Thomas Piketty: In times of crisis dominant ideologies get challenged
What will the world beyond coronavirus look like?
Some believe that things will snap back to how it was before. Others suspect the future is more malleable.
“Economic ideologies are very fragile, and times of crisis are always times when dominant ideologies are being challenged and possibly go through major transformations”, says Thomas Piketty, professor at the Paris School of Economics, told The Africa Report.
His new book, Capital and Ideology, which builds on his previous tome, Capital in the 21st Century, has recently been translated into english. [Search here for data and information from the book]
A central tenet: while there has been a drive to paint the laws of economics to be as immutable as those of physics, actually much of the way the world economy is structured is a result of the choices politicians make.
In essence, inequality is a choice not an inevitability.
Rahm Emmanuel, the first chief of staff to Barack Obama, on arriving in the White House in 2008 said “Never let a good crisis go to waste” . The Obama administration used the financial crash to push through progressive healthcare legislation in the following years.
Piketty is hesitant with coronavirus. “I don’t want to instrumentalise this crisis. Things can get so bad with mortality.”
He points to the much higher mortality rates caused by the Spanish flu of 1919 in poorer countries – and is concerned that African countries will see similar outcomes without heavy intervention.
Instead, for Africa, Piketty calls for quick, ambitious social safety net programmes to mitigate the severe economic and social impact of the crisis.
Importantly, social distancing will not work where these programmes do not exist. “If you can’t go and work, that can’t last for very long”, says Piketty. “So there is a big risk that this strategy can’t be sustainable”.
This points to a reckoning: once you have higher social spending, you have to pay for it.
This is turn will prompts questions about what a country does about its debt, monetary policy, how it re-organises its tax system, how it organises economic relations between countries… “and one of the lessons from history is that these dominant views about how to organise the economic system can change very quickly when faced with crises like this one”, says Piketty.
In these forward-looking conversations, Piketty expects African countries will have a great contribution to make.
For example, he points to the restructuring of the CFA Franc as it weans itself off French control: “how to define a common currency, [and if] it is possible to put it to the service of a development model that is able to provide more investment for the young generation”.