A New Agenda for the Social Sciences

by Margaret Levi on December 8, 2015

What a marvelous and ambitious book this is. I share all the reasons for praising it: its breadth, its ambition, its grasp of history, and its use of hard-earned statistical series. And I love the way Piketty relies on various novels to paint the picture of class and economic strategies in periods long gone. I also share many of the criticisms, particularly by my brethren in political science, political theory, and political sociology: its failure to comprehend the complexity of power, politics or institutions.

Let me first vent one minor irritant. Novels play an important purpose in this book by giving us a flavor of societies, their norms about property and inheritance, and the influence those norms have on the way people construct their lives. We learn of the novels of Austin and Balzac, but what of the writers addressing the reactions of people to the economies of the twentieth, let alone twenty-first century? Dystopian novels abound, capturing the fears of technology and of environmental disaster, but there are also those that reveal the lives of those affected by Wall Street, the decline of the family farm, the transformation of industry and work. We get a somewhat nuanced sense of the life of the striver and struggler of the nineteenth century but little sense of those who inhabit the current century—or even the last.

Now to the main points. Others, particularly some of those contributing to the Crooked Timber collection already offer telling critiques of the weaknesses in Piketty’s political analysis. I do not want to rehearse well-tread ground but focus instead on issues where I think Piketty requires the help of other kinds of social scientists to enhance his important agenda. In particular, I will discuss two work-related issues: technology and the changing nature of jobs. Then I shall turn to more standard political questions: the roles of the state, organized interests, and beliefs.

Piketty provides the crucial building blocks with his documentation of inequality and his arguments about why it is the natural outgrowth of the kinds of economies we have built. The grand (some would say grandiose) title of his opus—but even more importantly the work itself—makes him a worthy successor of the great political economists he echoes: Adam Smith and Karl Marx. But for Piketty neither the invisible hand nor class conflict will lead to a reduction in inequality. In the spirit of John Maynard Keynes, his panacea is fiscal. However, the point of the taxes Piketty advocates is not to resuscitate an economy in depression but rather to inhibit the continued growth of inequality in income and wealth with all its disastrous consequences for human welfare as well as the economy.

As erudite and thoughtful as Piketty is and despite the length and detailed scholarship represented in Capital in the Twenty-First Century, no single author—even one calling on collaborators in his field as good as Anthony Atkinson, Gilles Postel-Vinay, Jean-Laurent Rosenthal, and Emmanual Saez—can be expert on everything. To make his case even stronger, let alone take the next step in realizing effective change, Piketty needs the support of those better schooled in political science, political sociology, political philosophy, political history, and political psychology, disciplines to which he tips his hat but on which he barely relies.

The changing nature of the workplace

While Piketty focuses on the macro changes in inequality overall, he neglects how work relationships are changing in ways that also produce inequity and inequality. One of the recent projects of CASBS (the Center for Advanced Study in the Behavioral Sciences), which I direct, is on the Future of Work and Workers. We have an on-going series in Pacific Standard documenting the transformations in jobs caused by new technologies and new kinds of work. Despite the disagreements revealed in the essays by scholars, technologists, labor activists, business leaders, politicians, and policy analysts about what the world of work will look like in twenty years or so, a few clear outlines emerge. Whether robots eradicate human effort or assist it, advanced industrial economies are likely to have fewer and fewer high-end jobs, more and more service jobs, and a significant decrease in full-time occupations with benefits. In the developing world—indeed in the entire world—various forms of bonded labor and servitude are re-emerging. Where workers lack locations to congregate regularly—be it around water coolers, at dispatch halls, or in factories—collective action will need to evolve to ensure the kind of worker voice and pressure to which governments and politicians respond and that serve to promote the kinds of protections and tax systems Piketty advocates.

