WHAT INEQUALITY DOES TO ELECTORAL DEMOCRACY / PROJECT SYNDICATE

What Inequality Does to Electoral Democracy

Like many advanced democracies, France has long cycled between periods in which its politics were divided along traditional left-right redistributionist lines, and those in which culture war issues took center stage. If there is any lesson to be drawn from this history, it is that the cycle may be about to repeat.

Harold James

PRINCETON—In a new polemic that aims to serve as a manifesto for our times, the economists Julia Cagé of Sciences Po and Thomas Piketty of the Paris School of Economics draw from the past two and a half centuries of French history to consider the impact on politics and society of economic inequality, and what should be done about it. 

Originally published in French in 2023, A History of Political Conflict: Elections and Social Inequalities in France, 1789–2022is even more timely today, now that higher interest rates have made public debt increasingly burdensome, less sustainable, and more politically explosive.

At the heart of their study is a carefully constructed geographic analysis of France, not along the lines of the 96 administrative departments created by the French Revolution, but across 36,000 smaller units: metropoles, suburbs, towns, and villages. 

The rather repetitive manner by which their message is presented in the book’s 848 pages is not ideal but does not diminish the importance of their core insights, which deserve wider attention.

Varieties of Polarization

Cagé and Piketty see political responses to inequality as falling into two distinct categories, each with its own chronology. 

Their terms for these are bipartition (a left-right polarization) and tripartition (with a center opposed by a right-nationalist and a left-redistributionist or ecological movement). 

The traditional left-right divide reflects social and economic polarization around the left’s program of redistribution, whereas questions of identity ultimately anchor the tripartite divide.

The original tripartition came between 1848 and 1910, and fell apart just as the international system in Europe was disintegrating and global conflict was becoming more likely. 

A second tripartition then began in the late 20th century with the debates over the Maastricht Treaty (which established the European Union) and the creation of a monetary union and single currency. 

This was also when two referenda, in 1992 and 2005, shook things up in a new way. 

Not since the mid-19th century, when Napoleon III cunningly used plebiscites for his own purposes, had referenda played any major role in French political life.

In 1992, the governing center-left, led by the Socialist President François Mitterrand, and much of the center-right supported European integration, but the Maastricht Treaty was approved only narrowly, by a 51–49% margin. 

Then, in 2005, a proposed European constitution, drafted by a convention led by former French President Valéry Giscard d’Estaing, was soundly rejected, by 55 to 45%, with the largest share of negative votes coming from rural France.

These results produced a dynamic of political disaffection and disillusionment. 

The 2005 decision to reject a European constitution made little to no practical difference in France’s orientation toward Europe and the wider world, because the Lisbon Treaty already provided an alternative framework that did not require a referendum. 

The “nays” thus felt that they had been ignored, and as their resentments grew following the 2008 financial crisis, they mobilized against the political center.

The 2008 crisis fueled harsh criticism of financial capitalism from both a right-wing president (Nicolas Sarkozy) and then a left-wing one. 

During the campaign that would carry him to the presidency in the 2012 election, the Socialist François Hollande declared that “my enemy is finance.” 

But rhetoric is not policy, and France went on to elect as president Emmanuel Macron, who had served as Hollande’s economy, industry, and digital affairs minister and benefited from a higher concentration of upper-income votes than any president in French history.

I see two plausible interpretations of the shifts between bipartition and tripartition, only one of which Cagé and Piketty would unambiguously endorse. 

They both see structural economic factors behind the left-right division, above all industrialization and the shift to “salarization” (wage labor) that also took place across the rural world.

Moreover, one of their aims in the book is to rescue rural France from the condescension of posterity, and especially from the disdain often dished out by the left. 

They show that the pays profond—the deep country—not only drove French political developments in the past but continues to do so. 

It was these voters who formed much of the opposition to Macron’s early plans for a green transition promoted through higher fuel taxes and hard speed limits—measures that would hit rural France disproportionately hard.

Globalization and Its Discontents

But an alternative interpretation is that the shift to tripartition was a logical response to globalization, which limits the potential of any program centered around redistribution because the mobile factors of production can pack up and leave. 

Entrepreneurs and the business elite can simply flee from higher wealth or income taxes, and multinational corporations can redomicile where capital-gains or business taxes are lower. 

Then, when redistribution proves impossible, other topics—culture-war issues concerned with identity and tradition—become the new focus for political mobilization.

The growth and dynamism found in some EU countries—Ireland, Luxembourg, the Netherlands—reflects past decisions to offer havens for wealthy individuals and corporations seeking lower taxes; and extra-EU centers—Switzerland, Dubai, Hong Kong, Singapore—have become even more potent magnets for capital flight. 

But the issue is not just about tax rates. 

The ease of incorporation and the legal framing of corporate law are also critical. 

Thus, in the first half of the 19th century, when corporate law was restrictive in France, many French (and German) companies incorporated in liberal Belgium, which then provided a model for new laws in France and Germany in the 1860s and 1870s, setting in motion the first round of tripartition.

