What I have just described is a cooperative and ideal (not to say idyllic) scenario that would lead via concentric circles to a vast transnational democracy, ulti
mately resulting in just common taxes, a universal right to education and a cap
ital endowment, free circulation of people, and de facto virtual abolition of bor
ders.143 I am aware that other scenarios are pos si ble. As we saw in Chapter 16, there is no assurance that EU member states (or any subset of them) will be able to agree anytime soon on a demo cratic procedure for levying common taxes.
Meanwhile, the Indian Union with its 1.3 billion people has adopted a progres
sive income tax on all its citizens together with common rules that give the dis
advantaged classes access to universities. The Indian model has other prob lems, however. Still, it shows that demo cratic federalism can take forms that people in France, Switzerland, or Luxembourg might never imagine. Establishing mutual confidence and norms of transnational justice is a delicate, highly fragile exer
cise, and no one can predict how cooperative arrangements might evolve, Between the ideal path to global federalism and the path of generalized na
tionalist and identitarian retreat, many trajectories are of course pos si ble, with multiple switch points. To make pro gress toward a more just globalization, two princi ples should be kept in mind. First, although it is clear that many of the rules and treaties that currently govern international trade and finance must be profoundly reformed, it is impor tant to propose a new international legal framework before dismantling the old one. As we saw in the discussion of Eu
ro pean institutional reforms in Chapter 16, po liti cal leaders may be tempted to renounce existing treaties without specifying what new ones they would like to put in their place. This is what happened with Brexit. British Conservatives chose to ask voters to decide by referendum whether or not they wished to exit the Eu ro pean Union but did not indicate how they planned to or ga nize their future relations with the Eu ro pean Union in case of exit. Without returning to autarky (which no one wants), there are many ways of regulating these 143. To be clear, under the scenario described here, most decisions would continue to be taken and administered by national, regional, or local assemblies, which would also approve most financing. In many cases it is better to or ga nize delibera
tion at this level (for example, on curricula in diff er ent languages, local infrastruc
ture and transportation, health systems, etc.), within the logic of the decentralized participatory socialism I am advocating. Only global public goods and taxing of transnational economic actors are to be regulated directly at the transnational level.
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relations; the postreferendum debate has shown how difficult it is to agree on any of them.144
Second, while it is essential to propose a new framework for cooperation before abandoning the old one, it is impossible to wait for the entire world to agree before moving ahead. It is therefore crucial to think of solutions that will allow a few countries to move toward social federalism by signing codevelop
ment treaties among themselves while remaining open to others who might eventually wish to join them. This is true not only at the Eu ro pean level but at the international level more generally. For example, if one or more countries abrogate one of the treaties that currently mandate the free flow of capital, they must first create a new arrangement that would still allow for international in
vestment and cross border owner ship; then they must invite others to join them, but only on condition that any country joining the agreement abide by the rules for transmitting information about asset owner ship. This is necessary to allow proper assessment of taxes based on each person’s ability to contribute (as mea sured by wealth and income).
Similarly, sanctions imposed on noncooperating states must be reversible;
it should be made clear that the goal is to establish a cooperative, egalitarian, and inclusive system and not to heighten international tensions. Ideally, all states, in Eu rope and elsewhere, would end harmful competition and establish new forms of cooperation. Profits earned by large multinational corporations should be apportioned among states in a transparent manner, with minimal tax rates compatible with the general level of taxation and financing consistent with the social state. In practice, if agreement on apportionment cannot be reached, any group of countries (or even a single country) could act on its own, imposing its share of the global tax on a com pany in proportion to that com
pany’s sales of goods and ser vices on its territory.145 Some may denounce this
144. Among the solutions considered was the possibility that the United Kingdom would continue to abide by the same trade rules that applied before Brexit despite having relinquished the right to participate in the elaboration of those rules.
What ever solution is fi nally adopted, it is likely that relations between the British Isles and the continent will continue to be the subject of debate for de cades to come, depending on what new forms of fiscal, social, and environment union EU member states establish (or not) and on their ability to impose new rules of co
development linked to free circulation of goods and capital.
