Thomas Picketty's Opus Magnum on Inequality in Light of John Rawl's Property-Owning Democracy

If the global economic crisis has (re)highlighted the paradoxes of “laissez-faire” capitalism’s sustainability and raised fundamental issues of political economy, the recent Thomas Piketty’s Capital in the Twenty-First Century (2014) managed to focus the debate on economic inequality, that some seminal authors consider as a main threat both to growth and democracy (e.g. Krugman, 2009; Stiglitz, 2012).

However, Piketty’s approach is neither novel nor conclusive. On the one hand, many authors (e.g. Georgescu-Roegen, 1971) had previously clearly shown that any human society, socially organized, is the locus of an inherent distribution conflict between an elite entrusted with the task of coordination, and the rest of the society. On the other hand, the ability of institutional change to prevent this type of conflict inherent to the division of labor remains untreated in Capital in the Twenty-First Century. Indeed, Piketty’s proposal of a global wealth tax on capital income as a starting point in reversing income inequality seems utopian, notwithstanding the fact that it is confined within the redistributive logic.

Unlike this purely redistributive capitalist welfare-state’s prism, John Rawls’s “property-owning democracy” seems more likely to work “to disperse the ownership of wealth and capital, and thus to prevent a small part of society from controlling the economy and indirectly political life as well” (Rawls, 2001, p. 139). The aim of such a design is to ensure “the widespread ownership of productive assets and human capital” (Ibid.), in a way that elicits an ex ante egalitarian “predistribution” of the capital, rather than relying on ex post mechanisms to compensate the market failures.

Clearly, a just and sustainable society cannot be a society in which the political agenda and the economic structure are both determined almost exclusively by concentrated capitalist interests. Rather, it fits well with a socioeconomic system with the aims of wide capital dispersal, blocking the intergenerational transmission of advantage and safeguarding against the corruption of democratic politics (cf. O’Neill and Williamson, 2012).

In discussing the deficiencies of the Piketty’s neoclassical analysis and its pure redistributive logic, this paper explores the promising possibilities of “property-owning democracy” and its extensive normative and positive outlook.

References

Georgescu-Roegen, N. (1971), The Entropy Law and the Economic Process, Cambridge, MA : Harvard University Press.

Krugman, P. (2009), The Conscience of a Liberal, New York : Norton.

Meade, J. (1964), Efficiency, Equality and the Ownership of Property, London: George Allen and Unwin.

O’Neill, M. & T. Williamson (Eds.) (2012), Property-Owning Democracy: Rawls and Beyond, Oxford: Wiley-Blackwell.

Piketty, T. (2014), Capital in the Twenty-First Century, Cambridge: Belknap Press of Harvard University Press.

Rawls, J. & P. Van Parijs (2003), “Three letters on The Law of Peoples and the European Union”, in “Autour de Rawls”, Special Issue of Revue de philosophie économique, 8, p. 7-20. 

Rawls, J. (1971), A Theory of Justice, Cambridge, MA: The Belknap Press of Harvard University Press.

_______ (2001), Justice as Fairness: A Restatement, Cambridge, MA: Harvard University Press.

Stiglitz, J. (2012), The Price of Inequality, New York : Norton.