A theory of the state and government

Government becomes a major player in Piketty’s Capital. It is government that imposes taxes and provides social security, key components of an equalizing program. His statistical analysis documents the growth since 1870 of what he labels “the social state” (p. 474 and passim), one that plays a “central role in economic and social life,” not just war and security. But this is a description not an analysis of the role of government; we gain but hints of possible reasons for the expansions and contractions in its interventions in social and economic life. What we need is an argument about the relationship between civil society and state. We know that high inequality in wealth translates somewhat directly—but not perfectly—into high inequality in power. Piketty is certainly not making the claim of Marx and Engels in The Communist Manifesto that, “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie” Yet, how the wealthy operate and under what circumstances the non-wealthy have voice and influence must be part of an account that offers reasonable prescriptions for creating greater equality. This is a domain in which recent research on American politics and political history excels. See, for example: Larry Bartels, Martin Gilens, Louis Hyman, Elisabeth Clemens and Doug Guthrie, Jacob Hacker and Paul Pierson, Ira Katznelson and Monica Prasad.

Ultimately, what we need is an appropriate theory of the modern state, its forms of government, and the role of democratic institutions where they exist. It is not incumbent upon Piketty to offer this kind of theory, but his agenda raises a call for those of us who can to step in and step up. And many have. To name but a few who have taken on the grand task of helping to develop better theories of the state and of government: Francis Fukuyama, Peter Evans, Robert Bates, Bo Rothstein, and Barry Weingast.

Organized interests

To advance a program of reducing inequality and inequity in modern capitalist societies and of improving the quality of life and work depends on a fuller understanding of the actors in civil society. Piketty’s emphasis is on governmental and economic actors to the extent there is an emphasis on actors at all. Actually, his book is more of a structural account than one in which we have a good sense of the key actors and their strategic possibilities. So, the first move in producing a better political analysis is to identify the players, their potential coalitions, and their range of actions under different conditions. This means going beyond the wealthy and the government to specify the key sets of players within those groupings as well as outside them. The second move is to bring in civil society more fully. Boix, Acemoglu and Robinson, and North, Wallis, and Weingast attempted to do that in their accounts of the rise of democracy, but the Piketty problem is a different one, more similar to that of Piven and Cloward in understanding American welfare programs. Who are the organized interests who can engage in effective political influence and when can they do so? What role do voters play? Labor unions were mentioned but once or twice in passing in Piketty’s book and political parties hardly at all; voting received a brief notice. Yet, the literature in political science and political sociology on these subjects is huge and instructive. Of special interest to Piketty should be the numerous works on relatively contemporary tax policy in developed economies (e.g., Steinmo; Daunton; Lieberman; Mares; Bergman; Martin et al.; Delalande; Martin).

Beliefs

The third building block is also crucial. Culture and ideology both contribute to the roles government can play in an economy and to the ways members of society change their demands and outlook. This Piketty recognizes. But underlying culture and ideology are beliefs what the world is like and what any individual or set of people can do about that world. Although Piketty acknowledges that the current state of affairs has attained a legitimacy that he is challenging with his work, the mechanisms of legitimizing demand greater attention. We know, for example, that effective tax collection depends on confidence that the government is able to ensure that, first, taxes go to the promised expenditures (without too much corruption en route or distortion at the end) and, second, others pay their taxes. But the belief in the fairness and the reliability in the tax system these conditions imply only occur where there is a bureaucracy capable of identifying who can pay what and able to enforce the rules. Only then do we get what I’ve elsewhere called “quasi-voluntary compliance”: coercion is a backdrop, yes, but people will willingly contribute because they believe in the purposes of taxes.

But what makes citizens believe or honor the ends taxes are meant to serve? The non-economic literature (Hochschild; Ferejohn; Scholz and Pinney; Levi and Sacks; Levi et al.; [Dickson[(http://www.nyu.edu/gsas/dept/politics/faculty/dickson/dickson_leadership.pdf) complements that from the economists. As John Ahlquist and I argued in a recent book, such beliefs are an effect of the rules and processes embodied in organizations, governments, and groups. When individuals believe that they are being treated fairly, when they are given credible information about the way the world works, and when their socialization and opportunities enable them act on ethical commitments, they are more likely to develop an “expanded community of fate,” in which they see their fates entwined with others—often strangers—in a larger society. They are then more likely to make sacrifices in taxes and to overcome a narrow view of self-interest in service of a larger societal good.

To claim that Piketty has failed to provide a sufficient political analysis in Capital in the Twenty-First Century is not really a criticism of his extraordinary book and its ambitious agenda. Rather it is a call to the rest of the social science community to provide that additional arguments and evidence needed if we are to succeed in making our economies and polities more equitable and better adapted to serving the human needs of their entire populations.

