Potemkin Review met with Thomas Piketty at his Paris office and talked to him about his book Capital in the 21st Century, asking detailed questions about his arguments therein as well as on broader issues, which anyone who has been following the debate should find useful.
Thank you for meeting with us, Professor Piketty. To begin with, a number of critics, for example, Branko Milanovic and Anwar Shaikh, have suggested placing your work in the classical tradition of economics, resuscitating issues of class, capital and labor in dealing with macroeconomic questions, considering you part of a tradition that stretches from Smith to Keynes through Marx and others. Where do you see yourself in terms of economic tradition? Do you see yourself as part of this classical tradition?
I am trying to contribute to putting the issue of distribution back at the center of economic analysis. So in that sense, my work can certainly be viewed as an attempt to pursue a tradition, which, in the 19th century, had been very important in trying to study long-run trends in the distribution of income and wealth. I do think this issue of looking at the distribution, and looking at the long run, has been neglected for far too long. In that sense I am trying to pursue this [classical] tradition. But I also try to pursue a tradition which is outside of economics and more in historical research, i.e. a long tradition in social and economic history, in particular in France with the École des Annales, but also at the international level, trying to look at the history of income, wealth, prices, wages. I think my book is as much a book of history as a book of economics. I view myself more as a social scientist than as an economist. The boundaries between economics, history and sociology are not that clear, at least are less clear than economists sometimes imagine. We have been losing a lot of time in the past because of too strict boundaries. The work I have done is very basic in a way and I think the only reason why this data collection has not been done before is because somehow this was viewed as too historical for economists and too economic for historians, so nobody was doing it.
Economics as a discipline has been, at least in the last few decades, rather closed to this type of interdisciplinary program and research project that you have outlined. Do you think that the success of your book might open the field to a certain extent?
I try to contribute to it, but it will take more than one book. There is a considerable degree of self-confidence in the discipline and the widespread view is that economics is completely different from other social sciences. I think this is wrong, but these beliefs are very strongly entrenched in economics departments. It is so easy to do complicated mathematics in order to look scientific hence it is very tempting for many economists to adhere to the status quo in the field. Again, it is very easy for someone to be good at math; most of the time the kind of math that economists do would not impress a mathematician, but it is enough to impress people around them in the school of social sciences. I want to emphasize once more that while I would like to have some influence on how economists do research, I would also like to have an influence on how other disciplines, in particular historians, look at economic issues. I think it is a responsibility to bridge these divides. The lack of dialogue is not only the fault of economists. Too often, historical research in recent decades has focused on cultural and political history, and has sometimes neglected social and economic history. In order to do proper political and cultural history and the history of political ideas, one also needs to look at the evolution of the economic facts, of wages and prices, which in the end, contribute to the formation of collective representations on the economy, social justice, communism, capitalism and every human institution.
In many countries now, economic history has become so closely tied to economics departments that it is almost completely separate from the rest of history departments. In France, the very lively tradition that was present at the École des Hautes Études en Sciences Sociales (EHESS) around the École des Annales twenty or thirty years ago, now faded away. At least, in economic history and social history, people are less interested in statistical surveys and wages than they used to be a couple of decades ago.
We would like to focus now on some of the reception to your book. We are mostly going to focus on the reception coming from the left, but first we wanted to ask you about the Financial Times debate that you had over the summer regarding the discrepancies in using survey data and tax data in the United States and the UK. They basically accused you of having an ideological interest in the outcome of your data. Do you think that they had a legitimate point of contention in terms of scientific debate or do you think that, in fact, they had an ideological position themselves?
I have responded in a very precise manner to every point they raised, and anybody looking at my response would conclude that they had an ideological viewpoint, but I let everybody form their own opinion. I am open to every suggestion to improve the data but I don’t think that the Financial Times review has been very constructive. This is the reason why we put everything online, and we are regularly adding new countries to the online database. I was in Korea two weeks ago, and we now have top income shares for Korea, which were not available when I wrote the book. We keep putting new data online every week, and I welcome every constructive suggestion to improve it, including when it comes from the Financial Times. The problem here is that they were not very constructive. As I mentioned in my response, they sometimes did not even look at the explanations that were already there in the appendices. They seem to be afraid of my book, but they should be afraid of the reality instead. In the end, I think they damaged their credibility most of all, and they offered me some free publicity for the most part.
