Thomas Piketty’s New Book: Impressive Research, Problematic Solutions

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By Jean Pisani-Ferry, who holds the Tommaso Padoa Schioppa chair of the European University Institute in Florence and is a Senior Fellow at Bruegel, the European think tank. Originally published at Bruegel.

This piece was also published on

From the extraordinary wealth of its empirical material to the breadth of its cultural scope, and from the rare alliance of statistical precision and literary references to the level of its intellectual and political ambition, there is much to commend in this remarkable book.

From a policy standpoint, however, its last part, where the author offers an agenda to promote social fairness, deserves the most thorough discussion. It is much shorter but at least as ambitious as the analytical chapters.

Piketty’s goal there is to offer a new paradigm to substitute the largely obsolescent social-democratic project. This ambition may seem excessive. It is rather fundamentally right. In the current context of social anger, catalogues of down to earth policy proposals neither convince voters nor provide policymakers with a guide for real-time decision making in an unpredictable environment. Democracies nowadays need directions as ambitious as the welfare Keynesianism of the 1960s or the small government, free market project of the 1980s.

Purportedly realistic agendas, furthermore, often fail to tackle pressing challenges. Wealth inequality, income inequality, and inequality of access to essential goods such as education and healthcare have reached levels where they cannot be addressed by tweaks on the margin of the sort usually discussed in the policy debates.

Piketty’s bold agenda relies on three main pillars. The first is the empowerment of employees through a radical reform of corporate governance; the second is a massive redistribution of wealth and income through an overhaul of the tax system; the third, which essentially applies to Europe, is a move to transnational federalism. There are good reasons to contemplate each, but each is also highly problematic.

Empowering Employees Through Reform of Corporate Governance

First, corporate governance. A recurring theme of the book is a critique of the absolutism of property rights (what it calls proprietarisme). Piketty despises communism, but he considers the gradual extension of the sphere of private property (from land to manufactures, intangible capital, and data) and the parallel increase of shareholder power as capitalism’s main curse and a fundamental cause of the rise in inequality. Drawing on the German and Swedish experiences, he aims to restore a balance between capital owners and employees.

His proposals, however, go beyond the German codetermination, where employee representatives get half of the seats on the supervisory board while shareholders generally appoint the executive board, which in practice ensures that the latter retain control of decisions but provides employee representatives with good access to information and a say on the overall strategy. Piketty envisions more on two fronts: He advocates giving employees half of the seats on the board of large companies and capping the voting rights of shareholders holding more than 10 percent of a firm’s capital.

There is no reason not to contemplate pro-labor corporate governance reforms, especially in an economy where human capital matters more and more. What is striking in Piketty’s proposals, however, is that he envisages the issue from an almost exclusively distributional point of view. Whether or not his reforms would be conducive to social efficiency, spur innovation, or help to curb corporate short-termism seems largely outside his scope. Capitalism is looked at primarily as a wealth accumulation machinery, not as a driver of economic transformation.

Redistributing Wealth And Income Through Overhaul Of The Tax System

Taxation is the second instrument through which Piketty intends to contain the concentration of wealth and property. His proposals on this front are both precise and radical. Numerical benchmarks are presented as indicative, but the goal is unambiguous: to transform the nature of property to make it temporary rather than permanent. Piketty’s social utopia is explicitly akin to a land ownership regime where property is regularly redistributed from the landlords to the peasantry.

Three different progressive taxes are to be mobilized to this end: a wealth tax, an inheritance tax, and an income tax. The proceeds of the first two, about 5 percent of GDP, would finance a universal capital allocation whereby on her or his 25th birthday, every citizen would be endowed with 60 percent of the average wealth (or about $130,000 in advanced countries). The third one would yield about 40 percent of GDP and finance public goods, social insurance, and a basic income for the poor.

These numbers may not look that radical. Public spending amounts to 45 percent of GDP on average in the European Union, so the overall tax burden could remain roughly constant. However, the suggested parameters point to a fundamental overhaul of the property regime. Based on table 17.1 on page 1130 of the book, the annual tax rate on wealth could reach 5 percent for a person with net assets worth ten times the average wealth. Knowing that Piketty would (rightly) tax all forms of wealth equally and that average French household wealth amounts to €250,000, the tax on a €2.5 million wealth would be €125,000 annually. By comparison, for the United States, Senator Elizabeth Warren envisages only a 2 percent marginal tax rate on wealth above $50 million (instead of Piketty’s effective rate of 10 percent), reaching 3 percent above $1 billion (instead of more than 60 percent).

