Review: Thomas Piketty: Capital and Ideology

One of the most productive things that I have done during Melbourne’s lockdown is read Thomas Piketty’s latest work, Capital and Ideology (Harvard University Press, 2020). It is undoubtedly not the most leisurely book to read, at 1150 pages, dense with footnotes, appendices, and graphs, spanning a three-hundred-year period, multiple countries, and the fields of economics and history. It is a monumental work of scholarship, and along with his last significant work Capital in the 21st Century (Harvard University Press, 2014), it provides a rigorously empirical, data-centric and troubling view of the undoing of financial egalitarianism in Western democracies. Piketty provides the historical reasoning of this, the monumental failure of the command economies of communism, the weakening of progressive taxations and other policies design to redistribute wealth (such as inheritance taxes) and the shift in the ideology of egalitarianism to ideologies based the uncritical embrace of ‘meritocracy’.

The primary cause of the significant shift is that the political left (Labour and Democrat’s) shifted from worker’s parties to parties of the educated (or what Piketty calls the Brahmin left). A more educated demographic is more likely to vote left; the less educated are more likely to vote right. Politics has become less of a class battle and more of a battle between elites; the ‘Brahmin left’ and the ‘Mercantile right’, with a bunch of Identitarian political cleavages to keep things interesting.

I will attempt to outline the four key arguments.

Inequality has always been justified by ideology, from pre-modern ‘trifunctional societies’ (church, nobles, and warriors), to slavery, colonialism, communism to what Piketty terms ‘hyper-capitalism’. All regimes had an ideology to justify financial inequality from the slave states of the Caribbean and southern United States (that drew up to 100% of their income from the slave trade), to Belle Époque France, to 21st Century hyper-capitalist states. Piketty has a knack for measuring the transition of inequality through various historical epochs using vast data sets of national income, taxation, and inheritance records. During the late Belle Époque (the period after the French Revolution) a ridiculously small elite owned nearly all the property in Paris, justified by the post-revolutionary-meritocracy of mercantile ‘egalitarian exceptionalism’.  It was only through the advent of progressive taxation and inheritance taxes in the 20th Century that France and other countries moved to a more quantifiable egalitarianism.

Piketty claims that communism was a disaster so great that its failure overshadows the regimes of colonialism and slavery that came before it (and this argument has infuriated the Chinese CCP so much, that they have banned his book in China). Plus, the failure to regulate capital through the experimental, centralised command economies of communism, has pushed western countries in another ideological and policy direction, to have very-little wealth in public hands. In fact, all that citizens now own through their governments (schools, roads, buildings, and agencies) is worth zero dollars once government debt is considered. Indeed, in some countries, governments must pay private enterprise interest as governments own less that they owe (and this has happened in the short timeframe of 10 years).

Social democratic policies are another area of focus of Piketty’s examination. Although they have not disappeared altogether (Norway, Sweden, Germany, and to a lesser degree, New Zealand and Australia), their influence on the world stage is marginal to the 21st Century libertarian notion of globalism (free-trade, tax havens, and ‘race to the bottom’ tax competition between nations).  Piketty argues that social democracies should form federal alliances to regulate capital on a global scale, as they have so successfully done domestically.

The social democracies were some of the most egalitarian societies the world has ever known, but this did not happen through mere cultural reasons or imagined ‘egalitarian exceptionalism’, but through clear policies linked to the unambiguous ideology of wanting to be egalitarian. This entailed political courage and enacting policies of wealth distribution through high progressive taxation and high rates of inheritance tax. The period from the Second World War until 1980 was a prosperous, high-growth, high-innovation period and this was archived through maintaining egalitarianism via high progressive taxation, especially in the US (up to 75%), which is now the most inegalitarian western economy. Piketty’s point is that fiscal egalitarianism and innovation are not mutually exclusive, and in fact, the opposite may be the case.  Globalism needs to move onto a more egalitarian footing, and this can only be done through alliances of progressive, egalitarian countries, something like a federal version of the EU (that presently only collect and distributes 1% of European GDP).

