Moving Toward Equality: An Insightful Conversation with Thomas Piketty

“We have long been moving towards equality, a process that, while occasionally driven by revolutions, is most often fuelled by social mobilisations and demands for greater equality” – Thomas Piketty

In a world where inequality seems to be growing by leaps and bounds, voices that seek to understand and change this dynamic are essential. One of the most resonant in contemporary debate is undoubtedly that of Thomas Piketty, whose bold analysis of inequality has revolutionized not only academia, but also political and social discussions. Is inequality an inevitable product of the system we live in, or is it an ideological choice we have collectively made? What can we learn from history about struggles and aspirations around economic justice?

In the following interview, we’ll delve, with the help of ChatGPT, into the heart of Piketty’s thinking, exploring his perspectives, proposals, and vision for a more equitable future. We invite you to join this unprecedented conversation, where economics meets history, politics, and the vision that a more just and equitable world is possible. Welcome to the exciting world of equality!

The Book That Changed the Global Conversation

Most books written by economists sell only a few thousand copies. “Capital in the 21st Century” (over 700 pages) by Thomas Piketty, sold over two million worldwide in over thirty languages. Why was there such an appetite for the book? Was it the seriousness of the book’s economic ideas, its bold proposals to significantly change the structure of wealth and power in many societies?

The political and social context can certainly influence how a book or any scholarly work is received, and in the case of Capital in the Twenty-First Century, several external factors likely contributed to its success. At the time of the book’s publication, inequality was an issue of growing concern in many countries, particularly in the United States where President Obama had singled out, in the months leading up to the book’s publication, growing inequality as a key issue for his second term. Works that provide detailed analysis and explanations can resonate in particular ways.

Indisputably, Piketty’s work placed economic inequality at the epicenter of global political discourse. LInequality is not natural, but requires an explanation, a justification of the rules that allow a legitimate acquisition of property by a group or an individual. Specifically, since 1980, although the poorest have improved their position, the great fortunes have grown much more than the economy has and, in addition, wealth has been concentrated in the richest, making the middle classes the great forgotten of the economic growth resulting from globalization.

Piketty’s postulates about the accumulation of wealth in the hands of a few, particularly when the return on capital exceeds the rate of economic growth, have emerged as a frame of reference in political economy debates. Before his book saw the light of day, the focus of the prevailing dialogue was on income inequality. His research on economic history has shifted the focus of this debate, integrating wealth inequality and provoking sharper reflections on the accumulation and intergenerational inheritance of wealth

Inequality as an ideology

Thomas, in his book “Capital in the 21st Century” one of the main arguments is that “inequality is an ideology”. You argue that inequality is not a natural phenomenon, but is based on political decisions. Could you explain how you came to that conclusion?

In my book, the term “ideology” does not carry a negative connotation. In reality, all societies need an ideology to justify their level of inequality or a certain perspective of what is beneficial for them. Throughout history, there has been no society in which rich people simply claim, “We are rich, you are poor, full stop.” Such a stance would not be sustainable, and society would quickly fall apart.

Dominant groups, on the other hand, have always needed to craft more complex narratives. They argue that their wealth benefits the entire organization of society, providing order and stability. While these arguments are not always completely convincing and are sometimes clearly motivated by self-interest, they still have a degree of plausibility. If they were completely fake, they just wouldn’t work.

In my book, I study the history of what I call “regimes of inequality,” which are systems that justify different levels of inequality. What I show is that there has been a learning process around the notion of justice. Over time, there has been a gradual reduction in inequality. We have learned how to implement equality through measures such as more equitable access to education and more progressive tax systems, among other examples.

However, this progress and ideological conflict persist. In practice, historical change originates from competing ideas and ideologies, and not solely from class conflict. Although the classical Marxist conception suggests that class position completely determines our worldview, our ideology, and the economic system we prefer, the reality is more complex. Indeed, for a given class position, there are various ways of organizing the system of property relations, the educational system, and tax policy. There is a certain autonomy in the evolution of ideology and ideas.

In your book, you highlight four essential points about inequality as a result of your research that have brought inequality to the center of public debate: Could you break down and briefly explain the relevance and interconnections between these key points?

