MARXISM IN THE TWENTY-FIRST CENTURY
It is self-evident that incomes must be highly unequal under capitalism, a system that rewards owners of capital. The inequality was greatly reduced in World War II when countries at war were forced to tax the rich to fund their armies; once the war was over, they returned to normal. Income taxation generates statistics; so incomes are easy to study—at any rate in countries with solid taxation systems. Economist Simon Kuznets was the first to do so, in 1953.
The French are proud of their language and publish exclusively in it; that shuts them out of the vast Anglophone market. Thomas Piketty is a rare exception who moves easily between the Francophone and Anglophone worlds. He did a Kuznets on France and published a study of French hautes revenues (high incomes) in 2001. Then he turned to Europe and the US and edited a book in 2007 with Tony Atkinson. In 2009, he wrote an NBER working paper on top incomes in the long run of history with Atkinson and Emmanuel Saez.
Then came the great leap: in 2014, he published Capital in the TwentyFirst Century, a study of inequality of incomes and wealth in Europe and the US from the 18th century onwards. It was followed the next year by The Economics of Inequality, which in Paul Krugman’s words was “a slightly revised version of a volume first published in 1997, when Mr Piketty was in his mid20s”. Now comes a behemoth—the fattest book I have ever reviewed. It covers ternary societies (with three classes— priests, soldiers and the rest), ownership societies, which followed them after the French Revolution in 1789 (which led to the decline of priests and fighters and the rise of the rich), slave societies, colonial societies, socialist and communist societies, ending up with hyper capitalism now. What characterises it is the unrelenting rise of inequality following the failure of the Left to change income distribution and benefit its poor and working-class supporters.
Piketty wrote for the first time on India in the American Economic Journal in 2009, in a joint paper with Nancy Qian. He contrasted India with China: the proportion of income tax payers rose from 0.1 per cent to 20 per cent between 1986 and 2008 in China, while it stagnated at 2-3 per cent in
India; the share of income tax revenue in GDP rose 0.1 per cent to 2.5 per cent in China, while it stagnated at 0.5 per cent in India. While India had progressive income tax in principle, it made no difference to income distribution.
Piketty dedicates an entire chapter to India in this book. He thinks the British inadvertently cemented caste hierarchy by mapping it in the census. They also left the Indian social structure alone: it survived the British era with little change. It was the government of independent India that tried to reform the society by privileging the Scheduled Castes and Tribes as they are now called.
Piketty starts with the 2,000-yearold Manusmriti, which lays down the rules for the Hindu society. While rulers must be Kshatriyas, their advisers and judiciary must be Brahmins. Commercial classes were Vaishyas; all the rest were Shudras. He thinks that Brahmin rule was challenged by Buddhists; faced by a shrinking market for their services, the Brahmins turned vegetarian to raise their own status. But Piketty thinks the Hindu society was not so rigid; it was the British who made it so by recognising caste officially. Independent India has tried to redress the inequality of occupation and opportunity embedded in the caste system, actively if ineffectively. There is some change: inter-caste marriages, for example, rose from 5 per cent of all Hindu marriages in the 1950s to 8 per cent in villages and 10 per cent in cities in the 2010s. Piketty ends his Indian chapter on this uncritical note. However, there is much more on the rest of the world in this book, and a good deal of it is unusual. ■
Ashok V. Desai was chief consultant to the finance minister during the reforms of the 1990s
The book dwells on the unrelenting rise of inequality due to the Left’s failure to change income distribution and benefit its workingclass supporters