This is a version of my paper from the Historical Materialism Australasia conference in Sydney earlier this month, which was part of a panel on Thomas Piketty’s Capital In The Twenty-First Century. I’d like to thank my fellow panelists Anitra Nelson and Mike Beggs.

It an unlikely bestseller: Thomas Piketty has written a thick book packed with data and the detailed description thereof. Is this the economics version of Stephen Hawking’s A Brief History of Time, to be bought in large numbers but rarely read all the way through, let alone understood?

The book has been lauded especially on the Left, from its liberal and social democratic end, to the large parts of the far Left which, while more critical, have welcomed the overlap between Piketty’s concerns and those of Marxists.

But it is not the first major foray into the issue of inequality that has caught imaginations. Think of the impact of the work of Rawls. Think of the UN Human Development Reports that showed massive wealth disparities. Think of Wilkinson & Pickett’s The Spirit Level.

Noberto Bobbio famously argued that “the criterion most frequently used to distinguish between the left and the right is the attitude of real people in society to the ideal of equality”. Bobbio’s words were first published in Italian in 1994. Have we made any advance since then?

Piketty’s book tells us that in fact in most rich countries inequality has worsened, and in a handful of societies (of which Australia is one) the richest 1 percent has not just pulled away from the rest but pulled away rapidly. The great strength of the book is that it makes the case for growing inequality since the early 1980s clear with a mountain of data. You can almost forgive Piketty’s naïve acceptance of a whole range of vulgar economic theory or superficial dismissals of those theorists he rejects (Marx being just one) — because the numbers, graphs and meticulous description are very interesting.

But stand back a minute and there is something quite weird going on here.

In many ways Piketty’s book is an implicit critique of the social effects of what is known as the “neoliberal” era. That era culminated in the biggest global economic crisis since the Great Depression. Recovery from the crisis has in most places been halting and weak. It has thrown several European states into regime crisis, and political instability seems to have accelerated in most places.

The traditional Left — in its more mainstream and radical versions — has gotten very little out of the crisis despite having spent a long time leading up to the crisis arguing for alternatives to “market fundamentalism”.

It’s my view that the renewed interest in inequality is based not just in the fact that capitalism produces terrible social inequality, which it has been doing for a long time, but because of the failure of the Left to deal with the much more immediately destructive effects of the global crisis itself. The Left has essentially come to the conclusion it can do little to control such forces and so battling “inequality” becomes a substitute for that project.

Furthermore, the “anti-neoliberal” program of the Left — nationalisation, state intervention, regulation, etc. — was actually implemented by governments of all shades after 2008. In Kevin Rudd’s words:

In the United States, the rescue of Citigroup and the Bank of America amounts to a de facto nationalisation. This followed the placing into conservatorship of Fannie Mae and Freddie Mac, and the effective nationalisation of AIG, the world’s largest insurance company. Once again, the social-democratic state, not the unfettered forces of the market, was called to the rescue.

Remember: This was the “social-democratic state” run by George W. Bush!

The result has been that in many rich countries most of the anti-market project of the Left was implemented, but in the interests of the capitalist system and not in the interests of the people it was supposed to help. Rudd again: “Not for the first time in history, the international challenge for social democrats is to save capitalism from itself”.

Piketty’s book is in one sense no more than a diversion from the abject failure of the Left with respect to the crisis. Of course this isn’t Piketty’s fault — he’s been researching this stuff for ages. But his superstar status suggests that his argument resonates with something that is going on.

It’s my view that the fight against inequality represents the last sigh of social democratic and more radical Left political projects that have reached their point of exhaustion. They failed to have much effect in the crisis, but they stagger on, zombie-like, trying to find some relevance. The grand dreams of “managing the economy” or “planning” or “overcoming crisis” don’t really figure in Piketty’s book, or in most modern Left discourse, except as a fantasy projection.

