Catastrophe, Reform or Revolution?


Catastrophes loom on the horizon: an ecological catastrophe caused by our reliance on fossil fuels; a nuclear catastrophe, caused by our reliance on nuclear power; and another kind of nuclear catastrophe caused by our government’s failure to pursue nuclear disarmament.

It is unclear whether the first can still be stopped or even reversed; what is clear is that the danger gets worse as time goes by.  What has taken many decades to develop is not easily undone, and the longer the task is put off, the harder it becomes. Thresholds have been crossed; more lie ahead.  At this point, doing little or nothing only makes the problem
worse — fast.

But taking bold action would require bold leadership, and there is little of that these days in Washington, DC.

The impending nuclear catastrophes can be blocked at any time.  But, here too, our leaders are hardly up to the task.

The good news is that none of these catastrophes are likely to do us in at one fell swoop; the bad news is that if our politics is ever to change enough to meet the challenges we face, it will be because ever more devastating foretastes of greater catastrophes to come increase in number and severity.

This will mean that the American government would have to take on the energy industry and the military-industrial complex.  This is impossible so long as it remains in the pockets of both.

Plutocrats are calling the shots; in their own (unenlightened) interests, not ours.

This is why the old slogan – “the only solution, revolution” – has become than ever apt.  But ours is not a revolutionary age.

It is not even an age in which far-reaching but non-revolutionary change — change for the better — is on the agenda.   In the Bush-Obama era, normal politics has become even more futile than it used to be.

Meanwhile, as catastrophes threaten, the body politic has grown chronically ill; basic rights and liberties are under assault, and the temptations of empire undo what is most estimable in our political culture.   For security’s sake, much that was worth retaining has been undone; and we are still more and more at risk.

And it could get worse.   Our military juggernaut and the institutions that comprise our national security state are capable of wreaking havoc throughout the world to an extent that is without precedent in human history.  The danger is that this is what will happen as American economic, political and moral dominance wanes.  Wounded tigers on the loose lash out.

Decline has been in the works for years, but the Bush-Obama wars have accelerated the pace.  It has gotten to the point that, in the current rift with Russia over Ukraine, even Israel, dependent as it is on American sufferance, feels free to act in its own interests, not America’s, in the United Nations.

Britain and France survived the loss of their empires.  We can too; a soft landing is possible.

Indeed, if Obama really wanted to be, as he says, “on the right side of history,” it would be his highest priority.  His highest priority instead is serving his corporate masters.

Inequality is on the rise too; this is a chronic malady that betokens yet another catastrophe.

What the harm is in increasing inequality is not as immediately obvious as it is in the other cases, and neither is it as clear how the situation could be rectified if there were the political will.   This impending catastrophe therefore stands apart from the others.

Nevertheless, there is a widespread feeling that something is wrong, and that the problem is becoming worse.   It was this sensibility that brought the Occupy movements into being.

By now, only a remnant is left; soft repression and the meretricious pull of the 2012 election did Occupy in.  Perhaps this was inevitable.  Being leaderless and non-ideological, there was no clear next step.  Occupy could only wither away.

But it served a purpose.  It caused the idea behind the slogan, “we are the ninety-nine percent,” to take root.

Even Barack Obama is trying to horn in.  Needless to say, his efforts are just words, and his proposals are insipid.  He is going through the motions only in order to advance Democrats’ prospects in the 2014 elections.   No doubt too, he would like to depoliticize egalitarian aspirations.

Would he also like to diminish inequality?   No doubt, he would; but only if it could be done in ways that the pillars of American capitalism would not find threatening.  Good luck with that!

The problem the Occupy movements brought to public awareness was not just that the poor are getting poorer or that the gap between the rich and the poor is growing.   It is that the one percent – actually, the very top stratum of the one percent – is enriching itself egregiously in ways that threaten what remains of our rights and liberties and of government of, by and for the people.

In other words, the danger was – and remains — oligarchy.  With a political class bought and paid for by the hyper-rich, the danger is acute.  Our would-be oligarchs have lots of “free speech” to spend, and they are not shy about spreading it around.

The Occupy movement gave expression to political aspirations and to a demand for justice that is implicitly revolutionary.  But, at this point in history, it is not clear what a genuinely revolutionary politics, adequate to the tasks at hand, would involve.  It is urgent, though, that we find out.

To this end, it is obviously useful to revisit ways of thinking that did address fundamental structural problems in revolutionary ways.  It is especially useful to recall an idea, formulated expressly by Marx and Engels in The Communist Manifesto more than a century and a half ago: that history is the history of class struggles.