While the general reaction from the political right seemed to be in the form of trying to refute the findings in parts one through three of your book, the left on the other hand agrees with your findings for the most part, as they had already observed these processes of inequality growth. But their main disagreement lies with part four of your book, with the political proposal of a global capital tax. What is your opinion on the criticism from your left that state/capital collusion renders any attempt to implement a global wealth tax unrealistic? Don’t you think mobilizations for deeper structural changes are necessary before that?
Of course we always need to mobilize, I never denied that we need huge mobilization for this change. I tell the story of the emergence of progressive taxation in the past century and this did not happen simply as the outcome of a tranquil process. The income tax in European countries was accepted by the elite only after World War One and the Bolshevik Revolution as part of a counter-struggle against its influence. I couldn’t agree more with the fact that this huge change requires a big fight and a big mobilization and I think anybody reading my book will see that these fights and mobilizations are everywhere in the story I tell. So, I couldn’t agree more.
But for some on the left, your proposal is not going far enough in that it simply fleshes out a global wealth tax, and therefore downplays the issue of class struggle, or the role of the state in implementing such a tax. Are such reformist solutions possible today given their reliance on capitalist states to enforce policies against capital’s interests?
I think it would be a big mistake to oppose the objective of global progressive taxation of income and wealth with the objective of class struggle and political fight, for at least two reasons. First, making this tax reform possible would require a huge mobilization. This has always been the case in the past. All the big revolutions engendered a big tax reform. Take the French Revolution, the American Revolution, or World War One: although it was not a fiscal revolution initially, through the Bolshevik Revolution, it had a huge impact on the acceptance of a progressive tax regime and more generally social welfare institutions after World War One – and even more so after World War Two. These were fiercely opposed by the elite and by the right just before these shocks, so this shows that we need a big fight and sometimes violent shocks to make progressive tax accepted. It would be a big mistake to think of progressive taxation as a technocratic process that comes quietly from a minister and experts. This is not at all the history of taxation.
The second reason why one should not oppose class struggle and progressive taxation is that progressive taxation in itself is not enough. I think we also need to have new forms of governance and capital ownership. For instance, in the book I mention the difference between the private and social value of capital in corporations taking the example of German capitalism as compared to Anglo-Saxon capitalism, where I describe the role of workers on the boards of corporations. This probably reduces the market value of corporations, but it apparently does not prevent them from producing good cars. Therefore developing new forms of ownership, new forms of sharing of power between those who own capital and those who own their labor, is extremely important to me. Not only in the traditional manufacturing sector, but in many new sectors, such as higher education, media, culture, etc. the shareholder company is not the end of history and this form of organization and capital ownership is certainly not the future. We need progressive taxation of private capital, and at the same time, a new thinking of what capital ownership means and how we organize its owners. But we should not put these two forms of social progress [class struggle vs. progressive taxation] in opposition. They actually are very complementary, because progressive taxation is also a way to produce a regime based on transparency, on information about income and wealth that is necessary for workers’ involvement in the management of companies. If you do not know who owns your company, and if you do not have financial transparency about the wealth, the income, the profits, and the accounts of your company, how can you participate in decision-making? It would be a big mistake if some on the left believed “progressive taxation, that’s a technocratic thing, we don’t really care. We care about revolution, and capital ownership”. That would be a huge intellectual mistake.
On a separate note, for instance there is also a debate about debt repudiation versus progressive taxation of capital. What I propose, which is progressive taxation of private wealth, is, I think, a lot more radical than debt repudiation. In fact debt repudiation is not radical at all, because high wealth people will not suffer from debt repudiation, since they do not have public debt in their portfolios. Hence, they are not alarmed at all by this proposal.
Now we want to focus on your comparison of (r) and (g), the rate of return on capital -the way you define it- and the growth rate of the economy in general. You explain it to a certain extent in the book, but we still wanted to give you a chance to respond because we know that a lot of people are curious: why look at (r) as a rate of return on all wealth, instead of focusing on the rate of return on productive capital, i.e. the profit rate, as the driving force of capitalist economies?
I look at the rate of return on all investments. I think all investments are productive in one way or another. Some are not very productive, others more so, but capital is always useful. It is difficult to find useless capital. If you just think of business capital and corporations as productive investment, as opposed to housing capital, housing is also a very useful thing–the fact of having a roof rather than sleeping outside. So viewing it as non-productive would be a big mistake: I think we need to look at all forms.