On top of that, the same assets would be liable to a 60 percent estate tax, and the effective tax rate on income would reach 60 percent for a person earning ten times the average income. Such levels would most likely eradicate property above a relatively low threshold, except for entrepreneurs able to achieve stellar returns on capital. Simulations by Emmanuel Saez and Gabriel Zucman (2019) on the 400 richest US individuals actually indicate that a 10 percent marginal wealth tax on assets above $1 billion would have prevented the trend deformation in the distribution of wealth observed since the 1980s. Piketty’s combination of a confiscatory wealth tax, a highly progressive estate tax, and a highly progressive income tax would go much farther. It would imply the end of capital ownership as we know it.

Again, there is nothing wrong about breaking taboos and considering fundamental capital ownership reform. But on the condition that repercussions are addressed. Piketty’s apparent disdain for the implications of his proposals is mind-boggling. He does not even bother discussing consequences for saving rates, investment behavior, or innovation. As for corporate governance, distribution seems to be his only lens. Whereas the repeated use of capital in the title of his books is an unmistakable reference to Karl Marx, Piketty shows almost no interest in the production side. Capital, for him, means little more than wealth.

Moving to Transnational Federalism in Europe

The third pillar, European federalism, is conceived as a way to overcome the policy constraints stemming from the distortions created by tax competition and the European Union’s unanimity rule on taxation matters (and, obliquely, from the eurozone’s fiscal discipline framework).[2] To solve the stalemate resulting from the addition of veto powers within the EU Council (where each country is represented by its minister), he advocates democratizing the European Union and transferring taxation powers to a new assembly combining national and European parliamentarians.[3]

The diagnosis is correct, but the solution is unlikely to see the light. The problem in Europe is not, as Piketty pretends to believe, the composition of the parliament. It arises from the much more fundamental fact that nations that have agreed to pool economic sovereignty in a range of fields are not ready to endow the European Union with competences for either taxes or wealth distribution. This has been their position since the origins, and the current political climate makes them even less sympathetic to such ideas than ever before.

Apart from the fact that an assembly combining national and European parliamentarians would probably not behave according to Piketty’s wishes, why would states suddenly agree to a fundamental change in the distribution of competences? In Germany, the question has become a constitutional matter. In a series of rulings, the Federal Constitutional Court has erected barriers to the transfer of new powers to the European Union. Ironically its argument is of the same nature as Piketty’s, but its conclusions are the opposite: For the Karlsruhe court, the European Union is not sufficiently democratic to be endowed with significant new competences, because the citizens of the country whose demographic weight is the strongest—Germany—are underrepresented in its institutional system.

On all three accounts—corporate governance, taxation, and European governance—Piketty’s proposals, therefore, raise many questions that he fails, or does not even attempt, to answer. Absent a systematic discussion of the implications of, and possible objections to, his ideas, they can hardly be regarded as serious policy proposals. In the end, what is deeply disturbing in his book is not the radicalism of his plans. It is the contrast between the thoroughness of his empirical analysis and his casual approach to policy issues.


1. The book is available only in French.

2. Piketty’s proposals largely reproduce those made by him and his coauthor in 2017 in a project for a new European treaty.

3. EU legislation results from “codecision” (joint approval) of the European Parliament and the Council of the European Union.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. a different chris

    This has always been my problem with the way the human “social” mind thinks. It thinks: “Ok, smart guy, so how are you gonna solve it?”

    And generally smart guys, like Picketty and back to Marx, fall for that. Marx was great at diagnosing capitalism’s ills. That’s a incredibly big lift… why did we expect him to figure out the fix, too? Maybe it wasn’t his job. Maybe it isn’t Picketty’s job to fix this stuff.

    I wish somebody had told Marx. Maybe somebody should tell Picketty. Enumerate the issues and then just shut up.

    1. Synoia

      Would that be incomplete work not to suggest solutions?

      Would it be better to Enumerate the issues and suggest a number of solutions to let consensus build on the most popular solution?

      For example: One is stuck in the mud:

      1. Stay there until it dries
      2. Drive forward.
      3. Back out
      4. Get a push from humans
      5. Call for a tow

      Not a complete list (because there are solutions in addition to these), and all solutions are temporary, need changes and enhancements, because there are always unforeseen consequences.

      1. a different chris

        >Would that be incomplete work not to suggest solutions?

        My point was that it would be a complete work. A book on architecture doesn’t specify how to build your house. I need information, I don’t need to be led by the nose.

        But yes, if your gonna suggest solutions suggest a good set of possibilities.