We have been hearing seemingly from time immemorial how antiquated that dictum has become.  Why then does it nowadays ring more true than ever?

* * *

On the face of it, this is not what Thomas Piketty’s Capital in the Twenty-First Century is about.  But what it is about speaks to the issue indirectly, and what Piketty has to say is of such importance that, from now on, anyone concerned with fundamental social, political, and economic change must take his work into account.

This is why the massive attention this massive book is garnering is salutary and timely — notwithstanding Piketty’s express rejection of the style of politics epitomized in France in the student and worker uprisings of May 1968; and notwithstanding how little Piketty says directly about class struggle.

Commentators on what passes for the left in the United States have largely followed Piketty’s lead.  In the business press, there is a clearer realization that, no matter how indirectly the issue is raised, Piketty’s work forces even professional economists to focus on classes and their struggles.

Capital in the Twenty-First Century book is remarkable on many levels.  It is especially remarkable in the ways that it deals with problems that fall within the bailiwicks of professional economists and economic historians.   This is why they could hardly ignore it, even if they wanted to.

In particular, Piketty and his associates have pioneered ways to access, analyze and compare data on the size and distribution of capital and income, and on degrees of inequality, for a far longer span of time and for many more countries than anyone has ever done before.

Only specialists can fully appreciate the intellectual tour de force involved, but even those of us who, like me, have no idea what is involved in searching for pertinent data on inequality in eighteenth and nineteenth century Britain and France, and who have no inkling of the complexities inherent in analyzing such data statistically, can appreciate the importance of the voluminous information Piketty has assembled.

We non-specialists can also appreciate how Piketty has brought some of the fundamental questions of classical political economy back into the purview of the dismal science.

Those of us on the outside looking in can hardly fail to notice how economists dismiss whatever they cannot represent formally, even when it is obviously important.  Piketty’s work meets their standard; he has shown how to model a good deal more information pertinent to understanding historical trends than most economists before him had thought possible.

He draws that data into an impressive theoretical synthesis, the gist of which is that there is a tendency in capitalist economies for the share of national income derived from capital (understood roughly as marketable productive assets not attached to persons) to increase and for the share obtained through labor (understood as remunerated work of any kind) to diminish.

Piketty does not contend that this will happen, but only that it is what will happen in the normal course of events, other things being equal.  That is how tendency laws work.  To take another example: we know from well-established biological science that human beings have a tendency to follow a particular developmental trajectory from birth through to death.  But for any of a number of reasons, that trajectory may not unfold as it normally would.

Piketty’s case is supported by ample historical evidence but his principle argument is “deductive,” in the way that economic arguments normally are:  he posits relations between variables and infers what the consequences would be when the relevant factors vary in particular ways.

The gist is that unless the rate of growth is unusually high by historical standards, capital will become a more important, and labor a less important, source for generating income at the national level.

More specifically, whenever the return on capital investment is higher than the rate of economic growth, capital’s share of national income will increase relative to labor’s share.

Piketty harmlessly confounds two distinct claims that, when distinguished, clarify his position in ways that avoid misunderstandings that are already surfacing.

There is first of all his “theoretical” account of the “normal” course of capitalist development, according to which there is a tendency for capital’s share of national income to increase, and then there is the historical hypothesis that this tendency law explains what actually happens.

An analogy will help clarify the difference.   Suppose, as is the case, that there are overwhelmingly good reasons to think that every organism within a particular population will die as its life course reaches and surpasses a certain stage.  Still, this discovery may not explain all or even any actual deaths because some or all of the organisms within that population might be wiped out for other reasons – climate change, for example, or disease.

Piketty maintains both that capitalist economies do tend to follow the trajectory he describes and that, if we look at the evidence over long enough stretches of time, the process he identifies does explain what actually happens.

Because he is able to look at what the French call la longue durée – or at least at longer durations of time than economists and historians before him – Piketty need not be embarrassed by the fact that inequality actually diminished in advanced capitalist
countries throughout most of the twentieth century or that, within this time frame, national income derived more from labor expended than from ownership of productive assets.

These exceptions to what the theoretical model predicts came to pass for a variety of contingent historical reasons – having mainly to do with the shock to the world economy of two world wars and a major Depression, and to substantial population increases that are unlikely to resume.

For these reasons, the rate of growth in all advanced capitalist countries during the period in question – in the years when world wars were not raging and the economy was not mired in depression – was very high by historical standards.  This exceptional phase lasted from roughly the 1920s through the 1970s.