In the book I try to write a multidimensional history of capital, and to make clear that when we make the addition of all capital assets at market value, we are doing something very abstract and I certainly do not believe that we can have a correct description or a correct summary of the state of capital in a given society as a result of this addition. This is why the book is so long. I try to tell the story of real estate, the story of land, the story of financial assets, the story of foreign investment, the story of business capital, the story of slavery… All these different forms of assets have not only different rates of returns, but also different histories linked to different social relations, different bargaining power between owners and those who do not own, sometimes those who are being owned. I fully agree with this point, but I think we should not exclude [any forms of capital]. In this history of capital, it would be a mistake for instance to exclude real estate or housing.
But don’t you think it is fruitful to differentiate between capital and wealth? If we think of the society as being composed of three major classes following the classical tradition; capitalists who derive profit income, laborers who derive wage income, and rentiers who derive some sort of rent…
The distinction between rentiers and capitalists is a bit arbitrary, I think. I agree that there are different forms of assets: for instance in some societies one finds slave-owners, which constitutes a different class if you like, nowadays we have a group of people who are patent-owners. There are of course important differences between owning slaves, land, real estate, patents, foreign investment because they correspond to different social relations and different levels of bargaining power. Sometimes it takes political domination to protect your foreign investment, slaves or patents. But just having these two groups, rentiers and capitalists, would be a bit too simple and too rigid, because the same people can reallocate their portfolio between land, slaves, etc. and it has always been this way. You can also never find pure rentiers in the sense that there is always some productive dimension to capital. Take Sir Thomas in Jane Austen [Mansfield Park]; at the same time he has slaves in the West Indies, and land in England, for which one needs to organize the domain and decide on which land to invest. Capital is never quiet in the sense that it takes a lot of energy, but at the same time they probably get more than they should sometimes; therefore a rigid distinction between rentiers and capitalists is not useful, I think. What my book is trying to do is rather to tell this multidimensional history of the metamorphoses of capital, which is the title of one of the first chapters in my book, where I show that the substance of capital and property changes permanently over time, but there is some sort of fundamental logic that is always different and always the same.
We have a question about the other side of the comparison, (g). You are taking the return on wealth, i.e. property income (r), and comparing that to the growth rate of the economy (g). Do you think there is a problem with (g) also including (r) in it? Do you think it would be useful to compare (r), which is basically the rate of return on income derived from property, to the part of (g) that excludes (r), which is the growth rate of non-property income, i.e. labor income?
That would be a different comparison. The comparison that is meaningful to me is the one I am making, the one between the rate of return on capital and the growth rate of the economy. In the long run, if the capital share is constant, the growth rate of labor income and the growth rate of total income and total output will be the same.
But doing this would also factor in changes in labor’s share of national income.
In the very long run, the labor share has to be stable. When I look at r>g, I look at it from a very long run perspective and describe it as a permanent state of affairs. Let me be clear, r>g does not imply an infinitely rising capital share. It is perfectly compatible with a stable capital share, i.e. a stable capital / income ratio and stable inequality. Everything is stable except that you possibly have an enormous level of inequality. But that does not preclude the possibility of an equilibrium steady state. Then if we are in the steady state, looking at total income and looking at labor income is the same.
But in the latter case, you would see changes in the labor share, for instance in the last 30 years. And that would mean even more inequality than what r > g suggests.
So, the growth rate would be lower for the past 30 years, because of the decline in the labor share. It will be different from what I want to focus the attention upon, but that will be interesting for other purposes.
Neoclassical economics has gained a reputation for being hostile to questions of distribution and indeed having a kind of circular system whereby if you suggest raising wages then they will argue you will just get negative employment effects, so it is better to focus on economic growth instead of distribution. You have successfully opened the field to take questions of distribution seriously again and part of your success is due to putting the argument in neoclassical language. Nevertheless, using such a framework has left you vulnerable to certain neoclassical criticisms to your right. For example, Larry Summers has criticized the elasticity of labor substitution issue saying your estimate of 1.5 is not feasible in the literature, while others have taken objection to your assertions that skyrocketing CEO pay are not commensurate with productivity growth, saying that any temporary divergences are not sustainable in the long term since marginal productivity remuneration has to hold. At the same time as you have faced such neoclassical criticisms to your right, some heterodox economists have criticized you for not breaking fully with the neoclassical framework. Don’t you think it would be useful to challenge more directly some of the theoretical elements of the neoclassical consensus?
I do not believe in the basic neoclassical model. But I think it is a language that is important to use in order to respond to those who believe that if the world worked that way everything would be fine. And one of the messages of my book is, first, it does not work that way, and second, even if it did, things would still be almost as bad.
