In April 2014, Thomas Piketty’s tome on inequality, Capital in the Twenty-First Century, was released in English translation, featuring 577 pages (minus the footnotes) and some 115 or so graphs and illustrations. In May Capital reached the no. 1 spot on the New York Times bestseller list, a fact surprising even to the publisher Harvard, which struggled to meet the furious demand for the book. The central assertion of this behemoth of a text is that capitalism, particularly since the 1970s, has been punctuated by an extreme increase in inequality. Further than that, though, Piketty asserts that this increase in inequality is not some symptom of dysfunctional capitalism but is in fact capitalism working as it should – or, proliferation of inequality is structurally built into the fabric of contemporary global capitalism.
Economic domination by the wealthy elite is again rising.
This is not, of course, a new argument. In 1931, amidst a situation of rising fascism, a German theologian of growing fame (and scorn) published a brochure titled “The Protestant Principle and the Proletarian Situation.” The theologian was Paul Tillich, and in the brochure he took the church to task for remaining silent in the face of the economic domination of the vast majority of humanity. If we are to take Piketty seriously today, the situation of capital in the 21st century is such that economic domination by the wealthy elite is again rising; in today’s world, Tillich’s little brochure from more than 80 years ago again condemns us within mainline Protestantism for our failure to act boldly in the face of the despoliation of the majority of humanity. I think we would do well to listen to him. To listen is what I intend to do in this essay: first to Piketty and then to Tillich, in order to draw some conclusions on what these two writers might say to we who as a community so often pray as Jesus taught, addressing to God the words “your Kingdom come.”
CAPITAL IN THE TWENTY-FIRST CENTURY
Piketty claims that his text is very different from the kinds of studies that have come before it in that technology has made available to him and his team of researchers a way to look at a great deal of aggregated economic information in order to better ascertain the movements of capital over time (and, he says, do so in a more complete way than has ever been done in the past). His assemblage of economic information is certainly at the heart of the book and informs each of its four sections. Throughout we find information drawn from large countries such as France, Germany and the United States, as they have the most detailed records (though figures from many other countries also are offered when the data is available).
The central conclusion that Piketty reaches by looking at all of this data might be expressed (very much simplified) in this way: r > g leads to inequality. This is to say, inequalities begin to proliferate when the average rate of return on capital exceeds the rate of growth of the economy as a whole. The reason Piketty offers for this phenomenon is (again simplified) that essentially under these conditions money invested in the past becomes more valuable than money invested in the future, thus fueling inequalities. For example, if the average rate of return on capital were 5 percent and the economy’s rate of growth were 1 percent and I had a sum of $500,000, I could mobilize that money somewhere this year and expect a return of $25,000, thus increasing my total to $525,000. But if the sum I began with was $50,000 – or $500 – the return the $500,000 would dwarf my earnings.
The wealthiest are appropriating greater portions of the total wealth for themselves, making those resources unavailable to the lower classes.
The bright side here might seem to be that the rate of return gives me an incentive as the owner of $500,000 to invest my money, putting it into an economy rather than sitting on it. The proliferating inequality, however, comes in when we consider that my $500,000 was wealth and that most of the world owns no wealth (wealth defined as accumulated resources such as material goods, money, gold, land, etc. and not what is immediately gained from wage labor). Inequality of incomes from labor aside (which Piketty also explores), Piketty points out that inequality of wealth in the United States alone is such that the top 10 percent own 70 percent of the wealth, with the top 1 percent taking close to 35 percent of that for themselves. Piketty asserts that although we do not necessarily find similar levels of inequality everywhere, we almost universally find that since a nearly 60-year decline in inequality, from 1910 to 1970, from 1970 on the top 10 percent appear to have been taking a greater and greater portion.
In a situation in which wealth accumulated in the past becomes more valuable than possible future accumulation (r > g, above), a fortune of ten million dollars could grow faster than the economy, thus appropriating greater resources. When the owner of such a fortune is compared to a person whose wealth amounts to ownership of a $3,000 car, the first person can ride the rate of return to astronomical heights of wealth simply on his or her past accumulation, while the person with the car must rely on the average growth of the economy and might in fact not even enjoy the fruits of this growth. Because of this and many other factors, Piketty asserts that the 70 percent ownership of wealth by the top 10 percent in the United States almost certainly represents a trend that has not yet played out. It is important to point out here that these are percentages: It is not the case that everyone is getting richer; rather, the wealthiest are appropriating greater portions of the total wealth for themselves, making those resources unavailable to the lower classes.