This long stretch of time was also the period in which the theories of economic growth to which Piketty takes exception arose.   If Piketty is right, mainstream economists mistake an historical anomaly for a norm.

Piketty maintains that “patrimonial capitalism” is capitalism’s normal state; in other words, that the nineteenth, not the twentieth, century exemplifies capitalism’s natural condition and that, exceptional cases apart, the income of the truly rich in capitalist societies is derived not from work, but from property – typically, inherited property.

He conjectures too that this is the shape of things to come.  Indeed, the future is already happening, and its political consequences are already being felt.

The underlying mechanisms Piketty identifies are subtly described, but the gist is simple enough; it is the “miracle of compound interest” writ large and working its effects at the macroeconomic level.

Left undisturbed, money in a savings account will grow at a rate faster than the rate of interest, if the “income” from interest that it generates is added back into the amount invested.  Similarly, patrimonies will grow, other things being equal, even when nothing except the income they generate is added to them.

Patrimonies also sustain high – sometimes obscenely high — levels of consumption, but the amounts consumed are dwarfed by the amounts added back in.  This is possible because in the past, and perhaps in the future as well, the vast majority owned nothing or almost nothing, while the very rich owned almost all there was to own and could therefore enrich themselves egregiously.

The years of economic recovery in the last century, especially the thirty “glorious” years that followed the end of the Second World War, are not the only apparent exception to Piketty’s account of inequality’s trajectory.

The astronomically high salaries paid to “supermanagers” – in the financial “industry especially — in the United States and elsewhere is another potential embarrassment to the historical hypothesis that the inherent dynamic of capitalist development, as Piketty conceives it, explains what actually happens.  The phenomenon was largely unknown before the 1980s; by the time Occupy Wall Street emerged it was a major source of outrage.

Piketty is very aware of this problem – but, as some of his critics have pointed out, his efforts to account for it, though sensible, have an ad hoc flavor.   He makes much of the fact that, in the American case, supermanagers are usually able to appoint their own boards of directors, who then approve their preposterously high compensation packages.  He also discusses how low marginal tax rates in the United States and elsewhere influence this phenomenon.

Still, in Piketty’s view, the factors that are enabling supermanagers to become obscenely rich are transitory phenomena that will soon pass.  Today’s supermanagers, or their
pikettydescendants, will become, in the normal course of events, tomorrow’s rentier capitalists – growing richer off of what they own, not what they do.

Perhaps so, but the supermanager anomaly, more than the others, points to the need for an even more profound break from the narrow historical vision that mainstream economic theory characteristically assumes.

In la longue durée, capitalism’s distributional consequences are not what they can appear to be in shorter time frames, especially anomalous ones.  Piketty has looked at a longer span of time than others have, and no doubt drawn the soundest inferences from his observations.  But thanks to the unavailability of pertinent data, even he leaves out much of capitalism’s history; perhaps his conclusions too are in need of correction.

But let’s concede that what he says about normal capitalism is on track.  Would this be the whole story?  Or even the most important part?

It is relevant that Marx’s view would plainly be No.  Like Piketty, Marx wanted to get political economy right.  But his main concern was to account for the social realities that underlie the world political economy endeavors to explain.

Piketty’s relation to Marx and Marxism has come up frequently in discussions of his work.   This was inevitable, given his book’s title, and also in view of his own appreciative, but ultimately critical, remarks on Marx’s treatment of the issues involved.

Marx predicted a different trajectory for capitalism than the one Piketty identifies.

Their respective arguments are not easily compared — in part because Marx’s concept of capital was not quite the same as Piketty’s.  Marx was committed to a labor theory of value, and therefore to conceptualizing economic categories in value terms.  Piketty, along with most economists of the modern era, is not.

But at an intuitive level, Marx and Piketty are on the same page. They each focus on the structural imperatives of the capitalist mode of production and therefore on the distributional consequences of capitalists’ investments.

In Marx’s account, the unfolding logic of capitalist development gives rise to a situation in which there is progressively less to invest in, leading the rate of profit to fall.

This situation ends ultimately with the breakdown of the economic system itself.   Capitalism, as Marx sees it, sows the seeds of its own destruction.

Piketty’s alternative conceptualization enables him to show how the Marxian story is a special case of a more general developmental process that would more usually lead, in the long run, not to breakdown but to rampant and savage inequality – by enlarging the (unearned) wealth of the very wealthiest, the one percent or the one percent of the one percent, to the detriment of everyone else.