As Piketty argues, one of the significant reasons that western countries (particularly the US), became so inegalitarian is because of shifting ideologies and voting patterns, especially on the left. Piketty uses post-election surveys to examine voter behaviour and discovered that there has been an almost complete reversal of voting patterns among a less-educated demographic. Since the 1980s, the less educated are more likely to vote Republican or Tory, and the more educated are more likely to vote Labour or Democrat. This shift mirrors the reduction of progressive taxation and the heightening of inequality in western democracies. The policies of the left (or what Piketty terms the Brahmin left) are seen by the working classes as supporting high-education and high-salaries, whilst neglecting working-class demands (which are often essentialised as ‘populism’). The pressure of global capital, the ‘race to the bottom’ in taxation competition, and a highly fractured polity have perhaps forced the hand of progressive parties.

As a conclusion, Piketty seems to be arguing that we need to get over communism, try egalitarianism again, and learn from the social democracies. The state does not have to own everything (the means of production). It can foster egalitarianism through taxation and ‘fiscal justice’, inheritance taxes (that prevent inter-generational wealth accumulation), and workers-representatives on company boards (as is the case in Germany and Nordic counties). One of his more interesting ideas is that there ought to be an explicit public-inheritance, or that every 25-year-old could receive a sum of say, 200 thousand euros to set them up in life at an early stage.  This money would come from an inheritance tax on the enormous fortunes. The ‘egalitarian ideology’ that justifies this is that wealth should be temporary and not accumulated over many generations (that could see us return to the nobility of pre-modern times).

I am fortunate enough to have read both of Piketty’s significant works, and the irony is, this type of scholarship is only possible in the 21st Century. The synthesis of quantitative data with a historical narrative on such scale using such techniques has all the hallmarks of emergent digital humanities (or ‘big reading’).  Piketty has even made much of his data available for further analysis, visualisation, and debate in the classroom. The book was released just before the global coronavirus pandemic, so perhaps there is a historical moment now, as there was directing proceeding the Second World War, where we have the chance to recalibrate ideologically and again move towards egalitarianism.

The death of a travel diary…[3/50]

An everyday discipline that I have had for the past 27 years (ouch) is keeping a daily ”travel diary”. I started this arduous task way-back in 1988 during Australia’s bi-centenary year. This first diary was a Christmas gift from my sister, embellished with pictures of koalas, kangaroos, gum-nuts, and celebratory bi-centenary images of Governor Phillip triumphantly raising flags at Sydney Cove. Through my first diary, I started describing nights out on the booze, difficult friendships, and grand aspirations of seeing the world.

2014-12-07 20.57.50And the next year I had embarked on a voyage to conquer new lands. This was my first time out of Australia and like many Australians of the period, I thought it would be the only time!

When I triumphantly returned from a year in Europe and the US, I enrolled in a humanities degree at La Trobe University in Melbourne. And this is when all the trouble began. The diaries became another journey; the rich world of the humanities is both an internal and external journey.

Although I have never re-read my journals, I do recall that during my early years of education, they were rambling monsters with all sorts of treatises and manifestos, jaded letters, and tortured-observations, stapled to every other page. What a splendid time that was!

Then came are all those years of travel; of long summers in Asia, of study and road trips in the US, of good times in Kreuzberg in Berlin and late night drunken visits to chicken shops in Dalston in London. There was Hanoi, Mumbai and Ko Phan Ghan, Kathmandu, Vientiane, Hampi, Harlem, and Hoi Ann. And all those damn universities; UNSW, RMIT, Melbourne, King’s, Virginia, VU, and UCSC, each with their idiosyncratic style and ways to engage (or not engage) with the world.

But over the past few years, the diaries have become pedestrian (take this as a sign), concerning setting practical goals and writing about day-to-day administrative shite. And they started to take up a lot of room, in more ways than one, thus, it is time to move towards a minimalist future.

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I see the process of diary writing as similar to physical work-out, it is a workout for the soul. And just as it is possible to notice those who have never been to a gym (sorry about that), you may also notice those who have never kept a diary nor traveled in their youth. They may look good on the outside but have few healthy perspectives developed from the inside.

Anyhow, after much deliberation, I decided to burn the f**kers; to set the diaries on fire and destroy that journey; to start at ”year zero” just like New Zealand with a new flag! Now I can be historically pure and arrive anywhere from nowhere like a contextually-challenging snake on a plane (there are no snakes in New Zealand).