Of course, these four points are essential to understanding the central argument of my book. Let’s develop them one by one:

• Inequality is not a natural process, but is based on political decisions. Inequality is not simply the inevitable result of market forces or technology. Instead, it derives from specific policy decisions that societies make, such as the structuring of tax regimes, labor regulations, and education systems. Throughout history, different societies with similar levels of technological or economic development have adopted very different structures in terms of the distribution of wealth and power.
• Inequality is an ideology that is used to justify the concentration of wealth and power. Societies often develop ideologies or narratives that legitimize and justify disparities in wealth and power. These ideologies can be based on merit (the belief that those with the most wealth have “earned” it), on divine rights, or on any other set of beliefs that make inequality seem “natural” or “fair.” The reality is that these ideologies are social constructs that are used to perpetuate power structures.
• Inequality has political and social consequences, such as polarization and violence. It’s not just about numbers or wealth distribution: inequality has profound implications for the cohesion and stability of societies. It can lead to social tensions, political polarization and, in extreme cases, conflict and violence. Highly unequal societies tend to have less social trust, higher levels of mental and physical illness, and other social problems.
• Changes in the structure of wealth are needed to address inequality and create a fairer society. Since inequality is largely the result of policy decisions, it can be addressed and corrected through policy. In my book I propose a number of measures, such as more progressive taxation, investment in education and public services, and reforms in property and inheritance. By changing the structure of how wealth is distributed and accumulated, the foundation can be laid for a more equal and just society.

However, in democracies, the people collectively decide through the vote to live in unequal societies. Why does this happen?

First, determining the exact level of equality or inequality is complex. Inequality is not necessarily negative in all cases. People pursue different goals in their lives, some value material success while others have different goals. Finding the right balance of equality is a tricky challenge.

When I mention that the determinants of inequality are ideological and political, I am not suggesting that they should disappear instantly and that we achieve full equality in the short term. Finding the right balance between institutions is an arduous task for societies, even considering that, over time, there has been a slight reduction in inequality. I believe that there is a need to achieve more equitable access to property and education and that we must continue in that direction.

History has shown us that it is a non-linear process. Over time, we have moved towards greater equality, which has contributed to the economic prosperity of the twentieth century. However, we have also faced setbacks. For example, the collapse of communism led to disillusionment with the possibility of establishing alternative economic systems to capitalism, and this explains, to a large extent, the rise in inequality since the late 1980s.

Today, three decades later, we’re beginning to question whether we’ve leaned too far to that extreme. We are rethinking how we can transform the economic system. The additional challenge presented by climate change and the environmental crisis has also drawn attention to the need to change our economic system. This is a complex process where societies try to learn from their own experiences.

Sometimes, they forget past lessons, overreact, and go too far in one direction. However, I believe that by putting historical experience into perspective, which is the purpose of my book, we can better understand the positive lessons and achievements of the past.

The Dynamics of Inequality

One of the most debated claims in your book is that the relationship between the rate of economic growth and returns on capital plays a fundamental role in the generation and amplification of inequality in modern capitalist economies. How do you develop this argument?

One of the results of my research is that in the market economy, returns on capital, such as income from financial investments or asset ownership, tend to grow at a faster rate than the rate of economic growth. This means that those who own a significant amount of capital can accumulate wealth more quickly than those who rely primarily on labor income.

When returns on capital exceed the rate of long-run economic growth, as has been observed in various times and places, a process of accumulation of inherited wealth is created. This tends to concentrate wealth in the hands of a minority, as those with more capital can benefit exponentially compared to those who don’t have as much capital to invest. As a result, economic inequality tends to increase over time, as the wealthy become even richer and have a cumulative advantage over others.

This dynamic of inherited wealth accumulation contributes to the persistence of inequality in the long run, which can be problematic in both economic and social terms. In this scenario, heredity plays a more significant role, leading to societies where wealth and status are passed down from generation to generation, and an individual’s socioeconomic position is strongly influenced or determined by heredity, rather than by individual merits or efforts. These trends can fuel social discontent and undermine confidence in democracy.

Do you doubt that the sustained levels of inequality you predict for the rest of the 21st century are compatible with democratic values? Iam not particularly optimistic about the future. Lessons from the past suggest that violent disruptions often play an important role and that formal democratic institutions do not always respond to growing inequality, especially because they can be appropriated by financial elites. But I want to believe that we can learn from past catastrophes and find more peacefuland sustainable ways to regulate capitalist dynamics.

One must be wary of any economic determinism in relation to inequalities of wealth and income. The history of wealth distribution has always been profoundly political and cannot be reduced to purely economic mechanisms. Private ownership of capital is at the heart of the inequality debate throughout history. The history of inequality is shaped by how economic, social, and political actors view what is fair and what is not, as well as by the relative powers of those actors and the collective choices that result.

A Brief History of Equality

In the perception of some, inequalities seem to be not only inevitable, but even necessary. What answer do you offer to this point of view? Where do you see inequalities being particularly detrimental to society?