The reception of Piketty’s book raises another issue for me. Most Left commentators have noted how hesitant he is in pushing his wealth tax and other arguments around redistribution. It is a far cry from British Labour’s Shadow Chancellor Denis Healey stating he would “tax the rich until the pips squeak” before his party’s 1974 general election victory. Piketty’s pessimism is understandable given the direction of such policies over the last three decades.

I think most of the Left falls into the trap of seeing this as a matter of “political will” (or its lack). Piketty is insistent that, “The history of the distribution of wealth has always been deeply political, and it cannot be reduced to purely economic mechanisms”. Yet he also suggests that there is an economic driver of inequality: “Specifically, it is important to note that the fundamental r > g inequality, the main force of divergence in my theory, has nothing to do with any market imperfection.”

This reflects the same dilemma expressed in politics — that society moves by its own “natural” laws but simultaneously that politics can correct these social problems. This paradox has always been at the heart of Left politics. It is now more acute than ever because the state intervened massively in the crisis and the result was no real circumvention of these trends to inequality, as well as a weakening and destabilization of the political system. On the Left PASOK had its “PASOK moment” but now others are falling prey: PSOE, the SPD, the ALP, etc.

Marx, by way of contrast, argued that social problems cannot be legislated away, merely administered differently by the state. This is because the state rests on the maintenance of a society that produces the social problems in the first place. He used an example similar to the current concern about inequality — how nations dealt with the issue of poverty:

From a political point of view, the state and the organization of society are not two different things. The state is the organization of society. In so far as the state acknowledges the existence of social grievances, it locates their origins either in the laws of nature over which no human agency has control, or in private life, which is independent of the state, or else in malfunctions of the administration which is dependent on it.

Piketty’s argument is a perfect example of the “political point of view” Marx criticizes.

The rapturous reception for someone who offers only the mildest corrective to deep inequality in his policy proposals reflects the Left’s exhaustion. It also provides a convenient explanation for the apparent failure of the Left to overturn neoliberalism. If indeed the relative economic strength of the 1 percent is so great, then maybe — in the words of recent Piketty convert, Greens leader Christine Milne —  “You get to the point as I have now come to believe, that we no longer do live in a democracy, but a plutocracy – a country governed by the wealthy for the wealthy.” Or Wayne Swan’s rants against the subversion of democracy by the super-rich.

Clearer admissions of political ineffectuality it would be hard to find.

We would also do well to remind ourselves that Marx was much less interested in equality than his modern followers. By Bobbio’s definition, then, Marx is not part of the Left.

Marx identified two main types of equality, both indissolubly linked to bourgeois society.

The first was equality as a political concept that came to prominence with the rise of capitalist social relations and the bourgeois revolutions. He was sharply critical of the limits of this kind of equality, arguing that political emancipation (equality before the state) was no substitute for social emancipation (which was human liberation).

The second was the exchange of equivalents in the capitalist market. In Capital Marx goes to great lengths to show that surplus value doesn’t emerge from unequal exchange or some other unfair process at the level of the market. Rather, underlying the equal exchange of values is a process of real abstraction of labour, of exploitation in the hidden abode of production, leaving behind the world of freedom, equality, property and Bentham.

Again, actual equality conceals exploitative social relations.

In Critique of the Gotha Programme, Marx argues that the point of communism is not “the narrow horizon of bourgeois right” but a situation of “from each according to their ability, to each according to their need”. That is, the alternative to the political and social inequality produced by capitalism is not a lessening of economic inequality but an entirely different way of organizing social relations. In such a society the real differences between individuals — which make true social equality impossible — and their collective existence are no longer estranged.

The excitement over Piketty’s contribution suggests that such a social vision is not only beyond the Left’s abilities, the Left doesn’t even understand the terms of the problem Marx was trying to address. Worse, while wanting to save capitalism from itself with the demand for more equality, it no longer has any real confidence it can achieve this modest aim.

Piketty, then, is truly the economist for today’s Left.