Before the Piketty bubble reaches stage six (at this rate, sometime later today), a few thoughts on the geosocial implications of his theory of inequality. That theory has been getting the lion’s share of the lion-sized attention showered on Capital in the 21st Century (Kindle edition available only). Those of you reading the reviews (if not the book itself) will know that r > g, the rate of return on capital increases more than the rate of economic growth, which means that the rich will get richer relative to the rest of us.

Historically the book points us to the Belle Epoque. What did it take to to dislodge that last era of concentrated wealth? A couple of world wars. War gave rise to social policies and economic growth that tamped down the level of retained “r” and fueled an anomalously high “g”. That evened things out quite a bit by mid-century, about which everyone has gotten so nostalgic.

But the social policies — and indeed the wars themselves — could only be built on high levels of national solidarity. Globalization at the turn of the last century turned out to be a false dawn. Economic interdependence wasn’t enough to prevent a bloodbath among the major economic powers. That was mostly downside, of course. The upside: the consolidation of community based on the nation-state, which in turn enabled thick redistribution.

This time around, globalization is for real. We’re not going to have a World War III to help reslice the economic pie. Transborder economic interdependence is exponentially higher. In social terms, that has consolidated a different kind of community: the transnational elites. They share more of an interest in protecting their collective wealth than in sharing it with their co-nationals. Davos doesn’t quite fit the argument, insofar as (at least nominally) it selects participants on the basis of social utility rather than wealth. But I’m willing to bet that Davos and/or its spin-offs and successors become playgrounds for the generations that inherit Gilded-Age wealth (“patrimonial capitalists,” in Piketty’s vocabulary). The Davos class is a new global community, with its own set of practices, beliefs, ideology, interests.

Since war is not a very plausible or appealing prescription, Piketty is left to press a global wealth tax. That makes sense in the face of higher transborder capital mobility. But it’s never going to happen so long as the Davos class is essentially unopposed. The current landscape looks neo-feudal, the elites moving in their global circles while the not-rich remain confined to their national spaces. (Immigration controls play a part in this, in contrast to free trade in goods.) I don’t have a sense of any real global class consciousness among non-elites. Jennifer Gordon presses conceptually interesting possibility of transnational labor citizenship, but that doesn’t seem to have taken hold on the ground. The Occupy movement hasn’t achieved enough of a critical mass to comprise a counterbalance.

Today is May Day. Can the workers of the world unite?

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Edward Brynes
Edward Brynes

Global taxation sounds to me like the mice getting together and resolving to hang a bell around the cat’s neck.
More seriously, I can imagine a world in which all heads of state decide to enact a wealth tax and deposit the proceeds into a common fund which would be re-allocated to decrease global inequality among the peoples of the various nations. Americans would pay huge amounts which would mostly go to Chinese and Indians and so on.  The problem is democracy; American voters would not consent. How far has the Occupy movement gotten, given that the recent $10.10/hr minimum wage was blocked in the US Senate? 
As an American, why should I assume that American wealth would be better spent in the hands of an international re-allocation authority? A great deal of development aid has gone to Africa without benefit.


Perhaps as a gesture to address inequality and to set a great example, the 1% of US academic institutions which have 37% of America’s $400 billion in university endowments could contribute those endowments to an international fund.  It would also even out the playing field for all institutions of higher education.  Win-win!

Thomas Lee

Terrific May Day post, Peter!  If a global wealth tax is not feasible and violent redistribution through war or a global proletarian revolution unlikely, it may be that political action by the global bourgeosie is the only hope.

Rhodri Williams

Belatedly – as a decidedly non-elite member of the global circles (or, if you will, a “not-rich” who is neither confined to my national space), I am beginning to feel rather like a scapegoat. Developments like the US’ current adventures in citizenship based taxation make me feel like I am being hung out to dry for the sins of the elites that can dance circles around these types of rules in order to appease my non-rich and non-globalized compatriots. Given that the US unilateral FATCA model may well prevail over anything sensible and multilateral proposed by the likes of the OECD, I guess the semi-globalized bourgeoisie may just end up collectively at the wrong end of the stick.