Thomas Piketty: ‘We are not doing enough to target the oligarchs’
The radical French economist tells JP O’Malley the Ukraine war is helping Putin distract his compatriots from how he and his cronies impoverished their country — and why the West should halt Russian fossil fuel imports immediately
Vladimir Putin last month demanded that foreign buyers pay for Russian gas in roubles or they would have their supplies cut off indefinitely. Many conservative economic experts claimed the Russian president’s blackmail would leave Europe in dire straits.
Thomas Piketty is not among them. “The west should cut all Russian gas imports straight away,” the radical French economist tells Review from his book-lined Paris living room. “This is very doable. For a country like, say, Germany, it would cost between 2–3pc of their GDP. If we don’t cut our reliance on Russian gas in the West, we will continue to send money every day to the Putin regime, which is intent on destroying Ukraine. In years to come, we will look back and regret this.”
The academic and multimillion-selling author believes learning lessons from history is essential to keep up progress towards a more egalitarian global society. That was the main theme of his 2014 book Capital in the Twenty-First Century, which sold more than 2.5 million copies. The 50-year-old has published a number of books since, including Capital and Ideology (2019) and Time for Socialism (2021). His latest, A Brief History of Equality, is out next week. Optimistic in tone and content, its argument is built around a simple message: there has been a general trend towards global equality — particularly in Europe — between the end of the 18th century and today.
“The move towards equality during that time frame is not a natural phenomenon,” he says. “It’s a long-running trend which begins with the demise of aristocratic privileges during the French Revolution and the slave revolt in St Domingue in Haiti: both events represent the beginning of the end for aristocratic slave-owning colonial societies.”
That trend towards more even wealth distribution continued throughout the 19th and 20th centuries, he says, as the benefits of social security and progressive taxation narrowed the gap between rich and poor in the western world. So too did social movements, the rise of trade unions and the establishment of new power relationships between capital and labour.
It all sounds rather utopian. But the history of equality is neither peaceful nor linear, Piketty stresses. Revolts, revolutions, social upheavals, political crises and bloody wars all played a vital role too. This long-running trend towards a fairer egalitarian society can and should continue, he believes. But we first need to take stock of how and why it worked.
It wasn’t until after World War I that progressive high taxes were adopted in most western countries. In the US, for instance, the top tax rate for the federal income rose from 7pc in 1913 to an astounding 77pc in 1918.
“Before World War I, the top 10pc of society owned between 80 or 90pc of total wealth. This was certainly true in countries like France, Britain and the US,” he says. “That has declined to the top 10pc owning about 60pc of wealth today [in the US it is about 70pc], so we’re definitely not there yet in this movement towards more and more equality, although we have made great progress.”
Piketty cites the aftermath of World War II as another example of a global crisis that eventually brought about fairer economic conditions for middle- and working-class people. Take Britain. When the Labour Party won by a landslide in the 1945 election, it set up the National Health Service (NHS) and a vast system of social welfare insurance followed.
“I’m not saying all you need is a big crisis, a revolution, and equality will immediately follow: that would be stupid,” Piketty says. “But you definitely need to have big mobilisation to break the balance of power. Because the elite will always try to protect their position. This was as true with the aristocratic class during the French Revolution as it is with billionaires today.”
It’s especially true in Russia in 2022. “Russia’s political and economic development, or rather its lack of it, since the fall of the Soviet Union three decades ago is a big drama”, he says. “The same country that pretended to abolish private property during the 20th century suddenly became the world capital of tax oligarchs and kleptocrats.”
The invasion of Ukraine is “to some extent, a nice distraction for Putin,” he says, because it allows him to “cover up the fact that people close to him in his autocratic regime have been stealing resources away from ordinary Russian people for decades.”
‘Great progress’: Thomas Piketty says the move to greater equality is a long-running trend
Piketty claims the West’s sanctions against Russia don’t go far enough. “We’re not putting enough effort to actually target all of the oligarchs,” he says. “[In the West] we have largely taken symbolic measures, which only target a few wealthy Russian [billionaires], whereas it should actually be thousands of Russian millionaires that are targeted.”
He points out that there are roughly 20,000 Russians today whose net worth is more than €10m each. “If the West really wanted to target the oligarchic class that has benefited from the Putin regime in Russia,” he says, “they would need to target this group of wealthy individuals.
“Targeting the Russian millionaires with proper sanctions could make a big difference in putting pressure on the Putin regime because it would show that the international [community] is serious about social justice, democracy and transparency.”
Piketty says Russia’s war in Ukraine is a serious wake-up call to western governments, which have been complicit in laundering dirty Russian money for decades.
“There is a lot of hypocrisy around this issue because a great deal of money [and assets] were stolen from ordinary Russian people following the collapse of the Soviet Union in 1991,” he says. “This money was then invested in western financial institutions, and real estate markets in Paris, London and New York. And then suddenly when there is a war, we say: ‘Oh, we need to do something about this’.”
Western governments have not just given Russian oligarchs financial security, they have protected their public reputations with the rule of law. The British legal system has been particularly accommodating. In 2012, for instance, Chelsea FC owner Roman Abramovich won a court battle in a London commercial court against another exiled Russian oligarch, Boris Berezovsky. Legal costs reached £100m.
Court cases like these, between filthy-rich Russian oligarchs, visibly display how “we have built a legal system [in the West] that protects the wealthy, but which does not protect ordinary people,” Piketty says.
“If you are a normal Russian, and lose half of your wage because of the depreciation of the rouble or because of inflation coming from western sanctions, there is no court you can turn to and complain,” he says. “But if you have £100m in London, and someone tries to take away half of your wealth, then you can go to court, and nothing will be taken away from you. We are so accustomed to this asymmetry in legal protection that we think it’s normal, but it’s not.
“This war in Ukraine is crazy, and a human disaster, but it should, ideally, help us accelerate the movement towards more transparency in asset ownership.”
‘A Brief History of Equality’ by Thomas Piketty is published on April 19 by Harvard University Press
