Piketty, Capitalism, and the new fight. . .

I have never had much time for the so-called "neo-conservative" agenda. I am old enough to remember when Milton Friedman entered into mainstream culture and I always found the arguments ridiculous. I don't think it takes much brain-power to understand that eliminating taxes on the rich and on corporations is not going to create jobs or enrich the general population. And in a context of increasing globalization I actually think the argument is less convincing. But thanks to a gradual corporate strangle-hold on the media the voodoo economics of the new right gradually became the default position of most of the political spectrum. It has only been the drastic and obvious increase in social/economic/political inequality that has really woken up many people to the real results of the new-right agenda. Then with the global economic recession of 2008 and the massive increase in the wealth of the richest while the majority were suffering badly, the real economic issues began to enter into mainstream discourse.

Now we have a new economic poster-boy in the face of Thomas Piketty, author of the meticulously researched Capital in the Twenty-first Century.  I think Piketty is a game-changer and here's why. Economists and activists have been warning for decades of the dangers of the new-right agenda. Many thoughtful commentators have pointed out that trickle down doesn't work (and let's face it, in the final analysis that is all the new-right agenda amounts to; make sure that the rich and the corporations have lots of money and the rest of us will get some), and many have even used analysis and statistics to demonstrate that income inequality is growing, innovation is slowing, and capitalism and democracy are suffering as a result. But Piketty is the first major, post-recession high-level economist to demonstrate through meticulous research with analyses decades of capitalist development, that inequality is an inevitable result of new-right policies and that inequality will significantly and rapidly increase unless capitalism enacts certain necessary reforms. From what I understand, what Piketty's argument partly rests on is a fairly simple formula that can be expressed this way - capital returns increase faster than economic development. Therefore as returns on capital increase exponentially, the more capital someone has the more they make and the less able they are to spend it and the less incentive they have to use it for development. This is by no means a revolutionary idea and in fact Karl Marx himself understood this when he talked about the concept referred to as the "relative impoverishment of the workers." Marx observed the same phenomenon and said that one of the results would be that the majority would become increasingly impoverished in relation to those holding the capital. And it did happen for a long time. But Marx, understandably, did not anticipate progressive taxation and huge state investments in education, two of the primary methods of decreasing relative impoverishment (or in today's parlance - inequality). And for a long time, it looked as though, at least at a national level, the force or tendency toward relative impoverishment, or inequality, would be mitigative by these two primary processes of state intervention. Then the new-right changed all that, and as they took control of the media they began to espouse this low-taxation, pro-corporate agenda. And because inequality had receded so significantly, many people had essentially forgotten the lessons of the socialists and social democrats (and, of course Marx) and the rich were once again able to begin to construct an oligarchy around their wealth and power. The reason that Piketty might be a game changer is that he is the first economist to gain a high, international profile in the post-recession era who has once again outlined how this process of oligarchy building takes place and how it is the direct result of less-progressive taxation, and decreases in state investment in education and other benchmark measures of quality of life and equality.

One need not be a Marxist, by any means, to understand the process of relative impoverishment, and creeping inequality. In fact, an increasing number of Capitalists are taking the problems seriously, including people at the World Bank (hardly a bastion of left-wing ideology). Because just like those who built the New Deal in the US, many capitalist are smart enough to understand that the building of a new capitalist oligarchy is a threat to capitalism itself.

Because of globalization, capitalist reforms will be more difficult in our era than they were in the past. This is because of the very simple fact that the rich can move their wealth so easily and that corporations can play nations off each other in what becomes a race to the bottom. But realization and understanding of a problem is the first step toward its solution. And I would contend that if those in power don't want another era of revolution and/or fascism, they will begin to see the need for a change.

In the election that is going on in Ontario at the moment we can see a microcosm of the cultural debate that is swirling around us. And for the first time in as long as I can remember people across the political spectrum are questioning the rightwing orthodoxy. When the Conservatives say that they will gut the public service and lower taxes for the rich and for corporation and that wealth will just "naturally" trickle down to the rest of the people, fewer and fewer believe them. After all, we have been lowering corporate and wealth taxes for forty nearly forty years now and the good jobs have been disappearing at the same rate. The relative wealth of the majority has been sliding for decades and the rich have been getting shockingly richer. Meanwhile even supposedly rightwing economic advisory groups have been beginning to point out that infrastructure investment is becoming painfully necessary, state investment in jobs wields much greater returns than "tax breaks," and income inequality is becoming a serious problem.

Make no mistake, this fight will take a long time. But I believe that Piketty has helped to open up a new front on what sub-commander Marcos called the Fourth World War.