When we left off at the end of Part One of Piketty’s “Capital and Ideology” (here), the feudal European inequality regime(s) had been substituted - either by reform or revolution - for a new ‘propertarian’ liberalism that in theory made property ownership a right open to to all in society, eliminating arbitrary social distinctions based on fixed social roles. Ignoring questions of how wealth and power was distributed in society was to provide the foundation for a stable, dynamic liberalism based on unchallengeable property rights. Part Two of the book juxtaposes this ideal with the reality of European slavery, colonialism and exploitation in the nineteenth century. As one chapter title puts it, this part of the book is concerned with the ‘globalisation of inequality’ - or in looking at inequality regimes from a non-European perspective.

Ostensibly, these chapters focus on slave societies, colonial governance and the Indian caste system. But as before, Piketty offers little new insight into the internal ideological justification of these regimes - students of slavery, for example, would be much better served by reading Sven Beckert’s work, which Piketty cites extensively. He’s more interested in the encounter between these systems and European propertarianism, and their transformation into more propertarian forms. In telling these rather scattered stories, one common theme that emerges is the centrality of the ‘political regime’ problem as a core question of ideology: identifying the boundaries of the political and economic community and defining its rules of membership.

A wretched hive of scum and villainy

Piketty makes a distinction between ‘societies that had slaves’ and ‘slave societies’, in which unfree human beings provided a significant percentage of the economically significant labour. The latter category includes Ancient Greece and Rome, but also the Caribbean sugar islands, the pre-Civil War United States and Brazil (not to mention the widespread enslavement of native peoples in settler-colonial societies). Notably, this means that a significant number of the most heavily slave-dependent human economies in history evolved during the nineteenth century under the authority of nominally liberal European regimes. Staggeringly, half of the total African population forced into chattel slavery in the Americas were enslaved after 1780, even as the European powers moved haltingly towards abolition.

The history of abolition, which consumes much of Piketty’s page count, is a depressingly familiar refrain as reformists and lawmakers focus almost exclusively on the compensation of slave owners - to “respect acquired rights, no matter what their origin”. The end result was a massive transfer of wealth to already-rich slaveowners, funded by public debt and ultimately - thanks to the regressive tax structures in place at the time - paid off by the working class. Particularly appalling was France’s treatment of its rebellious ex-colony of Haiti, which was still paying off its ‘debt’ to metropolitan France in 1947. Piketty emphasises that throughout this process, the formerly enslaved remained firmly outside the social contract in most propertarian societies, with debt and anti-vagrancy laws used to impose a level of labour discipline not all that more lenient than slavery itself. This emphasis on the moral use of debt as a tool of legitimising inequality resonates strongly with the work of the late David Graeber.

The story of exploitation in European colonial societies is ultimately not much better, though markedly more sophisticated. Generally, Piketty finds, the larger the European settler population, the less extreme the inequality - colonial elites, especially buearcrats and administrators brought in from the metropole and paid out of the taxes of locals, lived well but not as well as elites back home. Only in a small handful of societies where a settler minority came to dominate as local landowners (notably South Africa) did inequality reach levels seen in the slave colonies. While slavery was a racial caste system sometimes justified in patriarchal terms, from the ground-level colonial societies were the inverse: justified as ‘civilizing’ missions abroad, but often requiring the construction of elaborate racialised hierarchies.

Piketty demonstrates, using his incomparable data, that whatever their ostensible source of legitimacy, the primary purpose of late European colonialism was extractive and financial. At no point in European colonial history did the Empires transfer a significant amount of resources abroad to develop their colonies - administration was funded almost exclusively on the backs of locals. Access to raw materials - especially fuel and manufacturing inputs - was key. But financial dominance also played a large role. One-quarter to one-fifth of all capital in the UK and France in the late nineteenth century was held abroad - a staggering sum that generated capital profits equivalent to 5-8 per cent of total national income. This not only made wealthy citizens of the metropole wealthier, but funded an unprecedented level of consumption. The UK and, to a lesser extent, France, could run trade deficits to the rest of the world while still balancing their capital accounts - only the modern American empire comes close to this pattern of global hegemony. And this degree of financial extraction depended then as it does now largely on military occupation and economic coercion of developing states underwritten by the threat of violence.

