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Piketty v. Marx

Russell Jacoby

Thomas Piketty’s Capital in the Twenty-First Century is as much a sociological as an intellectual phenomenon. Like Allan Bloom’s 1987 The Closing of the American Mind, it is a tome that unexpectedly captures the zeitgeist. Few read all of Bloom’s volume—for the good reason that it was mainly turgid—but it spoke to a moment in which many felt that liberals and leftists were wrecking American education, if not America itself. That feeling in fact has not abated, and Capital in the Twenty-First Century can be situated in the same force field, with the difference that Piketty comes from the left and the terrain has shifted from education to economics. Even within education, the debate has largely moved to economics, the barriers that give rise to separate and unequal schooling. Piketty’s book bespeaks the palpable upset that American society, indeed, the world’s societies, seems increasingly rigged; that inequality is worsening and darkening the future. Capital in the Twenty-First Century might be more aptly titled Inequality in the Twenty-First Century.

It is pointless to criticize Piketty for what he has not claimed to do; but it is also insufficient simply to celebrate him. Many have addressed the extent he draws upon or deviates from Marx, but the issue may be more how he illuminates our contemporary plight. Nevertheless, especially in regard to his preoccupation with equality, Marx may be relevant. To consider together the twenty-first century Frenchman and the nineteenth century German foregrounds a divergence. Both protest economic disparities, but move in opposite directions. Piketty advances into the domain of salaries, income and wealth; he wants to temper these extremes and give us—to alter the slogan of the ill-fated Prague Spring of 1968—capitalism with a human face. Marx advances into the domain of commodities, work, and alienation; he wants to undo these relations and give us a transformed society.

Piketty is relentless in his indictment of inequality: “It is long past the time,” he writes in his introduction, “when we should have put the question of inequality back at the center of economic analysis.” The book’s epigraph is the second sentence of the Declaration of the Rights of Man: “Social distinctions can be based only on common utility.” (It is not clear why in his prolix book Piketty left out the first sentence: “Men are born and remain free and equal in rights.”) Piketty assembles a mountain of numbers and tables to demonstrate that economic inequality is intensifying; that the wealthier are wealthier; and that the rich own more.  Some critics have challenged his statistics, but have landed only glancing blows. Meanwhile Piketty has offered a robust retort to their charges.  

Piketty hits bullseye after bullseye about the exacerbating inequalities that disfigure society—especially American society. To pluck out from his book an example of inequality in schooling, which is not his focus, Piketty notes that education supposedly offers roughly equal access to all in order to promote social mobility. He calculates, however, that “the average income of the parents of Harvard students is currently about $450,000,” which corresponds to the top 2 percent of the income hierarchy. In a typical understatement, he writes that “such a finding does not seem entirely compatible with the idea of selection based solely on merit.”

For some leftists, this is old news. For others, who suffer from the relentless blather about why the minimum wage cannot be raised; why “job creators” cannot be taxed; and why American society remains the most open in the world, Piketty is what the doctor ordered. For instance, according to a report—not mentioned by Piketty—the top 25 American hedge fund managers earned $21 billion in 2013, well over twice as much as the combined income of approximately 150,000 American kindergarten teachers. That means the work of one hedge fund manager equals the work of about 17,000 kindergarten teachers.

Yet Piketty’s fixation on inequality also reveals theoretical and political limits. To be sure, the demand for equality has driven political upheavals from the French Revolution of the eighteenth century to the American Civil Rights movement of the twentieth, with stops for the Chartists, abolitionists and suffragettes of the nineteenth century. It has played a critical and positive role—and continues to do so. The entry “equality” in the “Encyclopedia of Political Protest” would take hundreds of pages and be cross-referenced to everything. In recent years protests about inequality underlie Occupy Wall Street or agitation for gay marriage. The cry for equality is hardly exhausted. If anything, it seems newly energized.

Nevertheless egalitarianism as an idea and demand also contains an element of resignation; it accepts society, but wants to balance out the goods or privileges. Gays want equality, the right like everyone else to marry. Fine, but marriage is still marriage, the imperfect institution that society cannot give up or improve upon. R.H. Tawney, the British leftist historian, noted the limits of equality in his 1931 book Equality, a broad defense of egalitarianism. The working class movement, he writes, puts its faith in “the possibility of a society,” where a higher value is placed on people and a lower value on money. But that movement is liable to fall short. “When it does so, what it is apt to desire is not a social order of a different kind, in which money and economic power will no longer be the criterion of achievement, but a social order of the same kind, in which money and economic power will be somewhat differently distributed.” This straightforward sentence cuts to the heart of the matter. Equalizing pollution pollutes equally, but does not end pollution.