        1. templar555510

          I’m with you chris . Neither Piketty , nor Marx for that matter, understand ,understood power . A commenter on here recently said it ‘ Trump found power laying in the road ‘ . That gets it . Change only happens when power moves from one group to another and nobody knows when that will happen because the forces at work are invisible. Just to return to Trump for a moment . Stop thinking conventionally about him – right/left, good/bad, more damage/less damage, draining/not draining the swamp . Think about this : he’s a catalyst ( a person or thing that precipitates an event ) . Already he embodies change. Both the Democratic Party ( who say it ) and the Republican Party ( who don’t ) expect ‘ politics as before after Trump has gone. But we all know from our own lives, life doesn’t work like that ; there is no going back because that would be to deny what has happened . It’s magical thinking , aka a fantasy . There is going to be change, big change simply because you know if you look outside your door that what we have now, however you define it ( Climate Change , Inequality et al ) has to give . But I have read many prescriptions of the future over my long life and every one of them turned out to be wrong.

          1. Michael Fiorillo

            But don’t the motivations behind impeachment involve a lot of magical thinking on the part of Dems, as way to restore the status quo ante? One of the motivating factions and dynamics in Russiagate was the neoliberal apparat in the Democratic Party, desperate to hold on to its prerogatives.

            The liberal meritocratic class desperately wants to return to that staus quo ante that we all remember so fondly…

          2. Eclair

            Our David made a rather frightening observation about power a few days ago. It will be up for grabs, so to speak. But, there are different kinds of power. Pitketty, Marx, Jesus, Galileo, Thomas Paine, Martin Luther, ML King, Jr. (and I’m missing a lot of people here, not only because this group is euro-centric) had the power conferred by their non-conformist views of the world-as-it-is. Plus, their ability to document this view, to weave it into a compelling narrative, enabled their ‘followers’ to take that story and run with it. Once that new world-view is out there, the flutter of a butterfly’s wings in Brazil sets air currents moving and old established orders fall. We pretend we can direct the direction of the collapse, and maybe we can push in the general direction, but, really, once new ideas set the whirlwind going, it is unpredictable.

      2. skippy

        I think the rub is the fail rate of those attempting forward time travel based on the accuracy of recent past or present socioeconomic factors.

        Just ask yourself how it is that those that are far more accurate fall to the wayside, after a short spell, only to be replaced by something that has little accuracy in its construct.

        I mean its not like we don’t have constructs plucked from thin air surviving thousands of years regardless of failures.

          1. skippy

            Did not know that think tank funding was a factor of uncertainty.

            But hay … even Leonardo da Vinci played that game, heck we would not even have the new testament had it not been funded and a spread laid out.

    2. Ignacio

      I believe that we cannot load in Piketty’s back all responsibilities: identify the problem, do the correct diagnostic, select and apply the correct treatment. So I give credit to your assertion: Maybe it isn’t Picketty’s job to fix this stuff. Just use his assesment in concordance with other experts in social law, corporate rules and state governance.

      On the last point for instance, while the German Constitutional Court has all the rigths to erect power barriers on fiscal policy, why then the EU applies a framework in which, under certain conditions that whoever decided, the EU opportunistically applies its own harsh fiscal rules on certain but no all eurozone countries that were historically not applied to others. This two-tier scheme is a recipe for failure. The article does not address that in the Eurozone, having members given monetary policy to a common “independent” institution it should have been considered the case that fiscal/monetary/social issues cannot be treated as sepparate compartments that do not influence each other, and the swift separation that the German Constitutional Court envisages is another recipe for EU disaster which is evolving into a drifting heterogeneous mixture of fiscal havens and hells.

      In fact, mentioning the eurozone only obliquely makes me suspicious about the authors intentions. It looks like french economists are better aware than italian on these risks.

  2. larry

    The English translation should be out in March, 2020 according to the English publisher, translation by Arthur Goldhammer who translated Capital in the Twenty-First Century.

  3. flora

    Piketty’s bold agenda relies on three main pillars. The first is the empowerment of employees through a radical reform of corporate governance;

    My problem with the first is that it appears to still privilege the corporation over democratic government as the nexus of solutions to the problems created by globalization. ‘Empower employees’ in corporations vs ’empower citizens’ of democratic governments to regulate transnational capitalism. I’m not against empowering employees – unions used to be pretty good at empowering employees.

    Shorter: Demanding a kinder, gentler transnational corporatism/capitalism isn’t the answer to citizen dis-empowerment, imo.

  4. Alex Cox

    Reliance on the European Union is entirely ludicrous. The European Parliament is powerless given the closed door dominance of the European Commission with its unelected leaders and neoliberal agenda.