Equally, in 20th- and 21st-century Britain and France, policymakers discerned a need to provide a refuge for capital—a role that was filled by the UK’s Channel Islands and the French border state of Andorra. 

Neither region is within the EU.

Andorra, which oddly is not even mentioned by Cagé and Piketty, is a peculiar sovereign entity whose joint heads of state are the French president and the Spanish bishop of Urgell. 

Even a Socialist like Mitterrand spent his presidency carrying the title “co-Prince of Andorra.”

While border controls have been conspicuously absent on the French side, Spain maintains tight controls on the frontier between Catalonia and Andorra. 

How long this will last remains to be seen. 

An Association Agreement between the EU and Andorra was negotiated late in 2023, but it is still awaiting the final signatures.

The Tripartition Trip Wire

In any case, it is reasonable to fear that tripartition will lead to political chaos, making democracy even more difficult to sustain. 

Such was the fate of the interwar German Weimar Republic—still the iconic case of democratic collapse.

The original parties of the German political center (the Social Democrats, the Catholic Center, and the liberal German Democrats) lost votes even during economically prosperous years, then saw their support further deteriorate during the Great Depression. 

The relative beneficiaries were the Nazis and communists. 

But since neither was going to form a governing coalition with the other, the resulting chaos generated a yearning for dictatorship.

It is easy to see why this analysis is relevant to France today. 

The fragmentation of the center means that the 2027 presidential campaign may well end up in a second-round runoff between the nationalist, anti-globalist, anti-European right (led by Marine Le Pen) and the nationalist, anti-globalist, anti-European left (led by Jean-Luc Mélenchon). 

It is in this context that Cagé and Piketty make their plea for a reassertion of bipartite politics. 

But in order to get back to bipartition, tax policy, rather than national identity and migration, needs to be at the center of the political debate.

As a warning, Cagé and Piketty point to a precedent in the mid-1920s, when Prime Minister Édouard Herriot’s center-left coalition failed to implement a program of capital taxation to deliver economic and financial stabilization. 

It was this failure that inspired François Goguel, a founder of electoral sociology, to produce one of the most important precursors to Cagé and Piketty’s own analysis of the French political system.

Looking back, they conclude that, “It is never simple to agree on the social distribution of the burden when it reaches such an extent, and it is no doubt inevitable that the resolution of this kind of conflict involves moments of political and social tension of considerable magnitude. 

We can just hope that serene, peaceful examination of historical precedents might help guide the future conflicts that will not fail to occur in the 21st century.”

Cagé and Piketty also identify a similar roadblock in two earlier historical episodes that played a key role in shaping French political sensitivities. 

The first was the revolutionary left’s failure, in the 1790s, to expropriate Church and aristocratic land holdings in a way that would benefit the bulk of the peasantry, rather than a small urban bourgeoisie. 

Then came the revolutionary wave of 1848, when rural constituencies were betrayed yet again. 

Amid an acute agricultural crisis, the government decreed a property tax hike, creating an additional source of hardship that rural France would not soon forget. 

Owing to the widespread sense of having been deceived by urban elites, many turned to the charismatic figure of Napoleon’s nephew, who would soon make himself an emperor.

When the Music Stops

As Cagé and Piketty correctly note, the political impasses that regularly paralyze French politics follow from a debt build-up. 

“As in the 18th century,” they explain, a “headlong rush into debt can be seen as a consequence of the perceived impossibility of fair taxation. 

The working and middle classes are no longer willing to pay more, and they favor heavier taxation of the wealthiest; faced with the government’s refusal or inability to move in this direction, the only viable, immediate answer is to accumulate more debt.”

Their proposed solution is higher taxation of wealth and capital, following the precedent of the 1952 West German Lastenausgleich (“Burden Equalization”) program to compensate Germans for damages incurred during Hitler’s war. 

But the German policy was introduced under conditions that modern France is unlikely to replicate. 

Lastenausgleich reflected a realization that a war had been lost and that sacrifice was needed; but it also was timed to capitalize on an economic recovery, based on market principles, that was just beginning to unfold.

In the event, the tax program helped to sustain what would come to be known as the postwar Wirtschaftswunder (economic miracle). 

But in the absence of a “miracle,” it would have generated the same political disillusionment that Cagé and Piketty document in revisiting the France of the 1790s, 1848–9, and the 1920s (which led to a leftward mobilization and substantially strengthened the French Communist Party).

All told, Cagé and Piketty have produced a unique, well-documented analysis of the problems facing French democracy and the historical role of debt in shaping choices between reform and revolution. 

Given the authors’ picture on the inside dust jacket, where they have donned conspicuously red garments and put on a big smile for the camera, it is tempting to see their book as an augury. 

The debt-driven political cycles that have long shaped French history are not over, and they could well trigger yet another wave of revolutionary fervor.

Harold James, Professor of History and International Affairs at Princeton University, is the author, most recently, of Seven Crashes: The Economic Crises That Shaped Globalization (Yale University Press, 2023).