Equality figures little in the works of Marx. He never thought that the wages of the workers could get very high, but even if they did reach a modest height, that was not the point. The deadening work remained, no matter the wages. Capital dictated the parameters, rhythms and definition of work, what is profitable and what is not. Even under “easy and liberal” capitalism, where the worker gets better wages and can enlarge his enjoyments and consumption, his situation does not fundamentally change. Better pay no more alters his dependence “than do better clothing, food and treatment, and a larger peculium [savings] in the case of a slave.” At best, higher wages mean that “the length and weight of the golden chain the wage-laborer has already forged for himself allow it to be loosened somewhat.”  

The nineteenth century notes of protest here may elicit a smile, yet the formulation concentrates on the structure of work about which Piketty is uninterested. The issue is not whether Marx or Piketty is right about how capitalism functions, but the vector of their analysis. Piketty’s vector points toward distribution, Marx’s toward production. Piketty wants to re-distribute the fruits of capitalism so as to even out the highs and lows; Marx wants to transform capitalism so as to end its dominion. Much of Marx’s work, early and late, sought to document the misery of work. Hundreds of pages of Capital described the average working day (and night) and its discontents. Piketty is silent about this matter, although his book does open with a labor strike. The entry in his index for “Labor” reads “See Capital-labor split.” This makes sense, because it is the inequalities of this divide that concern Piketty, not labor itself.

This also makes Piketty seem contemporary, and Marx hopelessly old-fashioned. Labor in Piketty exists mainly as numbers about income. To the extent flashes of detail or anger surface in his book, they concern the very rich. He observes that the fortune of Liliane Bettencourt, heiress of L’Oréal, the cosmetic giant, increased from $4 billion to $50 billion between 1990 and 2010. “In other words, Liliane Bettencourt, who never worked a day in her life, saw her fortune grow exactly as rapidly as that of Bill Gates.”  Piketty’s attention to the moneyed speaks to our current sensibilities, while Marx’s description of journeyman bakers, bleachers and dye workers evokes a past world. Manufacturing and assembling labor is vanishing in the advanced capitalist nations, although it is alive and well in the developing world from Bangladesh to the Dominican Republic. Yet what is old is not necessarily obsolete, and Marx’s focus on labor pinpoints something that hardly surfaces in Piketty.

Piketty effectively documents the “explosion” of inequality, especially in the United States, and rebuts mainstream economists who seek to explain vast pay gaps by rational market forces.  He skewers American academic economists “many of whom believe that the economy of the United States is working fairly well and, in particular, that it rewards talent and merit accurately and precisely.”  This is not surprising, he notes,  inasmuch as these economists belong to the top 10 percent of the wealth hierarchy. Their salaries are driven up by the private financial world in which they compete or occasionally work. The result? They “have the unfortunate tendency to defend their private interests while implausibly claiming to champion the general interest.” Piketty, who taught at MIT, notes in his introduction that the apologist and faux-scientific cast of American economists disillusioned him. A “great advantage” of being an academic economist in France, Piketty comments, is the minimal respect and pay one receives. This keeps one anchored in the real world.

But Piketty is less successful in offering a counter explanation of vast salary inequality beyond the fairly conventional notion that technology, education and social mores lead to a wage hierarchy. The remuneration of what he calls the “supermanagers” cannot be explained by the “rational productivity justification.” The “extremely generous awards meted out to top managers” are a “powerful force” intensifying economic inequality, especially in the United States. These gargantuan payments reflect current social norms, themselves part and parcel of a conservative politics that has reduced top tax rates. Corporate executives pay themselves enormous salaries because they can, and society finds it acceptable—at least in the United States and Britain.

Marx’s analysis proceeds differently. He is less interested in showing vast economic inequalities and more in finding its roots in capitalist accumulation. To be sure, Piketty anchors inequality in what he calls “the central contradiction of capitalism,” the disjuncture between the rate of return on capital and the rate of economic growth. Inasmuch as the former inevitably eclipses the latter, favoring existing wealth over existing labor, it leads to a “terrifying” unequal wealth distribution. Marx might not disagree, but again his focus is on work, which is where inequality originates and plays out. Marx argues that the accumulation of capital leads to partial, casual and permanent unemployment. It would be difficult to declare that these are not pressing realities in the world today, but they do not surface in Piketty.

