Thomas Piketty’s blockbuster book, “Capital In the 21st Century,’’may be one of those rare works that transforms the national political conversation. One such book was Betty Friedan’s “The Feminine Mystique,’’ which helped start the post-war feminist movement. Another was Rachel Carson’s book, “The Silent Spring,’’ which helped launch modern environmentalism. Piketty’s work may revolutionize our thinking about our economic system, and his June 1 appearance with Senator Elizabeth Warren in the Old South Church made clear that national politicians are listening.
Since the collapse of the Soviet Union, the issues of race, gender and sexual orientation — the American forms of caste — have commanded central attention. By taking us into political economy, Piketty is telling us that class must take an equal place with caste in any rational discussion of the American prospect.
Piketty’s bottom line is that America as the land of opportunity — where hard work and merit replaced the old European aristocracy of wealth — is a fading mid-20th century memory. We are moving in the 21st century into a new aristocracy of wealth resembling the 19th century European “Belle Epoque” or our own 19th century Gilded Age.
A focus on class in American conversation has long been dismissed as Marxist polemics, irrelevant to an America based on freedom and opportunity. But Piketty has irrefutably shown that class is at the heart of American life today, with inequalities growing and threatening democracy itself.
Piketty argues that when we look at the inequality of income earned from labor, America is almost certainly already the most unequal nation in history. This largely reflects a new class of top corporate executives — not the 1 percent but the .1 percent — who are succeeding in awarding themselves astronomical salaries. In succeeding generations, the children of these oligarchs will inherit multi-billion dollar fortunes never seen before.
Piketty shows that salaries of people at the top are shaped less by productivity or talent than by politics and social mores. He argues that productivity, especially of highly paid super-managers, cannot be assessed or priced accurately by market forces or by corporate leaders. At the top, power shapes compensation.
This casts much of our reigning theory of the market into doubt, discredits the meritocratic idea of the market, and moves us into the political and sociological side of political economy, as well as into unchartered economic theory about capitalism and class. Even the US economists praising Piketty have said little about the theoretical challenge to their own profession, which has treated class as a 19th century concept rather than a 21st century one.
The most important Piketty discovery — which is brilliantly documented but which Piketty does not fully theoretically explain — is that Western capitalism has operated as a chronic Gilded system, creating a major gap between the uppermost class and everyone else over several centuries. The only — and brief — exception is the period of the two World Wars and the Great Depression in the mid-20th century, when accumulated capital was destroyed while growth mushroomed.
The historical lesson is that while Western capitalism seems capable of partially transcending caste privilege, it is locked in almost all eras into the perpetuation of ever growing class differences.
The political implication is profound. America’s view of itself is based on the belief that hard work will be rewarded. Piketty’s data shows the contrary. The real rewards will be inherited, upending the defining view of America as the land of opportunity.
Such a profound challenge to the national identity is as grave as the moral crisis of slavery and patriarchy. If America is lucky, a French economist, may help lead us to a new politics of class that Senator Warren has taken up: changing the tax codes to strengthen the inheritance tax and increase general tax progressivity, limiting the burden of student debt, building up unions and public investment in schools and green infrastructure, paid for partly by new wealth taxes.
Pitekky’s role would please another French observer, Alexis de Tocqueville, whose work helped Americans see in their own experiment a grand democratic promise— but one that could collapse into egoism and oligarchy without a fight against the perogatives of class.