But being a historian (and a digital one) I just could not do it (well, not completely). So I painstakingly digitised all the diaries before I burnt them (it took many weeks, and now my arm hurts). They were scanned and photographed (according to one of the many standards) and are now safely encrypted and stored on a cloud drive protected by an inactive account manager. So, if I don’t reply to the ‘are you still alive’ email sent by this particular service every six months, they will never see the light of day. This makes me very happy!

So, I won’t keep a daily diary any longer (at least, not in this form). That work is now done, and the fruits of that labour will forever carry me on my travels. Burn!

Why is Smith Street important? A history of one of Melbourne’s most diverse streets

This evening I’m going to discuss the historical significance of Smith Street, the street that forms the border of Collingwood and Fitzroy, one of Melbourne’s most important and diverse streets. This presentation borrows from heritage work I did a few years back before the development of the site over the road, which is now the Smith and Co. apartments. As a disclaimer, I have lived in the area on-and-off for a good deal of my adult life and presently live less than 200 meters from here (although I have on occasions gone to other suburbs!). In this presentation, I’ll give a brief historical overview of Smith Street from when it all began the mid- 19th Century up until the 1970s.

The 19th Century

  • Street founded in 1837 on an irregular track from the top end of Bourke Street that went to Heidelberg
  • Between 1837 and 1865 the street made the transition from a thoroughfare to a manufacturing and shopping centre
  • Boom in the 1880s saw the building of the Post Office and Foy and Gibson’s Collingwood Store
  • Cable tram arrived on Smith Street in 1887 and expanded the retail population

• Smith Street is one of Melbourne’s oldest thoroughfares dating back to the first suburban land subdivision in Melbourne in 1838. Smith Street forms the eastern border of Fitzroy, and the western border of Collingwood. At first, Smith Street split the suburb of Collingwood in two but then the eastern half of the suburb was named Newtown and then later, Fitzroy (Melbourne’s first suburb).
• Smith Street originally formed part of a winding dirt track that went to Heidelberg. And it was the only road out of the city into the northeastern district of the fledgling Victorian colony. Smith Street was later straightened when the area was surveyed for the city’s first subdivision and became Melbourne’s first suburban shopping strip. In Victorian times, it was one the busiest and most important shopping centres in all the Australian colonies and in Melbourne it was only rivaled by Chapel Street in Prahran.

Foy and Gibson's, Smith Street, Collingwood
Foy and Gibson’s, Smith Street, Collingwood, 1890s

Establishment of Foy and Gibson’s
• Between 1837 and 1865 Smith Street underwent a transition from a thoroughfare to a manufacturing, service and shopping centre.
• One of the most important manufacturing and retail outlets of the time was the Foy and Gibson’s complex which had at the time the largest factory in the Southern Hemisphere.
• This is perhaps the first example of a purpose built department store in Australia and was completed during the boom years of 1891.
• Most of the Foy and Gibson buildings were built by the renowned Melbourne architect William Pitt who was responsible for many well-known buildings including the Federal Coffee Palace (that got pulled down), the Melbourne Stock Exchange, the original Rialto building, St. Kilda and Brunswick town halls, and the Victoria brewery in Victoria Parade. He also designed many theatres and re-designed the Princess Theatre in 1888
• And this image is on the Collingwood side of the street where the Smith and Co. development is being built at the moment.
• And these images (postcards etc.) can be found at Yarra Libraries or the State Library and some of them are online in the Pictures Victoria project.

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Foy’s ‘ladies store’, opened in 1912

Fitzroy side of the street (and this is the Ladies store)
• Foy and Gibson’s was the first modern department store in Victoria and was a Smith Street institution for over one hundred years. Founded by a dour Scot, William Gibson, the store rapidly expanded so that by the early 1890s Foy and Gibson was present on both sides of Smith Street and its factories sprawled across three entire blocks of Collingwood.

• And this immense emporium or ‘ladies store’ on the Fitzroy side of Smith Street was opened in 1912.

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Recent picture of Foys Ladies Store, Smith Street, Fitzroy

And this is a fairly contemporary shot of the building (with the Union Bank of Australia Building on the corner). And Kathmandu is housed in part of the old Foy’s emporium building at the moment.

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Macs Hotel occupied 168-172 Smith Street from about 1860 (on the Collingwood side of the street).

