Piketty’s Capital and a Civic Economics of Provision
The key argument in Thomas Piketty’s book, Capital in the Twenty-First Century, has gained much attention of late, as it should. Quite simply, we are headed for continued disparity between the very wealthy and the rest of us, unless we create international governing schemes that can control the growth and movement of capital. And the chances of that happening are not very great.
As he admits, it doesn’t take a rocket scientist, or even an economist, to figure out the current trends. Capital—things like real estate and stocks and bonds—which can be seen as unearned income, will probably get a return of 4 to 5 percent, while return on earned income such as labor, will probably see an increase of around 1 percent. In such a future, the rich get richer and the poor get poorer.
This is not the first appearance of this argument. At the end of the 19th Century Henry George make a similar argument, and actually proposed a similar solution: a tax of capital. (Progress and Poverty). Will Pikett’s work become as well known as George’s once was and then as completely ignored? Hard to know. What is different is that George actually offered a new way of seeing things, a new story. Piketty, on the other hand, remains within the story of an economics of property. As far as we know from this book, he hasn’t taken seriously Karl Polanyi’s 1940 claim that labor, land, and money are not properties. Labor is a human activity, land is a biotic community, money is a social relation.
Even before Polanyi, George argued that land is a commons, something that belongs to all of us. Therefore, increases in the value of land should be shared with all citizens, in the form of a land value tax. Not a bad idea, but it would require either the generosity of landowners, which is unlikely, or the activation of citizens to take their democracy and make it work for the majority instead of the wealthy minority. Something that has not happened yet.
There is really nothing surprising that capitalism only work when political leaders represent the interests of all citizens rather than only the capitalist elites. I don’t think Piketty would disagree with this, but he doesn’t really offer a framework that would energize citizens to direct the economy. To limit economic analysis primarily to changes in income, with now more and now less going to labor or to capital, may motivate a few to try to improve things, but not many to transform them.
We need not to think outside the box, so to speak, but to change the box we think in. Instead of thinking about the distribution of income, we need to think about the distribution of provisions. Instead of thinking about increasing economic growth, we need to think about protecting the commons we all should share—especially the planet. Capital, after all, comes out of the commons. Just as all energy comes from the sun, all capital comes from the commons. Furthermore, money should not be treated as capital. It is a means to get what we deserve. If people are hungry, it is not because of the shortage of food, but the shortage of money to buy food. So, create the money. There should never be a shortage of money to buy food, or the other necessary provisions for a good life.
Let’s be truthful. Capitalism is driven by fear. Its origin is the Atlantic triangular trade, where enslaved Africans become the “property” of landowners. Slaves were not just labor. They were capital. Property rights are only the other side of this fear. As long as we are caught in this box, it is difficult to be too pessimistic. If we can build a new box, based on citizen participation and aimed at making provisions for all, we can have hope.