In this interview, Branko Milanovic, author of Capitalism, Alone: The Future of the System That Rules the World, discusses recent political instability, trends in policy on inequality and a way to break the 1 percent’s “quasi-automatic” increasing share of capital.

 
Recently in The Guardian you wrote that capitalism isn’t really in crisis — in fact, it’s becoming more powerful all the time. In Western Europe, where support for globalization is low, do you see countries trying to reign in capitalism as it moves into areas of daily life that weren’t previously commercialized?
 
I don’t see Western European countries doing that because I think these countries don’t have much of an ability to control things precisely because of globalization. What I rather see is that, despite all the discussion of inequality for almost 10 years, a huge presence of inequality in public perception, and a very significant change in the political landscape in all the countries in Western Europe and Eastern Europe as well — we see very little in terms of actual policies that would reduce inequality. Paradoxically, we see policies from [President Emmanuel] Macron in France regarding the job market and pensions, for example, that are actually pro-inequality. So I don’t see much change, in terms of actual policies.
 
So even though inequality has entered the public consciousness, policies are going in the other direction?
 
Yes, and that’s very strange. Even if you look at this huge change in the political configuration, you don’t see the parties that are likely to bring the issues of poverty, inequality, and more equal access to education and healthcare moving to the forefront. What you see is the rise, for example in Germany, of the extreme right wing. And in Spain, of this new right-wing party Vox that has appeared out of nowhere.
 
Late last year, you wrote on your blog about “why the world is in an uproar right now,” as demonstrated by protests in Chile, Iran, Iraq, Hong Kong, and Venezuela. And just a few months ago there were more demonstrations in France. You said this will happen until there are more structured political forces on the scene that can channel these grievances and use them to come to power. Do you think these grievances will be addressed?
 
It’s interesting that all these protests are taking place within the same period of time. The revolts are very heterogeneous in terms not only of the demands, but also of the regimes and governments they are addressing or dealing with. Let me give you what I think is the nicest example: Iran and Chile. In both cases you have a similar trigger, which was the increase in the price of fuel in one case and an increase in transport fees in the other.
 
And then you have suddenly an outburst of revolt; you have people in the streets. In both cases, nobody was expecting this to happen. And in both cases you have pretty violent demonstrations and then a very violent, totally brutal reaction by the police or even the army. After 10 days of riots, there were 20-plus people dead in Chile, 200-plus dead in Iran.
 
The regimes that are being targeted are very different — you have a democracy with roots in a dictatorship in Chile, and in Iran a regime that is a theocracy that in principle, in the past, was taking care of the people who are poor. But nowadays it seems to be the opposite: an oligarchy of the rich has been formed in Iran. Many of these people who were protesting in Iran felt totally left aside the by the government. They can’t get jobs. They feel their grievances are ignored, that the people who are in power are contemptuous of their needs.
 
It’s very difficult for me or for anybody else to say what commonalities exist among these different small revolutions, except to say that clearly people are revolting because they feel that the rulers are ignoring them. And there’s not much bending by the governments so far. Not much has happened in France despite a year of protests. In Hong Kong, politicians are waiting for the protests to phase out or to end. In Iran, there’s no real sign the government is going to change. In Chile, they’re considering a new constitution, but if there are no additional protests, this might never come to pass.
 
In your book you discussed how the cost of tuition at private U.S. colleges, including the very top universities, has soared in recent decades. You argue that the elite don’t necessarily mind this situation. Can you explain why?
 
Many people have tried to explain the fact that the cost of education in the United States has skyrocketed. Whether you look at the cost of education with respect to the consumer price index, or to wages or household income, there is no metric according to which tuition costs have not risen. It’s very clear. Why have costs risen so much? I think one can view this as a mechanism whereby the rich, who are able to afford these costs, are monopolizing top universities.
 
In other words, if you are a very rich family and you can afford to pay $50,000 per child for a year, including tuition and all the other costs, that’s fine for you. But these costs clearly limit the number of other parents who are able to do the same. That essentially acts like a monopolization of top education, which also enables those who have graduated(mostly children of the top 10 percent) to earn high salaries in the future. Basically, high tuition limits competition from the children of others who cannot afford the costs. In that sense, for the rich, it’s an advantage.
 
I’m not saying it’s done by design, but the outcome has limited the intergenerational mobility (ability to move up). The ratio of the likelihood that a student at one of these elite schools is in the top 1 percent compared to the middle class is about 60 to 70 to one. Basically the chances of a middle-class child of attending one of these top schools are 1/60th of the chances of a child whose parents are in the top 1 percent.
 
In the conclusion of your book, you say there’s no viable alternative to this hyper-commercialized capitalism that we have today. But at the very end you explain two hypothetical types of capitalism: people’s capitalism and egalitarian capitalism. In egalitarian capitalism, people would have equal amounts of capital and labor income. And in people’s capitalism, everyone would have equal shares of capital and labor income. Can you explain these systems, and why you seem to lean toward people’s capitalism?
 
Under our current system of capitalism, the shares of income that people receive from capital and labor are very uneven. It’s not only that the income levels are different, but also the shares are — in other words, from the very poor to the middle class, people have practically zero income from capital. All the way to 95th percentile, people have very little in terms of income from financial capital, and their entire property is in housing.
 
Then you come to the top 5 percent. Their shares are different there — they rely much more on income from property. They own more real estate, but real estate accounts for a smaller percentage of their total property income, because they’ve moved into financial assets.
 
So, this is the current situation. The capital share goes up as you move towards richer households. This is why when, on a national level, the share of capital in total income increases, you have a quasi-automatic gain mostly for the rich and thus a greater interpersonal inequality.
 
Egalitarian capitalism is not as a realistic option; it’s used in the book as an extreme position to illustrate the other. People’s capitalism, however, is a realistic goal, a way toward much more widely spread ownership of financial capital and lower inequality.
 
Under people’s capitalism, the middle class would have a similar percentage of their income coming from financial capital as it would from labor?
 
Exactly. People who are in the bottom 30 percent would be unlikely to have any financial capital. That has always been the case. But certainly from the 30th percentile onward, you would ideally have more people with significant amounts of income from either financial capital or housing, but especially from financial capital. The distribution of capital-related income would be more equal. It’s important to realize that this is not a panacea: even with that system, you can still have high equality, but it would be a more “controllable” inequality.
 
Now people can ask me, “Okay, so what’s the big difference? Why do you prefer people’s capitalism compared to liberal capitalism, if the outcome in terms of income inequality is the same?”
 
The reason why I think that people’s capitalism is better is that since the current capital shares are so unequal, and so much in favor of the rich, a larger and larger chunk of total pie that is likely to accrue to capital owners in the future due to robotization and automatization will (within the current system) automatically spill into rising interpersonal inequality.
 
The idea of people’s capitalism is not so much that you would have equal incomes. The idea is that you would make a preemptive move — by having a more widely spread ownership of capital — toward breaking the link between the top 1 percent’s (or 10 percent) rising share of capital transmitting into rising interpersonal inequality.