A Brief History of Equality | Thomas Piketty

Introduction

When we examine our history, we learn two important lessons related to inequality. First, inequality is a social, economic, and political construct. Second, on a positive note, inequality has been decreasing since the 18th century. One factor that has aided our march towards equality is struggle — such as the French Revolution and the Slave Revolt in Haiti. However, these struggles are necessary but not sufficient conditions. We also know that we can strive towards equality through debates and experimentation, as we still do not know the exact structure or blueprint of an equal society or welfare state. The failed attempt by the USSR teaches us this.

Chapter 1: Progress towards Equality

In the last century, we have seen huge improvements in global health and education, as concepts like universal health and education have been normalized (although not fully realized, far from it). We can see the improvement in health and education through increases in overall life expectancy and literacy. We also see a similar march towards equality in terms of income growth. However, when dealing with these indicators, we must be aware of their shortcomings. Metrics like per capita wealth/income are often affected by outliers. Sometimes we should focus on a plurality of indicators over a single index, as we cannot compare (or compensate) apples with oranges, such as compensating for environmental degradation with equivalent money.

Chapter 2: The Slow De-concentration of Power and Property

For a simple breakdown of classes, it is easy to categorize them based on property. Those who lie in the bottom 50 percent are considered poor, 50-90 percent are middle class, 10-1 percent are wealthy, and the top 1 percent are dominant. The author takes the data of France, where the bottom 50 percent still own less than 5 percent of the total property, whereas the top 1 percent own 25 percent, and the dominant 9 percent own 30 percent. The slow de-concentration of property has been the story of the rising middle class, the 40 percent who almost own 40 percent of property today. Interestingly, there was no middle class before the 20th century, and much of the march towards equality has been the transfer of property from the top 1 percent to the newly created middle 40 percent, which sadly means the bottom 50 percent are still struggling to keep up.

Although power and property are often linked (which is why we also see the de-concentration of power), we need to keep in mind that classes are often flexible and multidimensional. This means that the same society can have different classes based on education, political power, socio-ethnicity, etc.

Chapter 3: Slavery and Colonialism

Much of human history from the 16th to the 19th century is the story of a great divergence between Asia and Europe. Most books pinpoint the institutions of Europe, capitalism, and the open free market as the main reasons for this divergence (while acknowledging the role of slavery and colonialism). Piketty, on the other hand, attributes much of the divergence to colonialism and the subsequent exploitation of labor and resources by Europe. He argues that theories like the free market and capitalism do not hold water, since China, for example, was even more open. In contrast to the European embrace of the free market, it was actually their protectionism until they had gained a competitive advantage that allowed them to finally embrace the free market. Examples include high taxation followed by a ban on Indian clothes in Britain or forcing China to allow the opium trade through sheer violence.

This raises the question, though, of how the Europeans were able to colonize. Europe’s constant internal wars enabled them to develop military and fiscal strength far superior to others. Contrary to general knowledge, the higher taxation in Europe (compared to China and the Ottoman Empire) allowed them to have a stronger military. Long story short, the industrial revolution that leapfrogged Europe compared to Asia would not have been possible without the exploitation of resources and labor during colonialism.

Chapter 4: Reparations

One concept that often pops up together with colonialism and slavery is reparations. You might ask why. Well, to start with, after slavery ended, the slave owners were compensated, not the slaves. One extreme example is Haiti and France, where Haiti had to pay France for its independence, a policy that has played a huge role in Haiti’s underdevelopment. The same happened in the UK and UK-colonized Caribbean islands. Even in the case of the USA, where there was a civil war between two regions with different modes of development (slavery in the South and the displacement of Indigenous people in the North), the slaves of the South were promised reparations but were later deceived.

Even after the end of slavery, another form of slavery increased rapidly: colonial slavery. Especially in Africa, it reached extreme forms, where natives were made to work as slaves in the name of service (as they could not pay tax). This way, the seed for inequality was sown in most of the colonial world. For instance, inequality in education was perpetuated by investing almost everything in colonist-only schools, thereby widening and propagating inequality even further.

Therefore, Piketty argues that the talk of reparations is important and needed, for much of the inequality we have today is because of slavery and colonialism. Every global citizen should be taken into account as the richer are getting richer at the expense of the poor.

Chapter 5: Revolution, Class, and Status

Many of the things we take for granted, like labor rights, an 8-hour workday, and salaried jobs, actually came out of struggles and revolutions. The same applies to our political rights, such as the equal right to make changes in democracy. Universal suffrage took a long time as tax-based unequal voting weights were prevalent (and only a certain percentage of the population above a tax threshold could vote). Piketty picks Sweden as an interesting example — a country known for its relatively egalitarian structure that once had one of the most extremely unequal tax-based voting rules. Sweden’s simple shift from progressive voting rights to progressive taxation took less than a century to go from peak inequality to egalitarianism, showing that it’s all about policies. This undermines the idea that inequality is the result of “culture or civilization.” Piketty then highlights how we are still far from actual universal suffrage, as the rich can fund campaigns and decide the rulers, either directly (via lobbyists) or through media control.

Chapter 6: The Great Redistribution

Much of the march towards equality happened between 1914 and 1980, which is heralded as the great redistribution phase. It happened mostly through three ways:

The rise of welfare states (health, education, social security)
Progressive taxation
Liquidation of foreign assets

While all three measures happened because of continuous fights for equality, they were accelerated by the two World Wars (and the Great Depression in the case of the US). For example, in 1920s France, the same conservatives who were not okay with 5 percent taxation were okay with 25 percent. The rise of the USSR also aided the process, as the elites in Europe feared a Russia-like revolution otherwise. Thus, the money generated from progressive taxation made it possible to create welfare states, which then aided the march towards equality. Post-World Wars, the world also underwent decolonisation, where the liquidation of foreign assets took place (like the nationalisation of the Suez Canal by Egypt, which was controlled by France and the UK).