A Digression on Inequality

For a theorist of inequality, Piketty devotes remarkable few pages, either in his first book or this one, to discussing inequality from a sociological or philosophical perspective. Endless volumes of data can be produced to demonstrate how bad inequality has become, but Piketty himself seems to struggle to explain why this is abnormal or undesirable. “Capital and Ideology” doesn’t tackle this question head-on either, but scattered around these middle pages of the book, like a few half-formed thought bubbles, there are hints that the author is struggling to put together his own thoughts on the matter. He notes, once again, that inequality of wealth and inequality of income are very different different: that the former is often an order of magnitude more extreme than the latter, but it is the latter which tends to generate social discontent and disorder. Piketty seems to flirt with the “Capital as Power” thesis (which I also personally endorse):

“Inequality of wealth is above all inequality of power in society, and in theory it has no limit, to the extent that the owner-established apparatus of repression or persuasion (as the case may be) is able to hold society together and perpetuate this equilibrium”.

Think of the current pandemic-induced crisis for just a moment. Real economic production is certainly hurting - most major economies have entered a deep Depression, jobs are disappearing and incomes are suppressed. Yet at the same time, the stock market is as high as it’s ever been, most major asset classes (including both secure investments like real estate and insecure ones like BitCoin) have increased in value and major corporations are enjoying the benefited of essentially unlimited free credit from banks. The value of all this capital cannot possibly be related to the real value of their assets, their productivity or their profitability. Instead, they represent the bare, naked manifestation of the relative power those who control those assets exercise or expect to exercise over the rest of society. The pandemic has seen an acknowledgement, in some countries more than others, that the institutions of the state serve first and foremost the interests of capital. And so the massively increased monetary [quantised] value of those assets is a call that the owning class will able to exercise essentially untrammeled social and economic authority in the neo-feudal technocratic dystopia that will most likely emerge after COVID-19.

Inequality of income is different because a certain share of annualised production must always be devoted to the maintenance and upkeep of the members of society - the labour share of income. Income inequality can only go so high [“maximal inequality”], otherwise the majority of a population would lack access to the resources they need to physically survive and reproduce (though this isn’t a fixed standard - i.e. ‘poverty line’ - and evolves over time with material expectations). Perversely, Piketty notes, this means that the wealthier a society becomes, the higher income inequality can rise. Once the elites no longer need to concern themselves with how the proles will clothe and feed themselves, they can choke off any further egalitarian measures and appropriate a larger share of income for themselves. This helps explains why many pre-capitalist societies appeared to maintain admirable levels of income equality for long periods, even when their social structures and the distribution of wealth within them are high inegalitarian. Depressingly, Piketty’s data suggests on the basis of historical comparisons that wealth inequality would need to be significantly higher (three to four times current levels) before the modern West entered pre-Revolutionary conditions.

War makes States and States Make War

The final chapter of this part of the book looks at modern history in a broader perspective and seeks to answer the “Great Divergence” question - why was it European societies that were in a position to impose this level of global inequality on everyone else? Although growing populations and the windfalls of the Colombian Interchange set the stage, even as late at 1700 the fiscal capacity of European states was not significantly different from those of either the Ottomon or Qing Empires. Most pre-modern societies collected far less than ten per cent of national revenue - for context the modern welfare state requires the the order of 40-50 per cent. Piketty notes that the jump to 10 per cent of national income - what he terms the state’s ‘fiscal pressure’ - was the key step that enabled the rise of Europe. But as to why Europe: he basically endorses a version of Charles Tilley’s “States Make War, Wars Makes States” argument - the fragmented nature of the European polity, combined with a general intensification of conflict after 1700, made increasing demands for military and fiscal capacity, that could only be met by extracting more surplus value from the population.

In turn, the high levels of public debt that these interstate wars often triggered were a catalysts for the development of sophisticated financial markets and a further intensification of extraction. Piketty charts at length how the Europeans used their military and financial sophistication to choke off the early seeds of manufacturing elsewhere - especially in India and China - through the combination of forcing open colonial markets and closing home markets (commonly called ‘mercantilism’). Finally, Piketty notes the immense ecological consequences of this modern of liberal imperialism - extraction of resources from the colonial world allowed a level of industrial intensification and production that far surpassed the natural carrying capacity of their homelands, laying the seeds of the ideology of limitless growth that was to come later.