Democracy vs oligarchy, the fight of the century

by
Thomas Piketty
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A few days ahead of Donald Trump, Elon Musk, and tech executives aligned with the Make America Great Again (MAGA) movement coming to power, Joe Biden delivered a forceful warning about the emergence of a new « tech industrial complex » threatening the US’s democratic ideal. For the outgoing president, the extreme concentration of wealth and power risked undermining « our entire democracy, our basic rights and freedoms, and a fair shot for everyone to get ahead. »

Biden is not wrong. The issue is that he has done little to oppose the oligarchic drift taking place both in his country and globally. In the 1930s, his predecessor Roosevelt, also deeply concerned about such trends, did not stop at making speeches. Under his leadership, Democrats implemented a robust policy of reducing social inequalities (with tax rates on the highest incomes nearing 70%–80% for half a century) and investing in public infrastructure, health, and education.

In the 1980s, Republican Ronald Reagan, deftly playing on nationalism and a feeling of catching up, undertook to dismantle Roosevelt’s New Deal. The problem was that Democrats, far from defending this legacy, actually helped legitimize and solidify Reagan’s turn, notably under the Clinton (1993-2001) and Obama (2009-2017) administrations.

Biden has often been described as more of an interventionist than his predecessors in economic matters. This is not entirely false, minus two major drawbacks. Biden was among the Democrats who voted for the Tax Reform Act of 1986, the foundational law of Reaganism, which dismantled Roosevelt’s progressive tax system by lowering the top tax rate to 28%. Everyone can make mistakes, but Biden has never felt it necessary to explain that he had made a mistake or changed his mind. If spending isn’t funded, inflation inevitably rises, another major issue on which we are still awaiting Biden’s remorse.

Moreover, the outgoing administration’s so-called « Inflation Reduction Act » primarily facilitated the flow of public funds into private enterprises, effectively supporting the accumulation of private capital. There is no doubt that the Trump administration will push this unrestrained alliance between the federal government and private interests to its peak.

Could Democrats change course in the future? The overwhelming influence of private money in US politics, as pervasive among Democrats as it is among Republicans (if not more so, even with the recent growth of small donations), urges caution. However, the party’s chances of finding its footing remain real. First, the mix of nationalism and ultra-liberalism taking power in Washington will solve none of the social and environmental challenges of our time. Second, opposition to oligarchy continues to be a cornerstone of the nation’s identity.

In 2020, the Bernie Sanders–Elizabeth Warren duo had proposed extending Roosevelt’s New Deal, with the addition of a mega-wealth tax (with rates reaching 8% annually on billionaires, a level never seen in Europe), a massive investment plan for universities and public infrastructure, and the invention of a US-tailored economic democracy (with significant voting rights for employees in corporate boards, as practiced in Germany and Sweden for decades). The two candidates had nearly tied with Biden and won overwhelmingly among younger voters. Disillusioned by the Biden-Harris experience, Democrat voters were largely absent in 2024, a costly blow to the party. It is entirely possible that a Sanders-Warren-style candidacy could succeed in the future.

Above all, the rest of the world might well spearhead the most progressive political changes in the decades to come. Little is expected from the authoritarian oligarchies that China and Russia have become. But within the BRICS, there are vibrant democracies representing more voters than all Western countries combined, starting with India, Brazil and South Africa. In 2024, Brazil supported the idea of a global wealth tax on billionaires at the G20.

The initiative was unfortunately rejected by the West, who, in the same year, also found it strategic to oppose a proposed UN tax convention, in an effort to maintain their monopoly over international tax cooperation within the rich-country club of the OECD. This stance also sought to avoid any significant redistribution of revenue on a global scale. If, in the coming years, India shifted to the left and sent the nationalist, business-oriented BJP into opposition – an increasingly plausible scenario – the pressure from the Global South for fiscal and climate justice could become irresistible.

In the global battle between democracy and oligarchy, one can only hope that Europeans will emerge from their lethargy and play their full role. Europe invented the welfare state and the social-democratic revolution in the 20th century, and it stands to lose the most from Trumpist hypercapitalism. Here again, there is reason for optimism: since the Covid-19 pandemic, the public expects a lot from the European Union and is less hesitant than its leaders. One can only hope that these leaders will rise to the occasion and, by 2025, manage to overcome the mutual distrust and perpetual self-criticism that has held them back.