Capital and ideology is Thomas Piketty’s sequel to his 2013 Capital in the 21st Century. The first book argued that capitalism leads to inequality because the rate of return on capital tends to be higher than the rate of economic growth. Capital owners thus come to possess an ever-bigger share of total wealth. To combat this inherent injustice, high incomes should be taxed at 80 per cent and wealth should be taxed at 2 per cent annually.

Piketty quickly became an intellectual hero of the egalitarian left. Here was the conclusive indictment of capitalism they had been looking for. And not from some intellectually sloppy leftist pundit, but from a well-respected professor of economics at the School for Advanced Studies in the Social Sciences in Paris. Inevitably, he was dubbed the Karl Marx of the twenty-first century.

The epithet was premature. Although Piketty’s Capital was 645 pages and, hence, almost as long as Marx’s Capital, it was not a work of grand theory. It offered a small theory accompanied by lots of allegedly confirmatory statistics about historical distributions of income and wealth. But now we have Piketty’s 1,093-page Capital and Ideology, which is not only longer than Marx’s treatise but has “ideology” in the title. This time we do get the Marx of the twenty-first century!

Not quite.

This is not because Piketty disagrees with Marx’s materialist view that ideology is a consequence of technology and the resulting economic arrangements, and claims instead that ideology is “truly autonomous”. Rather, it is because Piketty doesn’t do theory.

Marx had Hegel’s “dialectical” theory that history moves to some endpoint through a process of thesis, antithesis and synthesis. He had internal contradiction and class struggle. He had the labour theory of value, the exploitation of workers, alienation and all the rest of it. If correct, this theoretical apparatus showed that the advent of communism was not only inevitable but welcome.

Piketty instead relies on statistics about inequality in various kinds of society through history, accounts of the justifications given for these “inequality regimes” and stories of their demise. Adopting his programme for “participatory socialism” — ultra-high tax rates, worker-run companies, income guarantees, positive discrimination in university admissions, and so on — is then presented as no more than learning from the lessons of history, a phrase that occurs throughout the book.

Alas, dispensing with theory isn’t that easy. Consider an obvious objection to Piketty’s proposed taxes on the rich: namely, that they would discourage the entrepreneurialism that has led to the astonishing economic progress of the last 200 years. Piketty waves this objection away with the observation that from 1950 to 1980 inheritance taxes and top marginal income tax rates in the US and UK were high, yet economic growth was faster than it has been since 1980.

The problem with this historical argument is that tax rates are not the only difference between the two periods. There were many peculiar causes of economic growth in the decades after World War Two, such as the redeployment of servicemen and capital to productive rather than destructive endeavours, the renewal of international trade and the entry of women into the workforce. Perhaps these positive forces swamped the damage done by high marginal tax rates. Piketty simply ignores this familiar analysis.

In a book purportedly about justifications for “inequality regimes”, none of capitalism’s famous apologists is even mentioned

Despite claiming to take seriously the ideologies that justify inequality, Piketty never does. Consider what he calls “ownership societies” (or capitalism), the regime that we have lived under since at least 1800. How do capitalism’s defenders justify the inequality that results from it?

According to Piketty, they claim that the super-rich deserve their wealth, provided that, unlike Russian oligarchs, they made it fair and square rather than expropriating it through political connections. Which he thinks is an absurd idea:

Such hyper-meritocratic, Western-centric justifications of inequality demonstrate the irrepressible human need to make sense of social inequality, at times in ways that stretch credulity. This quasi-beatification of wealth often ignores inconvenient facts.

Piketty goes on to mention some facts inconvenient for this meritocratic justification of extreme wealth. But it is futile because the advocates of capitalism do not defend inequality on the basis of desert. Early advocates such as Adam Smith did not, and nor have its late advocates, such as Milton Friedman. On the contrary, Friedman frequently pointed out that the rich and the poor in capitalist societies were often merely the beneficiaries or victims of accidents of birth. Nevertheless, he argued, the poor would be worse off under any alternative system.

In a 1,093-page book purportedly about justifications for “inequality regimes”, none of capitalism’s famous apologists is even mentioned, let alone quoted. Look through the index: you will find no mention of Adam Smith, Frédéric Bastiat or Milton Friedman.