{ 13 comments }

1

Rakesh Bhandari 12.08.15 at 4:30 pm

Piketty’s work raises the question of state coordination to impose a global wealth tax. The difficulty here is competition among states to attract capital. This is one of the reasons that he gives to think the after-tax r will remain so much greater than g to amplify the inequality in wealth holdings over time. In other words, the major question about the state that Piketty raises may be well not around domestic politics and domestic legitimacy but the challenges of the inter-state system.

2

Rakesh Bhandari 12.08.15 at 4:56 pm

What kind of coordinated state activity would be needed to stop misuse of tax havens? Should taxes be applied on the profits claimed within a state or on the sales made there or the employees actually employed there? I have not read Piketty’s student Gabriel Zucman’s book, but I understand that these are the kinds of questions about tax policy raised, and they seem to put inter-state coordination at the center.
Think here of the mis-use of the inter-state system for “inversions”.
http://www.newyorker.com/news/john-cassidy/the-pfizer-allergan-merger-is-a-disgrace

3

Rakesh Bhandari 12.08.15 at 5:49 pm

Qtd in Kaushik Basu’s Beyond the Invisible Hand:
“Globalization also means that governments are unable to raise taxes on
the rich and on corporations, for fear that they will move to another nation.
During the last twenty years, the average corporate tax rates in the Organization
Of Economic Cooperation and Development (OECD) countries have fallen from
45 to below 30 percent. From 2000 to 2005, twenty four out of the thirty
OECD countries lowered their corporate tax rates, and no country raised its rate. “

Kristian Weise 2007

4

Trader Joe 12.08.15 at 6:16 pm

@2 & @3
The questions and points you raise on inversions and tax arbitrage are good, but really only the tip of the iceberg since it pre-supposes that tax savings are the ONLY reason a company chooses to locate business in a tax advantaged jursidiction. While this is likely true in clear financial havens like Bermuda or Turks, its far less the reason in places like China or Ireland where the offshore location provides access to markets in addition to the tax advantage.

Said differently, if the U.S. lowered its corporate tax rate to 20%, jobs would not necessarily come flooding back from India, Mexico, wherever….however if India, Mexico etc. raised their rate to 35% to match the U.S., (which is the type of harmonization implied) you can bet the move would happen quickly which would add a degree of social chaos to the academically-neat argument of ‘global tax’ on capital.

5

notsneaky 12.08.15 at 6:54 pm

“advanced industrial economies are likely to have fewer and fewer high-end jobs” (because of robots)

How does this work?

6

T 12.08.15 at 7:33 pm

1st sentence of last paragraph: “To claim that Piketty has failed to provide a sufficient political analysis in Capital in the Twenty-First Century is not really a criticism of his extraordinary book and its ambitious agenda.”

Last sentence of 1st paragraph: “I also share many of the criticisms, particularly by my brethren in political science, political theory, and political sociology: its failure to comprehend the complexity of power, politics or institutions.”

I get the feeling that the the 2nd quote better expresses your view.

Finally, a question: whose agenda is “A New Agenda for the Social Sciences”? Your prescriptive agenda based on what you think is missing from Piketty per the last sentence of the OP? Or are you giving a name to the recent research you cite? Or is this just the typical critique of economics made by political scientists and sociologists with a special application to Piketty?

7

Peter K. 12.08.15 at 9:44 pm

With the rise of capitalism there has always been the contest between the political force of equality, fairness and justice and the forces of inequality or capital.

During the Progressive era there wasn’t a huge crisis, but there were many progressive reforms. The income tax, 40 hour work week, free public high school, food and drug safety, government regulations of all sorts.

I see a democratically-accountable government reaching in and regulating the private sector or taking markets over. Like Obamacare.

What Piketty notes is that before the Great Depression, economic inequality rose to high levels and perhaps led to a vicious cycle of bad policy and greater inequality. We got Silent Cal and laissez faire economics, the insane Bank of France and terrible monetary policies. High levels of inequality led to Depression and global war.

This led to a great reset, and more equality. Policy led to greater growth levels and higher taxes and inflation dampened inequality.