To those who hold that perspective, I would invite them to explore the history and evolution of inequality in various societies. History shows us a rich variety of trajectories, with different dominant groups in each era presenting inequality as intrinsically natural or as the only viable form of organization. However, an in-depth analysis reveals a vast diversity of social structures, which can change drastically, especially when political mobilizations emerge or ideological shifts are experienced.

My recent work, “A Brief History of Equality” analyzes several countries, extending the focus beyond the West. I put under the microscope nations such as India, China, Haiti and Brazil, among others, presenting even more solid evidence than in “Capital in the 21st Century”. My main conclusion is that it is ideological and political changes that ultimately determine the degrees and forms of inequality over time.

I am not advocating absolute equality; after all, each individual is unique, with his or her own choices and aspirations. What I do advocate, however, is the need to establish levels of inequality that are fair and equitable. I don’t offer simplistic solutions or magic recipes.

Just look at the 20th century: after the Great Depression, we witnessed a tax revolution, with the adoption of progressive taxation, especially evident in the US. between the 1920s and the 1970s. This transition, along with the creation of welfare states and social security systems, led, in the long run, to a decline in inequality parallel to economic flourishing.

The positive note I want to underline is that, historically, economic prosperity has been the result of investment in inclusive and equitable education. For example, in the 1950s, the U.S. He was a leader not only economically, but also in education. However, in the 1980s, with figures like Reagan, there was a change in direction, prioritizing wealth creation over equity. And while this route promised jobs and innovation, it didn’t necessarily lead to a more equitable or prosperous society.

I think that’s also the reason, to some extent, for the ideological shift we’re seeing today in the United States. With the rise of nationalism, Donald Trump’s sideis trying to find a new narrative and a new explanation for the reasons why the American middle class or the economic sectors located below did not benefit from the growth promised by Reagan.

Inequality, Nationalism and Populism

We see a resurgence of nationalism and populism in many countries, often linked to growing inequalities. In your opinion, how does inequality directly influence the rise of nationalist and populist movements?

The increase in the popularity of nationalist and xenophobic parties can be interpreted, to a large extent, as a reaction to the tensions and challenges that globalization implies. These political movements have proven adept at capturing and channeling the insecurities and frustrations of many citizens, offering simplified answers to complex dilemmas.

The challenges brought about by globalization, along with inequality and other current problems, are inherently complex. But the nationalist and xenophobic narrative offers an easy and direct way out, if not always accurate. It is less complicated to single out an external group, be it migrants, minorities or supra-state institutions, than to address the problem at its root. The rise of social media and certain media outlets, which spread disinformation and divisive narratives, has intensified polarization and reinforced radical discourses.

Many people, in this context of rapid change, feel that their identity, whether cultural or national, is in check. Nationalist and xenophobic movements provide a comforting narrative, assuring that they will protect and restore that identity.

In addition, the decline in labor supply in traditional sectors, coupled with rising inequality, has fueled feelings of vulnerability among vast layers of the population. Right-wing populist parties have managed to capture and express that discontent, promising to protect both jobs and the local economy from alleged external threats

It is essential to recognize that if the left or centrist currents do not propose clear and effective solutions to people’s everyday problems, a vacuum arises that other political actors will be willing to fill.

And why do you think the right has been more successful in capitalizing on these sentiments than the left?

I think that in many cases, parties of the left or center-left have been in power during times of economic or social crisis and are therefore seen as part of the problem rather than the solution. The idea of going back to “the good old days” can be very appealing to those who feel that their economic or social situation has worsened over time. This can lead disenchanted voters to look for alternatives.

In some contexts, the left has failed to present a coherent and convincing vision that counters the proposals of the populist right and the media and social media platforms have amplified the messages of the populist right, either by algorithms that favor polarizing content or by direct influence of political and economic actors. To counteract this trend, it is essential that there are clear and effective proposals that address the legitimate concerns of the population, without falling into discourses of exclusion or division. The great challenge for contemporary democracies is to find a balance between responding to the concerns of their citizens and maintaining values of inclusion, cooperation and human rights.

The Path to Equality

Your book highlights an optimistic aspect since, according to your argument, there is an entrenched movement that leads towards greater equality. Could you substantiate this claim?

Indeed, in my book I highlight an optimistic dimension in relation to the issue of inequality. My argument is based on the observation of a movement rooted in economic and social history that points toward greater equality.

Throughout history, we have witnessed struggles and social transformations that have challenged power structures and contributed to a decrease in inequalities at different times and in different contexts. These struggles have arisen in response to injustice and have resulted in significant changes in the institutions and rules that govern the distribution of wealth and power.