Marx’s mistake, Piketty tells us, was to assume (incorrectly, but naturally), that there is no way under capitalism to grow out of the problem of a falling rate of profit; and therefore no way that capitalist development could proceed indefinitely.

Piketty would be the first to concede that this was hardly Marx’s fault.  It was not until the middle of the twentieth century that economists managed to connect rates of economic growth and the distribution of income between capital and labor at the national level in ways that would have enabled him to adopt a more general perspective – in other words, to see beyond the special case.

Relevant data were simply unavailable, and the issue was never even broached at the theoretical level.   Marx’s intuitions were sound in Piketty’s view, but he was limited by the backwardness of economic science itself.

In fact, Marx’s intuitions were sounder than Piketty thinks; sounder even than Piketty’s own, even if Piketty’s way of incorporating Marx’s account of capitalism’s trajectory into his own, more general, view is sound.

That Marx did not, and could not, say the last word in economic science is only to be expected.  In science, unlike religion, nobody gets the last word.  But even if, from a twenty-first century perspective, Marx’s economic doctrines fall short, he, unlike later economists including Piketty, investigated phenomena on an even more fundamental level.

Marx’s main concern was the real world conditions that make the world of political economy possible.  On this most basic question of all, his contribution remains as timely as ever.

For Marx, it is the underlying reality of class struggle that brought the phenomena political economist account for into being.

The class struggles of the pre-capitalist world lie behind what Marx called “primitive accumulation,” the process of appropriation of social wealth that made pre-capitalist modes of production and ultimately capitalism itself possible.

More generally, it is class struggle that sustains modes or production in normal, non-revolutionary, times; and that, when circumstances change, accounts for their transformation.

And, on a less epochal scale, it is class struggle now that makes the enormous salaries of supermanagers possible, even to the extent that their self-enrichment is at odds with the underlying logic of the capitalist system itself.

Piketty, however, is not about to take up the cause of class struggle; as already noted, he declares himself, and leftists of his generation, immune from that temptation.

But his politics is egalitarian and progressive – in the manner of the left wing of the French and other Western European socialist parties.  True to their traditions, Piketty’s politics is reformist, not revolutionary.  Indeed, by the standards of what remains of the Western European left, his reformism is not even exceptionally extreme.

Of course, by the standards of the Democratic Party in the United States – including its self-described “democratic wing” – Piketty is way out in left field.  But that is another story, one that is painful to tell.

In order to diminish inequality and also the political turbulence to which it gives rise, Piketty advocates measures designed to impede the otherwise inexorable rise of patrimonial capitalism.

To this end, he advocates highly progressive – indeed, beyond certain (fairly high) limits outright confiscatory — taxes on wealth.

Progressive taxation is a familiar weapon in the social democratic arsenal.  But it is usually income, not wealth, which gets taxed.

Wealth is more easily hidden than income and, in the world today, it is easily transferred from jurisdiction to jurisdiction and from country to country in ways that put it beyond the reach of taxing authorities.  An effective tax on capital would have to be implemented at a global level, and would be extremely difficult to enforce.

But there may be no other way to address the core, structural problems Piketty focuses upon.

If genuinely confiscatory levels of taxation could somehow be put in place, and if the proceeds were distributed equally or according to some other egalitarian criterion such as redistributing more to the less well-off, a functional equivalent of the kind of revolutionary politics that now seems beyond reach might indeed become feasible – because the class power of the owners of capital would then be broken.

Until it is, catastrophes will continue to threaten, and the threats they pose will only become worse as time goes by.

Marx envisioned a (small-c) communist future: a world of abundance in which human beings are free from burdensome toil and able, through uncoerced cooperation, to distribute “from each according to ability, to each according to need.”

But Marx and Marxists after him also defended socialism, a form of society, sometimes called communism’s first stage, which superintends the transition from capitalism to full-fledged communism.

Why socialism rather than capitalism with redistributive taxation?

The classical Marxist answer is that capitalism is headed for breakdown and therefore cannot survive long enough to create the material conditions under which communism becomes possible.   That answer has been in disrepute for at least the past century; Piketty is only one in a long line of economic thinkers for whom reports of capitalism’s imminent demise are, as they say, exaggerated.

This is why another answer came into prominence during the twentieth century: the idea that socialism is indispensible for combatting the deformations of human nature that shape capitalist civilization.

This idea too has fallen into disrepute – thanks mainly to the fate of Soviet and later Chinese efforts to fashion “socialist man.”

