became a world celebrity with his book Capital

In The 21st Century, a book which actually

became the best selling economics book

of the 21st century, so far.

His new book Capital And Ideology

is now available in English in the bookshops.

Thomas Piketty is here to talk to the FT about the book.

Welcome.

The previous book really put inequality on the map.

Here you talk about ideology, and how

it shapes what you call inequality regimes,

and how inequality in turn shapes ideology.

Give us a glimpse of the argument.

Well, the novelty of this book as compared to the previous one

is that in the previous one, I was very much centered

on the experience of western countries,

in particular western Europe and North America

during the 20th century.

And the way World War One, World War Two

contributed to a big reduction of inequality.

Here, I take a much broader comparative

and international perspective.

I look at India, I look at Brazil,

I look at South Africa, China, Latin America.

And this allows me, I think, to better understand

how over time, over a long period of time,

you see major transformation of the structure of inequality

in various countries.

And the main driving force, I think,

it's not so much a violent destructions through war,

or economic deterministic forces,

or technological or control forces.

But rather, the changing ideology

and the changing political mobilisation about inequality.

So you see countries in history, which choose to be very unequal

in their organisation of property relations,

or think Sweden, which we now view as a very egalitarian

country but between 1865 and 1911,

you had actually voting rights that belonged first only

to the top 20 per cent of the population.

But within these top 20 per cent you

could have between 1 or 100 voting rights,

depending on the level of your property and tax.

And in several dozen municipal elections

you could actually have one individual

who had alone more than 50 per cent of the vote,

including the prime minister of the time.

And you know if you had told someone in Sweden

in 1910 that this was going to become

a very egalitarian country, the old political system

was organised very differently.

And there are many other national trajectories,

examples of countries that I describe in the book, you know,

just changing the structure of inequality.

In India, during the period of colonisation,

and how independent India tried to develop

the positive discrimination in order

to reverse some of these very strong inequalities

toward the formerly discriminated

lower caste of society.

So lots of examples showing that there's nothing

natural in the way social and economic inequalities

are organised in any given place.

It really depends on the imagination of societies,

and also the ability of the different sort of narratives

on inequality to win the day, through mobilisations,

through the political platform.

And I think it would be the same in the future.

It's kind of an interesting evolution from our previous

book, which I think left some readers with a bit of fatalism,

in the sense said that there was...

some of the measures seem to be there.

There are some very strong material forces at work here

that makes inequality, you know there's a strong tendency

towards widening inequalities.

And this perspective on ideas, and in some

sense I think more optimistic that if you change

enough people's imagination, as you put it,

things can change in the material economy very quickly.

When you look at the global perspective,

do you find that these changes in ideas have global reach?

What happens in one place also happens somewhere else?

Or are these idiosyncratic to different countries?

Well, sometimes you have a very quick diffusion of ideas.

So if you think of the rise of progressive taxation of income

and wealth around World War One, and in the interwar period,

it's very striking to see these very fast diffusion of ideas.

So until 1914, no country would dare having a top income tax

rate, or top inheritance tax rate above 10 per cent or 20

per cent .

And then suddenly, in the interwar period,

having 60 per cent, 70 per cent, 80

per cent on very large income, or very large ones,

becomes almost the norm.

Following the US, which has been a leader in the development

of progressive taxation in the interwar period,

up until to Reagan basically.

Up until 1980.

And then...

Introduced an income tax in 1915, something like that?

1913 in the US.

So it was actually before the war.

It's interesting that in the case of the US

it was peaceful social mobilisation that

took more than 20 years because they

had to change a federal constitution in order

to make the possibility of a federal income tax

constitutional.

In France, you have to wait until World War One.

Its really the summer of 1914.

So the war helps.

Yeah, well this is in the case of France

this is very, very sad story.

It's only to pay for the war with Germany

that finally the political decision is

taken to create an income tax.

Before that, the French political elite

would say okay in France we had the French Revolution.

So that's enough.

We are already are a country of equals.

So we are not like aristocratic Britain, also Italy or Prussia.

And that's also an interesting example of how sometimes

the elites tend to instrumentalise their own

national history in order to preserve...