The one exception is Friedrich Hayek, whom Piketty mentions several times but without rehearsing his arguments in favour of capitalism. Piketty proceeds as if it suffices to show that Hayek favoured capitalism even though it produces inequality. From this alone, sensible readers will already know that Hayek’s defence of capitalism is wrong. Why waste time telling them what that defence was and exposing its defects? Especially when there are hundreds and hundreds of pages of irrelevant history to get through.

It is not only bogus appeals to the lessons of history that Piketty substitutes for proper argument. He also likes to give the ideas he dislikes silly or nasty-sounding names. Defenders of “hypercapitalism” indulge in the “sacralisation of billionaires” and the “quasi-sacralisation of private property”. Piketty favours mixed private, public and social ownership, a position he calls “critical proprietarianism”. Those who favour private property are said to espouse “exacerbated proprietarianism”. This is just name-calling with big words.

Piketty also likes to describe things in ways that assume the conclusions he goes on to draw from them. For example, page 35 displays a chart showing the correlation between parental income and university attendance. It shows that as incomes rise, so does university attendance. But Piketty does not label the y-axis “rate of university attendance”; he labels it “rate of access to higher education”. Perhaps the lower attendance of the poor really is explained by their not having access to higher education. But this is what Piketty needs to prove. It’s cheating to simply conflate attendance and access when presenting the data.

He tries the same trick with a chart regarding changes in incomes between 1980 and 2018. It shows that the incomes of the world’s low earners (the bottom 50 per cent) rose between 80 and 100 per cent; incomes between the fiftieth and ninety-ninth percentiles increased by between 40 and 80 per cent; and the top 1 per cent of incomes increased by between 80 and 240 per cent. A box inserted in the chart tells us that “the top 1 per cent have captured 27 per cent of growth”.

It is cheating to build a contested explanation into what is supposed to be a simple statement of the statistical facts

“Captured”? This suggests that the top 1 per cent of earners took something that was already there. Maybe they did. But you cannot see this fact in the mere statistics.

Imagine a little country with just two farmers, Jack and Jill, both of whom make a living by growing and exporting potatoes. In 1980 they both earn $10,000 a year, making the national income $20,000. By 2018 the national income has risen to $40,000, with Jack still earning $10,000 but Jill earning $30,000. Has Jill therefore “captured” 100 per cent of the growth? If Jack had tripled his potato production during this period, but Jill received all the gains because she stole his extra output, then it might be a fair description. But if Jill tripled her own output, then it would be an absurd thing to say. She has not captured the growth in incomes: she has created it.

Statistics do not explain themselves. It is cheating to build a contested explanation into what is supposed to be a simple statement of the statistical facts. Yet this cheat is not the most peculiar thing about Piketty’s use of these global income statistics. Stranger is the idea that they support his case against post-1980 “hypercapitalist” globalisation. For they attest to astonishing progress. In no other 40-year period of human history have the incomes of the poorest people on earth come close to doubling. Who cares if the incomes of the top 1 per cent increased by even more?

The challenge these facts pose to Piketty is greater still. For they show not only that the poor have benefitted since 1980 but that inequality has been much reduced. To see why, start with the billionaires that so concern Piketty. Some are much richer than others. For example, whereas George Soros is worth $8 billion, Jeff Bezos is worth $112 billion. This massive inequality between billionaires does not seem to bother Piketty or anyone else, and with good reason. Because once you already have $8 billion, another $104 billion makes no difference — it makes you no better-off.

This is a simple implication of something familiar to all economists, namely, the diminishing marginal utility of income. The more dollars you already have, the less extra utility you get from an additional dollar, the less the gain in how well-off you are. Once incomes rise high enough, as with billionaires, no addition makes any difference: we have perfect equality. By contrast, when people start poor, small gains in income provide big gains in utility. That’s why the last 40 years of rapidly rising incomes among the world’s poor has increased equality, even as the monetary wealth of the super-rich has exploded.

None of this is discussed in Capital and Ideology, of course, because Piketty doesn’t do theory. Not even regarding the nature of his beloved equality.