Dean Young, Socialist Party north west organiser
Left-wing economist and writer Thomas Piketty, alongside other economists, have in recent weeks produced a ‘Global Justice Report’ which aims to outline a plan to tackle wealth inequality. Piketty, in an article in the Guardian 4 June, sets out the four key aims of the report: “Redistribution at the world scale; a deep reform of the international financial and economic order; a radical transformation of energy systems; and substantial shifts in consumption patterns.”
With the increase of poverty and climate catastrophe at one end of society, and the increase in wealth of a tiny few at the other, people across the world will be interested in plans to reduce inequality and prevent environmental destruction.
But how do the authors of this report envisage such a transformation of society? They view the need to shift away from ‘overconsumption’ and towards an economy run on the basis of ‘sufficiency’ (in other words based on the needs of humanity). A fair goal, but the question ultimately is how to achieve this. Piketty and co believe we can move to a needs-based society with the following programme:
- Forming new international institutions within the confines of the capitalist system to supersede old ones such as the UN, IMF etc.
- The key new institution being a ‘Global Justice Fund’ (GJF) that spends 10% of global GDP each year from 2026-2060 on investment, compared to the 0.4% average today
- To fund this they propose a 20% global wealth tax, a 90% global marginal income tax on the top 1% of earners, and the GJF holding, via a sovereign wealth fund, 10% of all stocks internationally
With such a plan, the report suggests that by 2100 the average GDP per capita would equalise internationally at around €5,000 a month. The average working week would fall from 40 hours to roughly 19 hours. The gender pay gap would be eradicated. Climate catastrophe averted, the bottom 50% of earners would increase their share of global wealth from 2% today to 30%, with the billionaire class’s share of the wealth down from 6% to 0.05%. The report lists a lot more than this, but these are some standouts.
This report is a well thought-out, well-researched and evidence-based approach on how to begin to tackle the scourge of wealth inequality. It shows that in reality we aren’t doomed to climate chaos, or endless poverty and worsening living standards if the resources of society were put to use.
But society as it is organised now is based on competing capitalist nation states, which seek to act in the interests of their capitalist classes to maximise their profits. Piketty and co fail to ask or answer a fundamental point – why would international capitalism agree to such plans? Especially while governments are stopping international development funds, such as widespread cuts to USAID and UK foreign aid spending. Why would finance capital, such as the banks and hedge funds, allow the setting up of a sovereign wealth fund which owns 10% of all global shares? Why would the billionaire class allow a significant wealth tax and a 90% marginal tax rate? They would only concede this massive transfer of wealth away from their clutches if the alternative was something even worse for them.
Piketty, in his Guardian article, heralds the average 1:5 or 1:10 wealth disparity that existed at the height of Nordic and Western nations after the Second World War until the 1970s – the era of capitalist boom. But the post-war boom, and the unprecedented levels of investment in the economies of these nations (such as the nationalisation of roughly 20-25% of the British economy) was not done due to the kindness in the capitalists’ hearts. It was done to head off the radicalisation within the ranks of the working class after WWII. At that time, there existed an alternative way of organising society in the Stalinist states. While the lack of democracy and brutal repression proved to be their ends in the following decades, the nationalisation of the key parts of the economy and the planning of production were a danger to the bosses as workers saw there was an alternative. The capitalist class temporarily made sacrifices by allowing the creation of the welfare state, nationalisation of significant sections of the economy and very high taxes on the wealthy so they could preserve their system and one day take back these concessions. They have done this over the last 50 years via the methods of neoliberalism and privatisation.
The last 50 years show that, while the super-rich bosses maintain their position holding the levers of economic and political power, any concessions won are only temporary. Gross inequality across the world, climate chaos, and attacks on our living standards are baked into the capitalist system itself. We must do away with such a system, it cannot be reformed to serve the interests of the working class. In Britain, just 150 corporations control 80-85% of the economy. As a first step to building a society that provides what humanity needs, we should nationalise these 150 companies under democratic workers’ control and management. This would provide a real basis in Britain to plan our economy for human need, not profit. We must also spread such an approach internationally, not leaving ourselves isolated nor leave the working classes in other nations hamstrung by capitalist exploitation. It is for this reason that the Socialist Party is a member of the Committee for a Workers’ International, with sister organisations on every continent.
We need an international socialist solution to crisis-ridden international capitalism, with its waste and inefficiency, which creates trillionaires like Elon Musk while hundreds of thousands across the world starve and the climate gets ever hotter. The Global Justice Report stimulates a debate on how to fix society, but if we leave the wealth and power in the hands of an unaccountable capitalist clique we will continue in a doom loop of exploitation.
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