Regarding the elasticity of substitution debate, my response to Summers and others is the following: what we observe in the data in recent decades, is a rise in β and α simultaneously. So we have a rise in the capital / income ratio and a rise in the capital share [of national income] at the same time. If you were to take the standard neoclassical model, with a single good production function and perfect competition, etc., the only possible logical way to explain these two moving together would be an elasticity of substitution somewhat bigger than 1, say on the order of 1.5; and that would be consistent with the views that there are more and more different uses for capital over time and maybe in the future robots will make substitution even more… Now, does this mean that it is the right explanation for what we have seen in recent decades? Certainly not. As I make clear in my book, there are many other explanations for what happened in recent decades and this co-movement of α and β. One is the increase in the bargaining power of capital: globalization, the decline of labor unions, etc. The general increase in the bargaining power of capital has certainly contributed to the rise of the capital share. Next, one of the big differences between the neoclassical model and the real world is that the real world is better described by a multidimensional capital model, where at the same time we have a real estate sector, energy sector, many different sectors with different capital intensities; and at this stage real estate and energy are much more important than robots in terms of capital intensity. Maybe at some point in the future robots will be important, but for now in order to understand the rising capital share in recent decades one has to look at real estate prices, the evolution of rental income, etc.
The huge rise in real estate prices is partly related to the logic of (s / g) that I describe in the book: when there is a slowdown of growth, and people keep saving, and they prefer to invest in real estate in Paris, Rome, or London instead of keeping all their savings in China for various reasons, then this contributes to the real estate bubble. So the two logics of capital accumulation, i.e. a growth slowdown coupled with higher capital accumulation, and a real estate bubble actually reinforce each other. Sometimes people seem to object, saying you can either have the (s / g) explanation or the real estate bubble explanation. But the real estate bubble has to come from somewhere, and I think it is very much related to the fact that in low growth countries like Italy, France, etc. people who have wealth need an outlet for their savings, and some of it goes to real estate.
All I am saying to neoclassical economists is this: if you really want to stick to your standard model, very small departures from it like an elasticity of substitution slightly above 1 will be enough to generate what we observe in recent decades. But there are many other, and in my view more plausible, ways to explain it. You should be aware of the fact that even with your perfect competition and simplified one good assumption, things can still go wrong, in the sense that the capital share can rise, etc.
Are you saying that notwithstanding your rhetorical strategy to communicate with neoclassical economists on a ground where they feel comfortable, in your views it is not just that you reject marginal productivity explanations of income for those at the very top but more generally as well?
Yes, I think bargaining power is very important for the determination of the relative shares of capital and labor in national income. It is perfectly clear to me that the decline of labor unions, globalization, and the possibility of international investors to put different countries in competition with one another–not only different groups of workers, but even different countries–have contributed to the rise in the capital share.
We were curious if you have seen some of the recent criticisms of the β = s / g formulation, which argue that in the neoliberal era growth has fallen but so have savings rates, and there has been a decoupling of a stable capital / income ratio (β), and a falling (s/g).
I certainly agree that the (s / g) logic is never sufficient to explain the entire evolution of β. I think the change in relative asset prices for real estate, the stock market, and other assets can sometimes be a dominant factor. I start the book with the perpetual increase in land prices in Ricardo, and say if one replaces land by real estate in a large capital city, or by the oil price, one can observe this kind of divergence. So I am not exactly sure, but if what they say is that sometimes an increase in β can be due to larger changes in asset prices…
And for a period of 20 or 30 years?
In principle it could be more than that, even 100 or 200 years. If we take the language of the production function, with different speeds of technical progress in different sectors in a multi-sector model, anything can happen in the long run. For example if the rate of productivity growth is slower in construction or transportation than in information technology, biotechnology, etc. then in the long run the relative price of housing–in particular in major cities, where most economic activity is concentrated–can rise permanently and can even go to infinity. And I make it clear from the beginning when I refer to Ricardo, that it would be overly optimistic to rule this out for convenience.
Given this, we wanted to focus on fluctuations in the rate of return on wealth (r). Can you explain the role bubbles and crises play in your story? For example, rather than observing a stable (r) over the long run except for the first half of the 20th century, shouldn’t we see a sharp decline in the 1890s and once again in the 1970s?