Of course, Marx begins with a different proposition: labor as the source of wealth. Again, today this might seem quaint, but also signals something about capitalism that hardly is resolved. Capitalism both requires and dispenses with labor. In other words, capitalism both hires and, increasingly, unhires. It needs workers as it expands, but sheds workers as it cuts costs and automates, reducing its work force. Marx discusses at length how an advancing capitalism produces “a relatively redundant working population.” This takes two basic forms, releasing workers already hired and ceasing to add new workers. As a consequence capitalism produces “disposable” people or a reserve army of unemployed. As wealth and capital advance, so do the underemployed and unemployed, the truly unequal.

Ten thousand Marxists and fifty thousand economists have sought to revise or rebut this analysis, but looking at the world at large the notion of increasing surplus workers seems to have grasped a truth. From Egypt to El Salvador, or from Europe to the United States, most countries suffer from serious or urgent levels of under- or unemployment. To put this differently, capitalist productivity eclipses capitalist consumption. No matter how vast their desires, the 25 hedge fund managers cannot consume their $21 billion compensation, although they may try. Capitalism is plagued by what Marx called the “monsters” of  “over-production, over-population and over-consumption.” China itself can probably manufacture enough goods not only for Europe and North America, but also Africa. But then what happens to the world’s work force? Indeed China’s exports of textiles and furniture to sub-Sahara Africa have diminished jobs for Africans. (See Kaplinsky, “What Does the Rise of China do for Industrialization in Sub-Saharan Africa?”) From the point of view of capitalism, we have a growing army of permanently under- and unemployed, living exemplars of inequality who are banging on the doors desperate for work. “Should the Whole World be Composed of Gated Communities?” asks Branko Milanovic in his book on world inequality, The Haves and the Have-Nots.

Inasmuch as Marx and Piketty look in different directions, so do their solutions. Consistent with his alarm over inequality and distribution, Piketty proposes a progressive global tax on capital, which will “stop the indefinite increase of inequality in wealth.” He admits the idea is “utopian,” but maintains is useful and necessary. “Many people will reject the global tax on capital as a dangerous illusion, just as the income tax was rejected in its time, a little more than a century ago.” Marx’s Capital offers no real solutions. The penultimate chapter alludes to “new forces and new passions” that spring up to transform capitalism, leading to an era of “cooperation and the possession in common of the land and the means of production.” The agency is the working class. In 2014, this too is utopian—or worse, depending on how one interprets the Soviet experience.

One need not choose between Piketty and Marx. Or, perhaps, to use the language that Piketty regularly employs, one should clarify their differences.  Piketty’s utopianism possesses a practical edge inasmuch as it is couched in the familiar language of taxes and regulation; it requires global cooperation, in effect a world government, for a global tax that will control “an endless inegalitarian spiral.” It offers something tangible, a Swedish-style capitalism that has softened the economic extremes. It does not address a redundant labor force, alienating work, or a society driven by money and profit. Piketty accepts these, and wants us to as well. In return, he gives us something we know, capitalism with all of its pluses, but fewer of its minuses.

Marx gives more—and less. His indictment is deeper and wider, but it does not come with a “How to” conclusion. He might be called an anti-utopian utopian. In one of the afterwords to Capital he scorns those who want to write “recipes for the cook-shops of the future.” A vision or idea does emerge from his economic writings, however, but it has little to do with egalitarianism. Marx always rejected a primitivist equality of shared poverty, which would decree “universal mediocrity.” But even a more expansive idea of equality had little attraction for Marx. He embraced the wealth of capitalism, but not its antagonistic essence in which all of work—all of society—existed only as a tool of profit. More egalitarianism would only democratize the evil. He recognized the power of “the golden chain,” but also the possibility of breaking the link. What would come after the chain falls away? That was not clear. Perhaps the best he offered is in his early writing in which he also wrote of a chain—and of religion as a fanciful flower. “Criticism has plucked the imaginary flowers from the chain not so that man will wear the chain without fantasy or consolation, but so that he will throw off the chain and cull the living flower.”


Russell Jacoby is the author, most recently, of Bloodlust: On the Origins of Violence from Cain and Abel to the Present (Free Press). He is a professor of history at UCLA. This article was first published by the New Republic and is reproduced with the author's kind permission.


Suggested citation

Jacoby, Russell, 'Piketty v. Marx', Evatt Journal, Vol. 13, No. 4, June 2014.<>


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