Chapter 7: A New Form of Democratic Socialism

Welfare states and progressive taxation have been instrumental in lessening inequality in the last century. So, Piketty argues that these measures should be improved and even extended to concepts like basic income and basic employment. For basic employment, he suggests including not only health and education but also energy and transportation under the welfare state. He also highlights how high progressive taxation balances the salary gap even before taxation, as people won’t have massive salaries if the corresponding taxation is high. He suggests this could be a way to control the talent-poaching ecosystem of big tech and corporations, ensuring the best minds work for the welfare state and not for the super-rich.

Finally, he suggests one more approach, and the most radical of all: redistribution of assets. How? By levying inheritance tax and wealth tax and circulating that fund to every person who reaches a certain age (like 25). That way, we will have somewhat of a level playing field. Also, taking environmental and ecological factors into account, he suggests a rule that such assets be invested in environmentally friendly projects (unlike random housing projects). This level playing field will mean most people have the option to do what they want, rather than being forced into the only 9-5 option.

Chapter 8: Real Equality Against Discrimination

Here, Piketty identifies three types of discrimination that are still prevalent and impeding our march towards equality. First is global education equality, which is always proclaimed but never realized. The system mostly allows rich kids to pursue higher education in well-paid degrees, showing a strong positive correlation between higher education and parental income. He also criticizes top-notch universities that openly favor rich alumni and donor legacy seats, calling it necessary instead of fighting for that money to be paid in tax and used for welfare state education.

Second is gender bias. While much focus is on the gender salary gap, he identifies the gap in well-paid jobs as a bigger problem. Also, the participation of women in government is still meager compared to what it should be. Lastly, the concept of productivity does not account for unpaid work by women, such as the role of homemakers.

Third is the bias against minorities. He stresses the importance of fighting against discrimination based on race, caste, and ethnicity without rigidifying identities, as the consequences of rigid identities could lead to social disharmony and war. He uses India as an example of a country fighting discrimination through caste-based reservations and how this has helped bridge the income gap between reserved and non-reserved categories compared to the US, which still has a huge racial income gap. With all identity-based reservations, he hopes for a transformation to economy-based reservations eventually. He also criticizes the hypocrisy of European secularism, where churches receive funds allowing rich people tax breaks instead of paying that money in taxes.

Chapter 9: Exiting Neocolonialism

Piketty discusses modern global laws that have created a form of neocolonialism. In the name of free trade and free circulation of assets, companies can access public benefits of a country without paying required taxes. Similarly, poor countries cannot extract as much customs tax for foreign products as they once could. The money poor countries receive in aid is peanuts compared to what flows out to foreign companies. The destruction of local companies in competition with foreign global companies only makes poor countries even more reliant on richer countries. Not to mention how a few occasionally corrupt wealthy people from poor countries can hide their money in tax havens.

This is where he argues for another radical measure: the concept of global taxation. His logic is that the resources of the world are common, and the rich are getting richer by exploiting poor countries and world resources. So, a system where a global tax is levied and distributed to each global citizen is required. He also suggests integrating an individual carbon footprint tax into it, so the rich (or people living in rich countries) cannot exploit the environment more (mostly at the detriment of poor countries) without consequences. To exit neocolonialism, he even suggests forming global social democratic unions to address global problems collectively and seek common solutions.

Chapter 10: Toward a Democratic, Ecological, and Multicultural Socialism

Piketty stresses that measures towards egalitarianism are even more pressing from an ecological standpoint. Judging by the current economic model which is not ecologically sustainable (evident from climate change, rising global temperatures, etc.), and the measures taken (or not taken) towards it, the author worries that only a disaster of some sort could accelerate the urgency towards a more ecologically sustainable model (and if it could be too late).

He also believes much of the next phase will be shaped by Chinese socialism — a statist, authoritarian system that is currently working well. However, he suggests a path of democratic, participatory socialism. While it’s important to point out the authoritarian nature of the Chinese system, he argues that the Western model, which talks about justice and democracy but is riddled with inequality and hypocrisy (not to mention its checkered slave-owning, colonial past), is not helping the cause.

Finally, he talks about the march towards universalist sovereignism. He argues that exiting neocolonialism and handing actual sovereignty to all countries and their people is important. However, he also stresses that it should not be based purely on nationalist sovereignism based on rigid identity, which is what is happening all around right now (USA, UK, India, Turkey, etc.). One fact we cannot escape is that at the end of the day, we all share one home — our universe. Thus, universalistic sovereignism is the path ahead, where equality for all people is pursued (by pursuing measures like global tax distribution, global carbon cards, etc.).

My Takeaway

While the book paints a positive picture of our march towards equality, it also stresses the need to strive even further in this direction. It highlights various measures that are already in place and working well, like progressive taxation and the welfare state. Additionally, because of its strong emphasis on egalitarianism and ecology, it stresses the importance of evaluating human progress and prosperity while keeping our environment in mind.

Finally, some of the suggestions might seem a bit radical, or at least difficult to implement at this time, like the concepts of wealth taxation and global taxation. However, the book provides good reasons for such measures. Remember, many great ideas seemed radical and infeasible at first, only to become normalised with the passage of time (think concepts like universal suffrage and progressive taxation). So, it’s important to have debates and discussions about ideas, as we can only progress with innovations and experimentation, as we always have.