In the short or medium run, the rates of return on various assets are extremely volatile, partly for the simple reason that it is always very difficult to put a price on capital and to predict in advance how profitable a particular investment is going to be, even at the level of an entire economy, so this is going to generate huge fluctuations. I fully agree that this is very important, as it can create a lot of instability and fragility for entire societies in the absence of proper financial regulation. What I try to do in my book is to go beyond this and say even if these issues were taken care of by perfect financial regulation, and we managed to reduce or entirely suppress these fluctuations thereby approaching something very close to a steady state growth process, the long run tendency of the rate of return on capital and the growth rate of the economy can naturally lead to a large difference between the two and therefore a very high level of wealth concentration. One way to read the Marxist prediction of the 19th century is this: the situation is bad but in the long run it cannot go on this way forever because the rate of profit will have to fall. I guess one of the points I am trying to make in the book is that it is not the case, as long as there is some source of growth that is independent from capital accumulation per se–productivity growth, population growth–, there is no reason why the rate of return should fall in the long run.
What do you see as a source of perpetual productivity growth?
Simply accumulation of new knowledge. People go to school more, knowledge in science increases and that is the primary reason for productivity growth. We know more right now in semiconductors and biology than we did twenty years ago, and that will continue.
You argue in the book that while Marx made his predictions in the 19th century, we now know that sustained productivity growth is possible with knowledge (Solow residual, etc.). But do you think this can be a sustained process in the long run?
Yes, I do think that we can make inventions forever. The only thing that can make it non-sustainable is if we destroy the planet in the meantime, but I do not think that is what Marx had in mind. It can be a serious issue because we need to find new ways of producing energy in order to make it sustainable, or else this will come to a halt. However if we are able to use all forms of renewable energy, immaterial growth of knowledge can continue forever, or at least for a couple of centuries. There is no reason why technological progress should stop and population growth could also continue for a little more.
Do you think it is meaningful to differentiate between a fall in (r) due to wars, considered by some to be an exogenous shock, and a fall due to major crises, i.e. an influence from within the internal dynamics of capitalism?
I think both are endogenous in their own different ways. A lot of people argue that the First World War in particular was a sort of nationalist response to the very high social tensions and inequalities that characterized pre-WW1 European countries and I think there is a lot to that. I am very Leninist in that sense. Nationalism was a way to solve the internal contradictions, but I think the contradiction that societies were trying to solve was very high inequality and social tensions, and not really economic per se. From a strictly economic viewpoint, r>g and huge inequalities can go on forever, and until the First World War this is what all societies of the past looked like, including those before the industrial revolution. What I try to say in my book is that the industrial revolution did not change the basic structure of inequality and property as we imagined for a long time. Capitalism started before the industrial revolution and will continue even when there is nobody working in manufacturing employment anymore. That is why I go back to the 18th century and land capital: I try to show that it was just a smooth transition, a smooth process of metamorphosis of social relations, not a complete break… There was unusually high growth in the late 19th and the 20th centuries for a number of reasons, but in the future we may return to slower growth, although maybe not as slow as in pre-industrial societies. Instead of looking for internal contradictions that will put an end to the process naturally, I think we need to find other ways to regulate it. If there is an internal contradiction, it is really the fact that it generates extreme inequality, which is not consistent with modern democratic values. It is more a democratic contradiction than an economic one.
We have a question on global inequality. You have been criticized for your data being so far from a national context within the OECD, although not exclusively. Given that people like Branko Milanovic have shown that the majority of world inequality is due to income differences between countries, we were wondering if you thought your theories of economic growth and distribution would have some explanatory power regarding the differences between countries as well, or if something else would be necessary.
I start the book with the global distribution of income, and chapters 1 and 2 are really about the inter-country distribution of income between China, Europe and America. I try to return to this issue at the end of the book when I talk about the global distribution of wealth and I look at the global billionaires and multimillionaires rankings in China, etc. Therefore I try to pursue this global perspective all along and also in the historical dimension. A large part of the inequality prior to the First World War had to do with the fact that colonial powers owned a big part of the rest of the world and received income from it. One of the messages of my book is that this kind of very large foreign asset position can very well happen again in the future, with a different geography of who is the owner and who is being owned. This sort of international inequality and property dimension plays a very important part in the book, in fact this is probably the biggest threat posed by inequality. Property relations are always complicated. It is always painful to pay your rent to your owner, but when it is really a country paying rent to another country, it becomes really complicated. In economics textbooks, it is supposed to be simple, easy and efficient. It is even supposed to be a source of convergence, but in the real world, this is not at all a source of convergence, as Japan, China, etc. have financed their own investment, they didn’t become rich because of foreign investment. On the other hand, the countries whose capital stock is still largely owned by the West today, typically African countries, have not been particularly successful. Part of the reason is that being owned by another country is mostly a source of huge political destabilization and devastation. It is very tempting to expropriate the foreign owner unless you have political domination through colonialism. For the future, this is something we should keep in mind. That being said, I certainly want to push the research more towards emerging countries in the future, African countries, Latin America, etc. A good result of the publication of the book is that there are now more governments that accept to open their fiscal files, like Brazil, Mexico, and Korea. In fact in Korea, they disclosed them after the book came out, because journalists asked why Brazil or Korea was not in the data, and in the future I intend to do even more. The basic mechanisms are the same but in a more extreme way because from a purely economic viewpoint a country can own another forever–there is no natural force that will put an end to this–however, from a political viewpoint it is very different.
