Nature, Culture, and Inequality: A Comparative and Historical Perspective

Thomas Piketty is a French economist who got his PhD at the London School of Economics and began his teaching career at MIT. He put the rise of income and wealth inequality at the center of public discourse with his book Capital in the Twenty-First Century. One or two sentences suffice to summarize his thesis. When the rate of return on capital is greater than the rate of economic growth, inequality increases. The extent to which it increases depends on the redistributive policies of national governments.

Piketty described this thesis in 970 pages (in the original French edition, and 704 pages in the English translation). His Brève histoire de l’egalité took 368 pages (288 in English). And Capital and Ideology was 1104 pages—1232 in French.

So when the publicist for his newest work emailed about writing a review, one figures one has the rest of the summer cut out. Imagine the surprise when an 82-page book arrived in the mail (the French edition is 86 pages). It takes Professor Piketty that long to clear his throat.

Nature, Culture, and Inequality: A Comparative and Historical Perspective was written as a lecture for a general audience at the Musée du Quai Branly—Jacques Chirac. It is not easy going for a general audience, unless that audience can absorb references to Ernest Labrousse and Ferdinand Braudel.

But the ideas Professor Piketty teaches us are not too complex or abstruse for the general reader.

Imagine a pie that is growing at a certain rate (economic growth). Someone whose slice of pie grows faster than the pie itself (return on capital greater than growth) will have a larger and larger slice over time. The pie cutter, tax authorities, can choose to reapportion the slices by taxing large slices more than small ones.

This progressive tax policy, and New Deal social safety nets, led to increasing equality in the US and in much of the rest of the world from 1930 to 1980. Neoliberal economics took center stage under Ronald Reagan and Margaret Thatcher, and inequality began to rise.

Work on inequality of income and wealth uses a comparison of the top with the bottom earners and wealth holders  In a perfectly egalitarian economy, the wealthiest ten percent of the population has the same share of total wealth as the bottom tenth. In North European countries, the share of income going to the top decile is 20 to 35 percent, which is about as much as the bottom half earns. For extremely unequal nations, such as South Africa or Mexico, the top ten percent of income earners have half of the total share, while the bottom half have 5 to 10 percent.

In the United States the top ten percent has 30 percent of the total share, and the bottom half has only 13 percent. The period of greatest income equality in our nation was the 1970s. Today we have returned to levels of inequality last witnessed in the Gilded Age. The top one tenth of one percent (0.1%) has 200 times the total income of 90 percent of the nation.

What accounts for these differences between countries, and for the changes over time? In Professor Piketty’s very brief monograph, the focus is on progressive taxation and on spending on education. This accounts for different historical paths between, for example, the UK and Sweden. And it certainly mirrors the changes in the US.

These factors are, however, symptoms more than causes. The rise of neoliberalism in both the US and Europe explains change in the broadest of strokes, but without nuance. The monograph does not tell us about nature, culture, and inequality, and it is hardly a comparative and historical perspective. For these deeper understandings the reader must turn to the 1000-page tomes. This short transcription of a lecture will not suffice.