioeconomic relations, property rights, and the distribution of income and wealth in such a way as to allow its least advantaged members to enjoy the highest possible life conditions. A just society in no way requires absolute uniformity or equality. To the extent that income and wealth inequalities are the result of different aspirations and distinct life choices or permit improvement of the standard of living and expansion of the opportunities available to the disadvantaged, they may be considered just. But this must be demonstrated, not assumed, and this argument cannot be invoked to justify any degree of inequality whatsoever, as it too often is.

A Just Society What is a just society? For the purposes of this book, I propose the following imperfect definition. A just society is one that allows all of its members access to the widest possible range of fundamental goods. Fundamental goods include education, health, the right to vote, and more generally to participate as fully as possible in the various forms of social, cultural, economic, civic, and political life. A just society organizes socioeconomic relations, property rights, and the distribution of income and wealth in such a way as to allow its least advantaged members to enjoy the highest possible life conditions. A just society in no way requires absolute uniformity or equality. To the extent that income and wealth inequalities are the result of different aspirations and distinct life choices or permit improvement of the standard of living and expansion of the opportunities available to the disadvantaged, they may be considered just. But this must be demonstrated, not assumed, and this argument cannot be invoked to justify any degree of inequality whatsoever, as it too often is.

The proposals I examine here derive from the democratic socialist tradition, notably in the emphasis I place on transcending private ownership and involving workers and their representatives in corporate governance (a practice that has already played an important role in German and Nordic social democracy). I prefer to speak of “participatory socialism” to emphasize the goal of participation and decentralization and to sharply distinguish this project from the hypercentralized state socialism that was tried in the twentieth century in the Soviet Union and other communist states (and is still widely practiced in the Chinese public sector). I also envision a central role for the educational system and emphasize the themes of temporary ownership and progressive taxation (bearing in mind that progressive taxes played an important role in British and American progressivism and were widely debated though never implemented during the French Revolution).

Participatory Socialism The proposals I examine here derive from the democratic socialist tradition, notably in the emphasis I place on transcending private ownership and involving workers and their representatives in corporate governance (a practice that has already played an important role in German and Nordic social democracy). I prefer to speak of “participatory socialism” to emphasize the goal of participation and decentralization and to sharply distinguish this project from the hypercentralized state socialism that was tried in the twentieth century in the Soviet Union and other communist states (and is still widely practiced in the Chinese public sector). I also envision a central role for the educational system and emphasize the themes of temporary ownership and progressive taxation (bearing in mind that progressive taxes played an important role in British and American progressivism and were widely debated though never implemented during the French Revolution). ....... WHY CALL IT SOCIALISM In view of the largely positive results of democratic socialism and social democracy in the twentieth century, especially in Western Europe, I think that the word “socialism” still deserves to be used in the twenty-first century to evoke that tradition even as we seek to move beyond it. And move beyond it we must if we are to overcome the most glaring deficiencies of the social-democratic response of the past four decades. In any case, the substance of the proposals we will discuss matters more than any label one might attach to them. It is perfectly comprehensible that for some readers the word “socialism” will have been permanently tarnished by the Soviet experience (or by the actions of more recent governments that were “socialist” in name only). Therefore, they would prefer a different word. Nevertheless, I hope that such readers will at least follow my argument and the propositions that flow from it, which in fact draw on experiences and traditions of many kinds.4

In view of the largely positive results of democratic socialism and social democracy in the twentieth century, especially in Western Europe, I think that the word “socialism” still deserves to be used in the twenty-first century to evoke that tradition even as we seek to move beyond it. And move beyond it we must if we are to overcome the most glaring deficiencies of the social-democratic response of the past four decades. In any case, the substance of the proposals we will discuss matters more than any label one might attach to them. It is perfectly comprehensible that for some readers the word “socialism” will have been permanently tarnished by the Soviet experience (or by the actions of more recent governments that were “socialist” in name only). Therefore, they would prefer a different word. Nevertheless, I hope that such readers will at least follow my argument and the propositions that flow from it, which in fact draw on experiences and traditions of many kinds.4

On the Transcendence of Capitalism and Private Property What is just ownership? This is the most complex and central question we must try to answer if the goal is to define participatory socialism and imagine the transcendence of capitalism. For the purposes of this book, I have defined proprietarianism as a political ideology based on the absolute defense of private property; capitalism is the extension of proprietarianism to the age of large-scale industry, international finance, and more recently to the digital economy. At bottom capitalism rests on the concentration of economic power in the hands of the owners of capital. In principle, the owners of real estate capital can decide to whom they wish to rent and at what price while the owners of financial and professional capital govern corporations according to the principle of “one share, one vote,” which entitles them, among other things, to decide by themselves whom to hire and at what wage.

On the Transcendence of Capitalism and Private Property What is just ownership? This is the most complex and central question we must try to answer if the goal is to define participatory socialism and imagine the transcendence of capitalism. For the purposes of this book, I have defined proprietarianism as a political ideology based on the absolute defense of private property; capitalism is the extension of proprietarianism to the age of large-scale industry, international finance, and more recently to the digital economy. At bottom capitalism rests on the concentration of economic power in the hands of the owners of capital. In principle, the owners of real estate capital can decide to whom they wish to rent and at what price while the owners of financial and professional capital govern corporations according to the principle of “one share, one vote,” which entitles them, among other things, to decide by themselves whom to hire and at what wage.

we can establish true social ownership of capital by more extensive power sharing within firms, and second, we can make ownership of capital temporary by establishing progressive taxes on large fortunes and using the proceeds to finance a universal capital endowment, thus promoting permanent circulation of property.

Specifically, the German constitutions of 1919 and 1949 adopted a social definition of the rights of ownership, which took into account the general interest and the good of the community.