Macs Hotel
• And directly over the road was Mac’s Hotel, which also played an important role in the history of the district. It occupied the site of numbers 168-172 Smith Street from about 1860. Macs hotel was the focus of many of the agitations by which Collinwoodites were renowned. It was the headquarters of Stumperdom (or political stump speeches) and there was a large open space for gatherings.
• Perhaps Macs also played a role in the 8-hour movement that came out of the pubs of Fitzroy and Collingwood in the mid-19th Century.

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168 Smith Street Collingwood showing the remains of Mac Hotel, Circa 2003.

Until recently, the only surviving part was number 168, the southern third of the original building, but was torn down a couple of years ago.(and there is the Grace Darling Hotel just up the road from Macs is also an important hotel for the area and is one of the oldest, continuously licensed pubs in Melbourne, built in 1854)

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Cable trams operated in Melbourne right up to the 1940s.

Cable Tram
• And of course, before electric trams, there were cable trams. And this is what a Melbourne cable tram looks like in case you haven’t seen one (and they are beautiful and they operated in parts of Melbourne right up to the 1940s).

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Cable tram on Smith Street, circa 1906

And in this picture, you will see a cable tram on Smith Street. And this is looking down Smith Street from Johnson Street with the Birmingham Hotel on the right there.

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Cable tram on Johnson Street, Collingwood, circa 1906

And this is looking down Johnson Street from the corner of Smith Street: Does anyone notice anything unusual about this image? Johnson Street has trams!

1900 to 1970
• The period of 1900 to 1970 was an important period in the history of Smith Street. There was the expansion of Foy and Gibson’s (and its eventual closure), a tunnel was built under Smith Street for lady shoppers, and Coles opening its first store in Australia. But World War II saw the fortunes of Smith Street decline, due to a number of factors.

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Foy and Gibson Factories, 1906.

Foy and Gibson at its height
• I love this Image this is a picture of Foy and Gibson at its height in the early 20th Century. And remember Foy’s manufactured as well as sold their goods which would be incredibly unusual today (so they had a lighting factory and a furniture factory and a toy factory and a bedding factory I believe).

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Foy and Gibsons, Collingwood, 1906.

And this is a postcard of Smith Street with the large Foy and Gibson store dominating. There is an elaborate trellis facade built over the veranda, with blinds drawn against the sun, and the signs on every section of the veranda announce the Foy & Gibson Summer Fair. “Women in Edwardian dress cross the manure strewn road, men gossip next to their delivery carts; carriages wait outside the shop and several cyclists proceed along the street”.

Continue reading “Why is Smith Street important? A history of one of Melbourne’s most diverse streets”

Why is Smith Street important? (Nerd Nite Melbourne, 7PM, October 14)

If you are free on the night of October 14, come to Mr Wows Emporium, 79B Smith Street, Fitzroy (upstairs), to Nerd Night Melbourne.  This is a night were specialists (nerds) talk about all sorts of subjects from environmental politics, moon-landing crafts, and pharmaceutical research. And on the night of October the 14th, I will be talking about the history of Smith Street, with two other speakers (on different subjects).

Why is Smith Street important? A history of one of Melbourne’s most diverse streets

Smith Street is one of Melbourne’s oldest, most eccentric, and more interesting thoroughfares dating back to the first suburban land subdivision in Melbourne in 1838. It forms the eastern border of Fitzroy, Melbourne’s first suburb, and the western border of Collingwood. It was originally a winding dirt track that went to Heidelberg, being the only road out of the City to the North. In Victorian times it was one the busiest and most important shopping centres in the Australian colonies, until it went into decline in the 1970s. From the labyrinthine Foy and Gibson’s, one of the world’s largest and most eclectic department stores, to secret tunnels for ‘’women shoppers’’, to the first Coles store in Australia, to a long history of struggle between rich and poor, Smith Street is an significant route for understanding urban Australian experience.

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Digital registers and estate planning

The internet and other digital technologies are an important part of everyday life. We are, increasingly, using them to upload and download files, communicate with family and friends, store and share documents, listen to music, read books, watch videos and so forth.

These files accumulate throughout life and become an important record of that life (link to article in LexisNexis Retirement and Estate Planning) (it’s on page 63).