Many anti-capitalists today no longer speak of abolishing capitalism. Instead, they call for its “containment,” “correction,” or “improvement.” Intellectuals are constantly thinking up new concepts for “improving” the capitalist economic system or curbing its “evils.”
The most recent example of this is the French economist Thomas Piketty. In his highly acclaimed work Capital in the Twenty-First Century, he stressed:
At first glance, this all sounds quite harmless. However, Piketty is a radical anti-capitalist and advocate of socialism, as he demonstrates in his latest book, Capital and Ideology. In typical constructivist fashion, he imagines an ideal social and economic system, which he calls “participatory socialism” (to distinguish it from the real world, actual socialism that has failed miserably in 24 attempts). He is quite right to call his system “socialism” because, in essence, it is about “transcending the current system of private ownership.”
Specifically, Piketty’s vision includes the following: Every young adult should receive a large sum of money as a gift from the state at the age of 25 — Piketty calls this “a universal capital endowment.” This would be financed by a progressive tax on private wealth, which would rise to 90% on the largest fortunes. He also proposes the same tax on inheritances, which would also be taxed at up to 90%. He does not accept the objection that some assets may not generate any income at all and that the recipient might then be forced to sell the assets they have inherited, such as real estate. On the contrary, according to Piketty, this would have the advantage of contributing “to the circulating wealth into the hands of more dynamic owners.”
Of course, Piketty also proposes a correspondingly high tax on incomes, also rising to a peak of 90%. And he would apply this tax rate not only to all earned income, but also to dividends, interest, profits, and rents, among others.
In order to “transcend” private ownership, Piketty calls for an approach to regulating stock corporations that, at first glance, would seem to echo Germany’s system of co-determination, which gives workers’ representatives half the seats on a company’s supervisory board. However, according to Piketty, this approach has inherent “limitations,” including the fact that shareholders have the casting vote in the event of a tie.
If Piketty had his way, he would eliminate this “limitation” (that company owners retain residual control over their property) by breaking the link between the amount of capital invested in a firm and the shareholder’s economic power in the firm. In his words, “Investments beyond 10% of a firm’s capital would obtain voting rights corresponding to one-third of the amount invested.” The idea that the model of corporate organization with “one share, one vote” is indisputably the best cannot withstand close scrutiny, he writes.
Of course, Piketty is clear that the owners of residential or business property would leave such a country in a hurry: The “only tax avoidance strategy available to the owners … would be to sell the assets and leave the country.” To combat this, Piketty suggests, the government would have to introduce an “exit tax” of, say, 40%. In effect, this would erect a “fiscal wall” to prevent entrepreneurs and other wealthy people who have no desire to live under Piketty’s “participatory socialism” from leaving the country.
Piketty’s example proves the point: Attempts to “improve,” “correct,” or “reform” capitalism that at first seem harmless will often end in pure socialism and a total lack of freedom. The only difference between Piketty’s proposals and conventional socialism is that, under his model, private property would not be nationalized in one fell swoop by order of a single ruling party. Rather, the same goal would be achieved over a number of years by means of changes to tax and corporate legislation. The ownership of private property means nothing if others decide what you can and cannot do with it. Unfortunately, Piketty’s ideas chime perfectly with an age in which the state increasingly interferes in the economy and polemical propaganda is being aimed at the “rich.”
Rainer Zitelmann is the author of The Power of Capitalism and The Rich in Public Opinion.