One of the driving questions in Piketty’s book is the why inequality decreased from 1910 to 1960. He ascribes the trend to the shock of two world wars and the fiscal policy created in response. Aside from the inequality-reducing effects of sheer destruction, Piketty looks to tax rates, effects of inheritance and other such factors that suppressed inequality. Of particular interest, Piketty points out that confiscatory tax rates on enormous incomes (an American invention, by the way) within the United States reached nearly 95 percent during the second world war and remained at more than 70 percent until 1980, when tax rates began an eight-year plummet to a low of 28 percent. Piketty finds that the rates of taxation pursued before the 1970s were a significant force in the reduction of inequality during that period, and he asserts that the explosion of inequality during the past 30 years is in large part because of financial liberalization that cut taxes on wealth, deregulated multinational corporations and allowed for the existence of entities such as tax havens. Piketty’s proposed solution in the current inequality is an annual global tax on wealth, not only to help control the spiral of inequality but also to expose tremendous fortunes to more transparency, contributing to greater democratic decision making about wealth and inequality.
THE PROTESTANT PRINCIPLE AND CAPITAL
In his conclusion, Piketty returns to what he calls the central contradiction of capitalism, r > g, and makes this poignant assertion: “The inequality r > g implies that wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a rentier more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future.”
That last sentence relates significantly to what Paul Tillich identified as the proletarian situation in “The Protestant Principle and the Proletarian Situation.” Tillich in the essay adopts the Protestant assumption that the human situation is fundamentally distorted. He diagnoses the distortions of his time and proclaims that the situation of the proletariat, in which the majority of the population labors (and starves) for the benefit of the most wealthy, is “an inescapable consequence of the demonic structure of capitalism.” Tillich asserts that, as the bearer of the legacy of the Reformation, Protestantism proclaims that “the divine and human protest against any absolute claim made by a relative reality.” Thus, when a relative reality such as a church, nation or economic system makes an absolute claim upon people, not only does it dominate and destroy human lives, but it also exposes as idolatrous the kind of Christianity that remains complicit with such a claim. Tillich believed that in his day the relative reality of the demonic structure of capitalism was making such an absolute claim – one largely undisputed by the church.
AN ABSOLUTE CLAIM
I believe Piketty’s text has brought to the forefront of our national consciousness, albeit momentarily, what many have never had the privilege of forgetting: that the contemporary structure of capitalism is still making an absolute claim upon the lives of human beings. When Chicago at once closes the most schools in U.S. history (49, largely serving communities of color), when being unable to pay a simple parking ticket forces numerous poor people to face incarceration, when working a minimum-wage job brings in $14,500 a year, while at the same time the richest 10 percent are appropriating 70 percent of the nation’s wealth, we must continue to wonder about the demonic structure of capitalism.
As Piketty outlines the role of capital in proliferating inequalities, it seems that capital is indeed revealed as the sort of relative reality that is making absolute claims, and doing so all around the world. Monsanto and Syngenta, for example, own nearly $40 billion of assets in Africa and are forcing small-scale farmers to pay them for their patented seeds, sending a windfall of money back to the West and largely away from the people of Africa. This is racist colonialism under the auspices of capitalism, and it is happening not only between wealthy and poor nations but within countries – the United States for example – as poor people, particularly those of color, face the continuous attempts of capital to criminalize and colonize their lives.
I believe that in the present moment it does not do much good to demonize the wealthy. It might be idolatry to retain a ten million (or billion) dollar fortune, but I think Tillich’s expression of the Protestant principle encourages us to set our sights higher. If capital is making an absolute claim, then against such a claim is where we should set our sights, because it is killing the people God loves, and to stand silent in the face of such devastation is the true idolatry. We must dream more largely than simply discoursing on the ethics of Joel Osteen and his jet and instead look to authentically change the forces that effect, as Gustavo Gutierrez would put it, the structural plunder of the vast majority of humankind.
Early in his theological writing, Tillich often wrote on the concept of a “kairos” moment, which he related to the New Testament term meaning “appointed time.” He asserted there are particular historical moments allowing for a unique inbreaking of the Kingdom of God. We can hope that the current historical situation offers a “kairos” moment, but I think we do best to try to force one. We in the church are uniquely situated to keep this conversation on inequality from slowly drifting to the back burner, to imagine creative solutions to the current destructive situation and, most important, to attempt some. If we take both Tillich and Piketty seriously, structural change is nothing less than our calling as Christians in the current situation. All toward the glory of the Kingdom of God, a Kingdom impelled by the hope that the past will not continuously devour the future.
Image of Thomas Piketty: Fronteiras do Pensamento, Flickr, CC BY-SA 2.0 license