145. See Chap. 16 and Saez and Zucman, The Triumph of Injustice. In other words, if a com pany earns $100 billion in profits throughout the world and 10 percent of its sales occur in a given country, and that country levies a 30 percent tax on corpo
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corporate profits are the target, not trade, which simply serves as a verifiable index for apportioning profits (in the absence of adequate cooperation). Once adequate cooperation is achieved, the transitional system can be replaced by a better one.
Corporate taxes are especially impor tant because the current race to the bottom, which could end in exempting corporate profits from all taxation, is undoubtedly the biggest risk currently facing the global fiscal system. Ulti
mately, if nothing is done to stop it, the very possibility of a progressive in
come tax will be in jeopardy.146 The same logic can be applied to other taxes.
Earlier I discussed the progressive property tax. Companies that refuse to co
operate by supplying information about their stockholders may have to pay the forgone property tax revenues, again in proportion to their sales of goods and ser vices in a given country. The same goes for the carbon tax. In the absence of an adequate coordinated policy for reduction of emissions, it will be impera
tive to impose a carbon tax based on sales of goods and ser vices in each country.
Once again, it is impor tant to be clear that the desired cooperative solution is diff er ent (for instance, it could take the form of coordinated progressive taxa
tion of individual emissions) and to indicate a route for reaching that goal.
To recapitulate: The current ideology of globalization, which first devel
oped in the 1980s, is in crisis and entering a transitional phase. The frustrations
rate profits, then that com pany would have to pay $3 billion to the country in ques
tion. A com pany’s global profits can be estimated from vari ous sources, and each country can impose sanctions on companies that fail to provide required informa
tion. Recall that this is how taxable profits are allocated among the several states of the United States.
146. In a perfectly cooperative and transparent system, the tax on corporate profits would play only a limited role: it would simply amount to a prepayment of the in
come tax due by the stockholder receiving dividends and other income from the com pany. But in a noncooperative and nontransparent environment, the corpo
rate tax plays a much more impor tant role because this prepayment is often the only tax that the ultimate owners of the com pany will pay unless the individuals to whom the profits are ultimately distributed can be identified. Furthermore, it is easy to disguise any kind of income as corporate profits. Income from consulting or author royalties can be sheltered in a corporate structure with the active assis
tance of financial advisers, who take such strategies for granted, or by payment of taxes in another country. That is why it is essential to develop a strategy to end the race to the bottom, which will end in avoidance of all taxes by those with the means to pay for such tax avoidance strategies.
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created by rising in equality have little by little made the lower and middle classes of the rich countries wary of international integration and unlimited economic liberalism. The resulting tensions have contributed to the emergence of nation
alist and identitarian movements, which could unleash unpredictable chal
lenges to the current trade regime. Nationalist ideology could (and prob ably will) intensify competition between states, leading to further fiscal and social dumping at the expense of rival states while encouraging authoritarian and anti
immigrant policies at home so as to unite the native born population against its supposed foreign enemies. This has already begun to happen not only in Eu
rope and the United States but also in India and Brazil and in some ways in China (in its attitude toward dissidents). In view of the impending collapse of both liberal and nationalist ideologies, the only way to overcome these con
tradictions is to move toward a true participatory and internationalist socialism based on social federalist po liti cal structures and a new cooperative organ
ization of the world economy. Given the magnitude of the challenges, I have tried to outline solutions that could gradually make pro gress toward that goal pos si ble. These proposals are not intended to answer every question. Their only purpose is to show that human socie ties have yet to exhaust their capacity to imagine new ideological and institutional solutions. As the histories of the vari ous in equality regimes we have studied in this book show, the political
ideological repertoire is vast. Change comes when the short term logic of events intersects with the long term evolution of ideas. Every ideology has its weaknesses, but no human society can live without an ideology to make sense of its inequalities. The future will be no diff er ent, but from now on the scale will be transnational.
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—+1 In this book I have tried to offer an economic, social, intellectual, and po liti cal
history of in equality regimes; that is, a history of the systems by which in
equality is justified and structured, from premodern trifunctional and slave socie ties to modern postcolonial and hypercapitalist ones. Obviously, such a proj ect is never ending. No book can exhaust so vast a subject. All my conclu
sions are tentative and fragile by their very nature. They are based on research that needs to be supplemented and extended in the future. I hope nevertheless that this book will have helped readers clarify their own ideas and their own ideologies of social equality and in equality and will stimulate further reflec
tion on these issues.