Everybody Wants to Be a Cat

I've commented frequently this year on the reception given to Tomas Piketty's Capital in the Twenty-First Century as a political phenomenon, marvelling at the desperation of various establishment hacks trying to shoot it down, the sight of orthodox economists terrified by exposure to historical data, and the dawning realisation that a wealth tax may not be Utopian after all. Having finally got round to reading it (unlike many commentators and even some reviewers), I thought an interpretation that focused on the text, rather than the economics, might make a pleasant change. There are three parts to this: Piketty's use of literary and cinematic references, his relationship to the historiography of the French Revolution, and some linguistic and structural features of the work. I'm also going to do a separate post looking at Piketty in the context of political economy.

Economist reads novel, watches film

One of the tropes of the Piketty review industry has been the claim that the book "drips with literary references", in the words of Larry Summers, which just proves that economists need to get out more. There aren't that many. The examples culled from Austen and Balzac are cute, though they make fairly obvious points about the longevity of wealth in eras of low inflation, the social strategy of marriage as a route to upward mobility for men as well as women in the early 19th century, and the importance of inheritance in maintaining concentrations of wealth. In fact, there are as many cinematic references as literary ones, from Titanic to The Magnificent Ambersons, which the more snobbish reviewers have presumably considered less noteworthy than asides about Henry James.

The use of non-contemporaneous films to illustrate early twentienth century levels of wealth may be an elaborate joke on Piketty's part, parodying both the French love-hate relationship with American popular culture and America's suspicion of European cultural theory. The use of Disney's The Aristocats, in which anthropomorphic moggies are set to inherit a belle epoque fortune, certainly made me laugh, and you don't usually find many jokes in a book on political economy. Indeed The Aristocats, rather than Père Goriot or Mansfield Park, may be the key meta-text in Piketty's work, not least because the insurrection of the democratic alley cats leads to a chunk of Madame Adelaide's fortune being invested in a home for strays. That the machinations of the scheming butler are initially confounded by two hounds, named Napoleon and Lafayette, is also not without significance.

I think the fundamental point of these historical asides, and his admiration for the French records on capital instituted by the Revolution, is Piketty's belief that a progressive tax on wealth is unfinished business from 1789, which he refers to as "the bourgeois revolution par excellence". The book's epigraph comes from the Revolutionary Declaration of the Rights of Man and Citizen: "Social Distinctions can be based only on common utility". Insofar as the book's title is a gesture to Marx, the content is essentially "contre Marx" in its treatment of capital and the sidestepping of the materialist conception of history, and as such is an attempt to recover the democratic and pragmatic impulses of the Revolution and its "constructivist" approach to institutions.

The revolutionary tradition

Piketty mentions his admiration for the historian Francois Furet and specifically his pioneering work in "serial" or quantitative history, i.e. using extensive datasets to trace historical trends. But he also sees Furet's career as a warning of what happens when you abandon the patient analysis of data and commit, as the historian famously did in the 1970s, to a polemical focus on political culture. Furet sought to trace the totalitarian legacy of the Revolution and the Terror through to the twentieth century, which brought him into sharp conflict with orthodox Marxists and historians of the Annales school, as much for his neglect of data and his relegation of class and the material base as for his anticommunism.

Piketty is sympathetic to Furet's anti-totalitarian stance, but he regrets the older man's abandonment of serial history and, I suspect, feels that the democratic credentials of the Revolution have been obscured by the prominence given to the totalitarian inheritance. Furet was part of a wider fashion in the 1980s and 90s that sought a "post-ideological" historiography of 1789, focusing on intellectual fashions and cultural phenomena rather than economics and class. This was obviously influenced by a neoliberal ideology that sought to place the market and property beyond dispute (the "end of history" etc). Outside of France, this influenced historians like Simon Schama, who claimed in Citizens (1989) that "the Revolution gave birth to a new kind of political community sustained more by rhetorical adrenaline than organized institutions".

What I think Piketty is suggesting is that Schama's view was actually a reflection of contemporary political weaknesses that have continued down to today, and that the rhetorical adrenaline of progressives, such as the "we are the 99%" slogan, which itself originated in the earlier analytical work of Piketty and Emmaneal Saez, is insufficient. What is needed is first data and then the reform of the institutions, i.e. democratic governance. In fact, he elsewhere explicitly ties the quality of democratic institutions to their data-aggregation strengths, thereby reviving a tradition that dates back to Condorcet on the eve of the Revolution: "political institutions have a constructive role to play in order to allow for an efficient aggregation of all the socially-useful information that is dispersed among individuals". In other words, the Occupy movement's aversion to concrete demands let Wall Street and The City off the hook. In recommending a progressive annual tax on wealth, no matter how "Utopian", Piketty is avoiding the same mistake.

Les mots et les choses

Some of the book's language echoes that of a lecture, with formulations such as "which I will address later", the repeated use of "concretely" (announcing the shift from theory to practice), and regular previews of coming chapters. That said, the book reads well and Piketty has taken care to explain technical points clearly without resorting to the patronising parables of Freakonomics and its ilk. Breaking the chapters down into 2-3 page sections makes it easier on the reader and to an extent mimics the bite-sized (but chewy) model of the blog post. This is an unashamedly popular work, in keeping with its emphasis on democracy.

Of more significance in terms of policy is his reference to the need for a "financial cadaster", that is a comprehensive register of wealth (and not just property, as was traditionally the case) as the basis for effective taxation. There is an echo here of the "Cadastre perpetuel" of the revolutionary and proto-communist Gracchus Babeuf, though Piketty instead references the similar proposals of the experimental chemist and tax-farmer, Antoine Lavoisier, which indicates a preference for the technocratic traditions of the Enlightenment. Both ended up on the Guillotine, Lavoisier during the Terror and Babeuf during the Directory. Piketty's point is that public knowledge of private citizens' wealth should be seen as a feature of liberal democracy rather than the totalitarian state.

Piketty's provision of his technical appendix and supporting data online is a smart move that undoubtedly helped buttress the book's case, as much as it provided limited ammo for some critics, such as the FT's Chris Giles. There is a whiff of big data zeitgesit about this, though the format and structure of the data is quite traditional. Perhaps its true role is exemplary, encouraging the idea that data on wealth (the cadaster) should be routinely published. Piketty is well aware of the challenges of tracking wealth during the current era of globalisation, institutional tax avoidance and (largely) non-existent capital controls, but he clearly hopes that one mechanism of globalisation, the Internet, may help to promote transparency.

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Piketty ends his chapter on 'The Question of the Public Debt' with these words: "If democracy is someday to regain control of capitalism, it must start by recognizing that the concrete institutions in which democracy and capitalism are embodied need to be reinvented again and again". This is a call to arms that can appeal equally to democratic socialists and managerialist neoliberals, particularly in the post-2008 era when democratic institutions have proved both their worth (the prevention of immediate social breakdown following the credit-crunch) and their limitations (the swing to austerity and the Eurozone crisis). The widespread scepticism about his proposal for a wealth tax springs not just from an aversion to the restraint of capital, but from an ideological pessimism about institutional capability in the era of globalisation. Piketty is suggesting that we need to recover the bravery and optimism of 1789.