In these circumstances, it has become almost impossible not to identify human nature with the nature of the human beings we find in capitalist societies.

Liberal political philosophy is built around this understanding.  This is one reason for its appeal.

Another is liberalism’s inherent hostility towards the visible hand of the state.  Not all liberals think that the state that governs least governs best; New Deal-Great Society liberalism envisions an active role for the state in the economy and in the larger society.

But all liberals agree that state interference with individuals’ lives and behaviors should be kept to a minimum and that individual liberty should be vigorously protected.

In a world still afflicted with “authoritarian” regimes of various kinds, and with the memory of (big-C) Communism still very much alive, this has become an especially attractive stance – not least among those who, in other respects, are most in tune with the intellectual traditions and valuational commitments of classical Marxism.

What is appealing is not exactly liberalism per se, but a core idea behind its most defensible theoretical elaborations: the idea that real freedom (not the freedom to consume what hucksters sell, but the freedom to act on autonomously chosen ends) should be realized for all (irrespective of income and wealth) to the greatest possible extent.

This is the idea that motivates left-wing proponents of Basic Income Grants – grants given to all citizens or residents unconditionally.   The larger the grants, the freer individuals would be to pursue their own ends.

Were the grants large enough, everyone would be as free to pursue their own ends as the heirs of great fortunes have always been.  There would be no more rentier capitalists, but anyone who wanted to could live like one.

Under such conditions, it is not unreasonable to expect that individual human beings could find their way to becoming something like the “socialist men” (and women) Marxists once thought only state tutelage could fashion.

But how do we get from here to there?  That has always been the basic political question.

With the old models of revolutionary politics done in by events, the only possible answer is the one broached in Capital in the Twenty-First Century: societies will have to tax their way to some achievable facsimile of the end-state Marx envisioned.

Needless to say, Piketty is too much of a social democrat and too much of an academic economist to speculate on non-socialist – indeed, capitalist – roads to (small-c) communism.

But he is not averse to drawing less “utopian” policy conclusions.   Above all, he wants to counter the political instability that would arise –inevitably, he believes — in a world where fewer and fewer people own more and more of everything there is.

It is with this, comparatively modest, end in view that Piketty injected the question of redistributive wealth taxation into on-going discussions of inequality.  Piketty has many enlightening things to say about its feasibility, and about how it might best, and most feasibly, proceed.

We dinosaurs who, unlike Piketty, still think like militants did in May 68 therefore have much to learn from the reformist policy proposals he advances.  For if twenty-first century equivalents of earlier social revolutions are no longer on the agenda, how else can capitalists’ power be diminished?

And how else can the catastrophes that are looming thanks mainly to the ways the political system serves the interests of the upper stratum of the capitalist class be averted?

Even before those impending catastrophes came into view, the solution to the discontents inherent in life under capitalism was plain: it was to end capitalism and, ultimately, to establish a classless society.

Would confiscatory wealth taxation and radical redistribution achieve that end?   By providing a functional equivalent of patrimonial inheritances for all, it might, at least in part.

After all, the affinities joining that idea to the Marxian notion of (small-c) communism are too obvious to ignore.  Recall, for example, what The Communist Manifesto said of communism:  that it is a world in which “the free development of each is the condition for the free development of all.”

Nineteenth century aristocrats, living at the pinnacle of a highly stratified class society, were hardly proto-communist men and women.  But they were as free as could be to become all that they could be.  Were everyone similarly fortunate, we would be a large part of the way towards where Marx wanted to go.

Radically redistributive taxation could help realize that goal; and, if Piketty is right, we can get there from here.

ANDREW LEVINE is a Senior Scholar at the Institute for Policy Studies, the author most recently of THE AMERICAN IDEOLOGY (Routledge) and POLITICAL KEY WORDS (Blackwell) as well as of many other books and articles in political philosophy. His most recent book is In Bad Faith: What’s Wrong With the Opium of the People. He was a Professor (philosophy) at the University of Wisconsin-Madison and a Research Professor (philosophy) at the University of Maryland-College Park.  He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).




ANDREW LEVINE is the author most recently of THE AMERICAN IDEOLOGY (Routledge) and POLITICAL KEY WORDS (Blackwell) as well as of many other books and articles in political philosophy. His most recent book is In Bad Faith: What’s Wrong With the Opium of the People. He was a Professor (philosophy) at the University of Wisconsin-Madison and a Research Professor (philosophy) at the University of Maryland-College Park.  He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

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