It is true that trends towards equality are not linear and have experienced ups and downs over the centuries. However, it is possible to identify a historical pattern in which, after periods of extreme concentration of wealth, social movements emerge that seek greater balance and a fairer distribution of resources. These movements often push for legislative and policy changes that lead to greater equality in different areas, such as progressive taxation, access to education, and the protection of labor rights.

Today, we are witnessing a growing awareness of the negative implications of extreme inequality on society and the economy. This awareness has led to a renewed interest in policies that promote equal opportunities and reduce gaps between socioeconomic strata. The mobilization of civil society, the advancement of communication and the dissemination of ideas have contributed to this process.

Could you provide concrete examples of measures that you consider feasible to reduce the equality gap in the current economic context?

Of course, here are some of my book’s proposals for addressing inequality:

• Progressive Wealth and Inheritance Taxes: The implementation of higher progressive taxes on wealth and inheritance. This means that people with higher levels of wealth and significant inheritances would be subject to higher tax rates. This measure seeks to reduce the extreme concentration of wealth by taxing those with greater resources more significantly, which, in turn, can contribute to a more equitable distribution of wealth in society.
• Greater transparency in capital flows: It calls for greater transparency in financial transactions and capital flows. This could include regulating tax havens and implementing measures that prevent tax evasion and tax avoidance by high-net-worth individuals and companies. Greater transparency in these areas could help reduce opportunities for asset concealment and encourage higher tax contributions.
• Changes in the structure of wealth: I propose changes in the way wealth is accumulated and distributed. This could be achieved through the promotion of investments in goods that generate employment and economic development, as opposed to mere financial speculation. In addition, he raised the need for policies that encourage investment in productive and technological sectors, which could drive more inclusive economic growth.
• Institutional and policy measures: In my book, I emphasize the importance of implementing institutional and policy measures that directly address inequality. This could include improving education systems to ensure equitable access to education, as well as promoting social protection policies that reduce the gap between socio-economic strata. Policies that encourage democratic participation and reduce the disproportionate influence of elite groups in decision-making could also be considered.

One of your most striking proposals, of a single state payment of 120,000 euros for all citizens when they reach the age of 25, has been adopted by Yolanda Díaz in Spain. What objectives would be achieved by this measure?

First, this system of “inheritance for all” would be a complement to a system of universal access to essential public goods and services, such as education, health, pensions and citizen income. The intention is not to replace these benefits, but to add this tool to the existing ones. What would be its purpose?

Let’s imagine someone who has a solid education, good health, stable employment, and an adequate salary. However, you must allocate half of your salary to rent, paying landlords who earn rental income throughout their lives. In this scenario, a question arises. Inequality in ownership leads to significant disparities in life chances. Some are destined to rent for their entire lives, while others receive rental income continuously. Some may start businesses or inherit family businesses, while others lack the minimum start-up capital needed to get started. It is essential to understand that the distribution of wealth is still concentrated in a few hands in our society.

Those without wealth are in an extremely vulnerable bargaining position. They need to secure employment to cover rent and monthly expenses, and they often have to accept what is offered. Undoubtedly, for those who lack resources or sometimes only have debt, this unique inheritance can make a huge difference in their lives. With that capital, young people could invest in starting a business, continuing their education, buying a home, or investing in other projects that might otherwise have been out of their financial reach.

Obviously, the implementation and practical results of such a proposal would require detailed analysis and would likely vary according to the economic and social context of each country. For example, this type of payment could be funded through an inheritance tax or a tax on the largest wealth. Thus, instead of large fortunes only benefiting a few heirs, a portion would be redistributed to benefit everyone in society.

Thomas, your passion and dedication to unraveling the mysteries of economic inequality and its socio-political ramifications is truly inspiring. Throughout this conversation, he has shown us that history, while marked by inequalities, also reflects a slow but steady march towards equality. It is heartening to remember that each generation has had the ability to bring us a little closer to an equitable society.

In closing, what could I say to our readers to invite them to reflect on the role that each of us can play in fostering equality in our communities and in society as a whole.

Inequality is not only a matter of figures and percentages, but a profound manifestation of our collective choices. The fight for equality in all its forms is essential to building a more just and equitable world. Do not underestimate the power of your voice and action. Questioning power structures and working for equality can seem like a daunting challenge, but every small step we take can make a difference. Let’s educate ourselves, engage in public dialogue, support those fighting for meaningful change, and look for opportunities to create an impact in our communities. At the end of the day, the pursuit of equality is a collective struggle and we all have an important role to play on this path to a more equitable and humane future.

Thank you, Thomas, for sharing your valuable perspectives and for reminding us that the path to equality, while complex, is possible.