But it seems almost immediately, politics and policies began backsliding, with an acceleration in the 70s and 80s. Deregulation. Tax cuts. Attacks on labor and worker rights. The boom-bubble-bust economy of the 19th century made a return with the Tech stock and housing bubbles.

So here we are again with inequality levels at high 1920s levels with *r* remaining high at 5 percent and growth slowing down to 2 percent and slower. And politics is getting crazy.

8

tony lynch 12.08.15 at 10:51 pm

I think we need to face up to the fact that Marx’s view of the state is being made true. Under Capitalism fully realized there is nothing else for it to be.

9

Rakesh Bhandari 12.08.15 at 11:21 pm

Yes, there is the question here of Piketty’s analysis of government debt and the role that government bonds play in the portfolio of the wealthy.

10

cassander 12.09.15 at 12:58 am

How is this a new agenda? A few quirks of language aside, is nothing here that progressives would not have endorsed a century ago.

11

Tabasco 12.09.15 at 3:32 am

I also share many of the criticisms, particularly by my brethren in political science, political theory, and political sociology: its failure to comprehend the complexity of power, politics or institutions.

Piketty is an economist. This stuff is not his department. He should no more be expected to deeply understand them than to understand how enzymes break down food in the small intestine.

12

Rakesh Bhandari 12.09.15 at 4:04 am

Political scientists have a lot to learn from Piketty about the operation of sovereign wealth funds, the role that colonial assets played in the French and British Empires, the democratic failures of the Third Republic, the cycle of the nationalization and privatization of assets in poor countries, tax arbitrage, the connection between states as revenue collectors and information gatherers, the distributive effects of public debt, the effects of war on the operation of economies, and many other things.
This is a tremendous book, worthy of the most careful attention to what Piketty has actually found and what he is arguing.
By the way, Piketty insists that he is not an economist and is not interested in disciplinary squabbles. He rightfully locates himself in the great interdisciplinary social scientific tradition of Braudel and Bourdieu.

13

Rakesh Bhandari 12.12.15 at 6:17 pm

I have been struck by Bukharin’s critique of the rentier. It was completed in 1914; the English reprint has an introduction by Stanford economist Donald Harris. I have been eager to quote it, but it’s long. Yet given Professor Levi’s interest in Marxist theory and the fact that the discussion has died out, I shall hide here big chunk of it. Compare this to Piketty’s discussion of the rentier as the enemy of democracy:

The capitalist evolution of the last few decades involved a swift accumulation of “capital values.” As a result of the development of the various forms of credit, the accumulated surplus flows into the pockets of persons having no relation whatever to production; the number of these persons is constantly increasing and constitutes a whole class of society — that of the rentier. To be sure, this group of the bourgeoisie is not a social class in the true sense of the word, but rather a certain group within the ranks of the capitalist bourgeoisie; yet it displays certain traits of a “social psychology” that are characteristic of it alone. With the evolution of stock corporations and banks, with the rise of an enormous traffic in securities, this social group becomes more and more evident and intrenched. The field of its economic activity is predominantly that of a circulation of financial paper — the Stock Exchange. It is characteristic enough that within this group, living on the income from securities, there are a number of different shades; the extreme type is the stratum which is not only independent of production, but also independent of the circulation process altogether. These are, above all, the owners of gilt-edged securities: national bonds, secure obligations of various kinds. Furthermore, there are persons who have invested their fortunes in real estate and draw permanent and secure incomes from the latter. These categories are not even troubled by the disturbance of the Stock Exchange, while shareholders, being closely connected with the ups and downs of speculation, may, in a single day, either lose everything or become rich men. While these persons are thus living the life of the market, beginning in the morning with attendance at the Exchange and ending in the evening with a perusal of the quotations and the commercial supplements, the groups enjoying the income of silt-edged securities have severed this bond connecting them with the social-economic life and have emerged from the sphere of circulation. Furthermore, the more highly developed the credit system, the more elastic it has become, the greater is the possibility of “growing fat” and becoming “indolent and inactive.” The capitalist mechanism itself takes care of this matter; by making the organisational functioning of a considerable number of entrepreneurs socially superfluous, it simultaneously eliminates these “superfluous elements” from the immediate operations of the economic life. These elements are secreted to the surface of the economic life like the “circles of fat on the surface of the soup” — to use Sombart’s apt expression.