  5. chuck roast

    I would like to participate as a trustee on the board of my defined benefit pension plan. However, only pension plan beneficiaries who live in the state are allowed to run and sit on the board. I believe there is a reason for this.
    If I were in-state, then I could be lavished with travel expenses, hotels, “investment seminars” and a panoply of perks all designed to sooth and impress me with my supreme importance as a Trustee. Reading between the lines of the CalPERS posts tells me what this leads to…a Board of Trustees captured by staff and experts and turning into a rubber stamp for whole variety of parasites. Being out-of-state permits me to remain uninfected by the swine flu, and therefore an entirely untrustworthy fellow.
    Similarly, having a Corporate Board of Directors half-filled with wide-eyed workers getting their first taste of caviar does not fill me with much surety they would be prepared to do the right thing. However, having a Board of Directors filled with worker-owners of a co-operative who enjoyed baked stuffed haddock at their meetings would mitigate my anxiety.

  6. Crazy Horse

    In reality Piketty is debating how many angels can dance on the head of a pin. The USA is a kleptocracy and global military empire engaged in a race to destroy the natural world that supports all life. The energy source upon which its fleeting prosperity is based is irreplaceable, and has a half life measured in nanoseconds of geological time. The end of technocapitalism’s dominance will be through collapse, not through a nice polite transition.

    If we angels are to dance upon the head of a pin we could only do so based upon a completely different value system than that which underlies industrial capitalism. Toward that end I propose we look to the Potlach system practiced by the tribes that lived on the Pacific Northwest coast prior to being eradicated by the white man’s diseases. In a Potlatch system prestige is earned, not by hoarding as much wealth as possible as in Capitalism, but by throwing the biggest party and giving away the most possessions.

    In the modern world of mass communications there is no reason why we could not lionize the biggest potlatch winners to an even greater extent than we do our sports heroes and Kardashians. So when Jeff Bezos gave away half his space rockets, mansions, and Amazons, the media would let the world know that he was a wonderful benefactor of humanity, not just another ruthless greedy egotist. Until the potlatch mentality became firmly developed it might be necessary to make it mandatory. If the richest 500 individuals in the USA had the choice of donating half of their mansions , yachts and Bugattis, spare mistresses and oil stocks or being waterboarded and shipped to Guantanamo I imagine they would become converts. I predict that we would see a great surge in entrepreneurship as the Bill Gates of the world threw themselves into the competition to earn back their lost billions.

    What should society do with all it’s new found wealth? Make medical care a right instead of a path to bankruptcy? Make advanced education available to the most qualified rather than the students with the wealthiest parents? Or give everybody an equal nest egg to start a business at age 25, regardless of whether they are Bill Gates’ son or a crack dealer in the Bronx?

  7. Susan the other`

    Picketty should do an audio book. Where he just comes out screaming at the top of his lungs. It would be an instant hit. And it might even get through the thick skulls of heavy industrialists who stand to lose everything as society collapses. Intermediate manufacturing will be next in line and retail/distribution last. In the end food and water will be the only things for which there will be sufficient money. And “capital”? What a laugh. But don’t tell anybody!

  8. teacup

    When I take a look at this I‘ll go straight to the index to see any references to rent, rentier income, surplus value, unearned income, (natural) monopoly, regulatory capture, capital flow, effective demand, A. Pigou – R. Coase, sovereign currency, externalities, Michael Hudson…

  9. hunkerdown

    Of course, Bruegel has their house line about the indispenability of the ownership class and the professional-management class*. My sense is that the “innovation” shibboleth Pisani-Ferry invokes is lowkey about enforcing consumption in excess of need and surplus destruction, and is better left out of the hands of Mammon the market. Ideally, research and development that needs to be done would be done by grad students in universities funded by the public, with the fruits available to all, in combination with citizen researchers of all stripes.

    * Is it just coincidence this term shares an acronym with private mercenary corporation?

  10. none

    The first couple sentences of the review are missing. From the linked site:

    Thomas Piketty’s Capital in the Twenty-First Century blended history, statistics, and theory. Capital and Ideology,[1] his new magnum opus, is long enough (1,200 pages) to lump together several books: a quantitative history of inequality through time and space, from medieval Europe and ancient India to present-day societies; a largely noneconomic theory of social stratification; an investigation into the social roots of current populism; and a political manifesto for the European left.

    The book site in French is here:

    The book is not out in English yet.

      1. none

        The review is about Pikkety’s new book Capital and Ideology (Capital et idéologie), which just came out in French. Capitalism in the 21st Century was a few years ago. The link above is to the French publisher page about the new book.

      2. none

        The review is about Pikkety’s new book Capital and Ideology (Capital et idéologie), which just came out in French. Capitalism in the 21st Century was a few years ago. The link above is to the French publisher page about the new book.

        The review itself is also on the PIIE site here. (Migod, PIIE = Peterson Institute for Industrial Economics, nothing to do with the Peter Peterson Foundation I hope).

        (Pardon the duplicate post–I messed up with the 5 minute edit timer).

  11. Seamus Padraig

    “Impressive Research, Problematic Solutions” should go on Thomas Piketty’s tombstone.

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