It's a function of ideology, as you describe it.

Yeah, sometimes it's to protect your own interests.

But I tried to take this set of ideas

seriously, because there are always

more than just pure hypocrisy.

There is some hypocrisy sometimes.

But it's usually, they always have

some grain of plausibility.

People drink their own Kool-Aid.

Yeah, it's a...

Especially if they are paid for it.

We have to take these ideas.

We always have to take them seriously

if we want to go beyond them, and then

move to a different inequality regime.

It almost sounds from the book that if it's

the ideas that change, and that's what drives it,

it actually sticks more.

Because you mentioned that Germany didn't have very

high tax rate for very long.

It was basically on the western occupation.

So, I mean, it seems like when the ideas change you actually

get more lasting change.

That's right.

So in the case of Germany there are also

ideas that actually change and work

quite well, which is the whole idea of co-management.

You have workers' rights in the board of companies.

And so this was created in the 1950s, where

in large corporationS in Germany you

have half of the seats in the board of large companies

which go to a worker representative elected

by workers.

Those I'll go to shareholders.

So shareholders actually have half of the seats plus one.

So they have the decisive vote.

But if workers in addition to the 50 per cent of the vote

as workers, own 10 per cent of the shares, 20 per cent

of the shares of the company.

Or even some local government, regional government which

sometimes happens in Germany, own 10 or 20

per cent of the share, then you can

have a change in the controlling majority of the company,

in spite of the fact that some private shareholders have

80 per cent of the shares.

So you can see that these enormous legal transformation

as compared to the one share one vote view of private property,

and private co-operation.

And this is an example of an innovation that actually

did not spread too much.

You know, progressive taxation was

an example where you have large international diffusion.

Here it has sort have remained a specificity

of Germany, and Sweden, and Nordic countries.

But until the present day, this did not really

spread in Britain, in US, actually in France.

In my own country you still stick

very much to the one share, one vote principle.

I think this could change in the future because in the end,

these German Nordic system of co-management

worked pretty well.

It's quite successful.

Yeah, in getting workers to be more

involved in the long-term investment

strategy of the firm.

And I think this is something that is now discussed,

including in the US by Warren and Sanders,

of introducing more workers' rights in the board of US

companies.

And I think these could be, if this was adopted in the US,

in Britain, in France, there could

be a well diffusion of these other models

of corporate governance going on.

And this would be a pretty major change.

So more broadly, what is the state of play

in terms of ideology today?

It does feel like everyone's sort

of looking for a new direction.

Yes, I think we live at a time of great uncertainty,

because the ideology of globalisation

and financial deregulation, as it has developed in the 1980s,

is now at a time of crisis.

So first of all, in the US and the UK, where there was...

Reagan sort of made the claims that we will get more growth,

more innovation, by relying on a more free market...

And the government is the problem, yeah.

But 30 years later, in fact US workers

have not truly seen the growth.

And if anything the growth rate in the US

has been divided by two, following the Reagan decade.

You know, between 1990 and 2020, the 30-year period,

you only have 1.1 per cent in per capita national income

in the US, which is twice as less as between 1950 and 1990.

So the claim that by reducing top income tax rate,

and actually dividing them by two,

you will stimulate more innovation and growth.

This could have been true.

This could have been true.

But that's not what we've seen.

And I think this is why today, basically

you have two possible reactions to that.

You have a sort of the Trump, or in a way the Brexit discourse,

which is to say, OK, we're going to limit the competition

from foreign workers.

We have got to limit the flow of people,

the flow of immigration.

Build a wall with Mexico, and protect yourself

from your foreign competition.

And in the UK you add a little bit

of that with Polish workers and stubs of free circulation

of the people.

Now there's another way, which I think

of trying to regulate the circulation of people,

to regulate more of circulation of capital,

or at least to try to.

If you want to have free capital flow going on,

I think you need to have in exchange a more equitable tax

system for large corporations, for large wealth holders,

income holders.

So now, in between you could have business as usual.

You don't want to regulate more labour.

You don't want to regulate more capital.

But I don't think this is really an option.

Doesn't seem sustainable.