Just as you say that there is no spontaneous or endogenous force in the functioning of the capitalist economy that would counter your second law of capitalism (β = s / g) on the national scale, would you say the same thing at the international level?
I would, but in a way that is even more explosive and more terrible. There is a basic contradiction between what the market and the economic laws can deliver and what we collectively aspire to given the kind of democratic ideals we have in mind, and at the international level, that is even more explosive. From the viewpoint of economic laws, some countries can theoretically own others forever. In the three or four decades before the First World War, France and Britain had a permanent trade deficit of 1 to 2 % of GDP, but because their net foreign capital income was 5 to 10 % of GDP, in effect the rest of the world was working for them but they were still accumulating claims on the rest of the world. So it is as if you are paying rent to your landlord and with the rent, he is buying the rest of the building. It is always tough to be paying rent, but when it is at the scale of the world… This is actually what was happening, and it only stopped because there were the wars, the decolonization process and the Bolshevik revolution, all these huge political changes in the 20th century. However, from a purely economic viewpoint, there was no reason why it should have stopped. It took me a long time to understand this logic better, but when you become aware of it and its historical legacy, you want to be careful that it will not happen again.
As distinct from your global wealth tax proposal, what do you think of the current experiments in market supervision and capital control that we see in some countries in the South such as Venezuela and Argentina?
I am less fascinated by Venezuela than Jean-Luc Mélenchon seems to be, but I do not know enough about it. I think many experiences in Latin America, in particular in Venezuela but also Argentina, illustrate the difficult political consequences of being owned by powerful northern neighbors, so it is a very complicated relationship when you have this significant foreign wealth…. It is always difficult to deal with inequality, to find a peaceful way to agree on a proper level of redistribution. Nevertheless, when the owner lives abroad, in a different society and a different political community, finding a peaceful and reasonable way to find agreement is impossible and this renders the situation much more explosive.
On your relationship with the Socialist Party…
I have never been affiliated with the Socialist Party. I only publicly stated that when you have to choose between Sarkozy and Hollande, I would vote against Sarkozy, hence for the other one. I have never been a member of the Socialist Party, I have never been an adviser to anyone, I have always been a scholar writing articles and books. Elections are part of democracy, so I take them as they come and take position, but democracy and political engagement is much more than just elections. I believe in books, the power of ideas and that there are many different ways to do politics.
One final question on your idea of a Eurozone parliament…
I want to believe in international democratic solutions. I do not expect this to happen easily, but I am against nationalism in all forms: against intellectual nationalism, as well as economic and political nationalism. I believe that if one day we want to have the possibility to implement progressive policies, the priority is to build a democratic government at a higher level than France, Italy or Germany. If we go for the other solution, i.e. exiting the euro and going back to the nation state, the left will always be overtaken by the right, and the extreme right in particular. I think those on the left who believe we can go in this direction and still control the process are making a big mistake because “les électeurs préfèreront l’original à la copie” [voters will prefer the original to the copy]. When arguing for nationalism and return to the nation state, there will always be someone more convincing than the left. I think if there was a European parliament as the one I advocated for, in which each country was represented in proportion to their population, in the end the German parliament members would be put in a minority by their Italian, French and Spanish counterparts, and the level of the deficit chosen would be higher than what the Germans would like. Hence at the end of the day we would have more progressive policies than we have today. If France and Italy made a proposal of Eurozone Parliament, of course Germany would like to refuse it, but it would be difficult to refuse it forever. If you are against a Eurozone democratic parliament to vote on the level of the deficit and if you only want to impose rigid rules, at some point it will become difficult to defend the euro and prevent countries from saying ‘why do we need the currency when we can have monetary sovereignty’. I try to make my political commitments consistent with my historical research, but I do not pretend that this is the only conclusion that can be drawn from history.