And it must be remembered that the owners of gilt-edged securities do not represent a decreasing stream of the bourgeoisie of coupon-cutters, but that, on the contrary, this stream is constantly increasing. “The bourgeoisie is being transformed into rentiers who have about the same relation to the great financial institutions as they have to the State whose obligations they acquire; in both cases, they are paid their interest and have nothing else to worry about. As a result, this tendency of the bourgeoisie to transfer their fortunes to the State obviously must now be really increasing … since … the State presents the admitted advantage of greater security. A company share no doubt offers chances of gain not afforded by the State obligations, but also immense possibilities of loss. It must be borne in mind that the bourgeoisie annually produces a considerable surplus of capital; but even in periods of industrial booms only a small part of this surplus capital is absorbed by new issues of shares; by far the greater part is invested in national loans, municipal obligations, mortgages, and other securities affording fixed interest.” (Parvus: Der Staat, die Industrie und der Socialismus, Dresden, pp. 103-4.)

This stratum of the bourgeoisie is distinctly parasitical; it develops the same psychological traits as may be found in the decayed nobility at the end of the ancien regime and the heads of the financial aristocracy of the same epoch.[11] The most characteristic trait of this stratum, one which sharply distinguishes it both from the proletariat and the other bourgeois types is, as we have already seen, its removal from the economic life. It participates directly neither in the activities of production nor in trade; its representatives often do not even cut their own coupons. The “sphere of activities” of these rentiers may perhaps be most generally termed the sphere of consumption. Consumption is the basis of the entire life of the rentiers and the “psychology of pure consumption” imparts to this life its specific style. The consuming rentier is concerned only with riding mounts, with expensive rugs, fragrant cigars, the wine of Tokay. A rentier, if he speaks of work at all means the “work” of picking flowers or calling for a ticket at the box office of the opera.[12] Production, the work necessary for the creation of material commodities, lies beyond his horizon and is therefore an accident in his life. There is no mention of genuine active work for him; his whole psychology presents only passive shades; the philosophy, the aesthetics of these rentiers, is purely descriptive in character; they completely lack the active element so typical of the ideology of the proletariat. For the proletariat lives in the sphere of production, comes in direct contact with “matter,” from which it is transformed into “material,” into an object of labour. The proletariat is an eye-witness to the gigantic growth of the production forces of capitalist society, of the new and more and more complicated machine technology, making possible the throwing of larger and larger quantities of commodities on the market, with. prices going lower and lower. the more the process of technical perfection progresses. The psychology of the producer is therefore characteristic of the proletarian, while the psychology of the consumer is characteristic of the rentier.

We have already seen that the class of society here discussed is a product of the decline of the bourgeoisie. This decline is closely connected with the fact that the bourgeoisie has already lost its functions of social utility. This peculiar position of the class within the production process, or, to put it more correctly, without the production process, has led to the rise of a peculiar social type that is characterised particularly by its asociality. While the bourgeoisie as such is individualistic from its very cradle — for the basis of its existence is the economic cell which is engaged in the bitter struggle of competition for independent existence with other cells — this individualism in the case of the rentier becomes more and more pronounced. The rentier knows nothing of the social life at all; he stands apart from it; the social bonds are loosed; even the general trials of the class cannot weld together the “social atoms.” There disappears not only the interest in capitalist enterprises, but any interest in the “social” altogether. The ideology of a stratum of this type is necessarily strongly individualistic. This individualism expresses itself with particular sharpness in the aesthetics of this class. Any treatment of social themes appears to it eo ipso as “inartistic,” “coarse.” “tendencious.”…
The rentier is not capable of looking forward. His philosophy of life may be resolved into the maxim: “Enjoy the moment.” Carpe diem; his horizon does not extend beyond the present; if he thinks of the future, he thinks of it only after the pattern of the present; in fact, he cannot imagine a period in which persons of his type will not be collecting interest on paper securities; his eyes close in horror at such a possibility; he hides his face at the prospect of coming things and tries not to see in the present the germs of the future; his thinking is thoroughly unhistorical.

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