'Most countries would be better off with €5,000 [monthly GNI] and 1.8°C than with €10,000 and 4°C': Thomas Piketty

Piketty: What we propose involves enormous growth for a country like India, which would become as prosperous as the US is today in per capita terms, including a 4-5x rise in per-capita material consumption. We also look at scenarios with even higher growth, including a ‘productivist convergence’ scenario with no work-time reduction, where all countries converge to €10,000 in monthly GNI [gross national income].  

The problem is that this comes with cataclysmic global warming: 4°C or more according to our projections. In contrast, we show that it is possible to limit warming to 1.8°C with the €5,000 target. 

Using lower-bound estimates for the welfare costs of high temperatures, both in terms of GDP [gross domestic product] loss and non-monetary well-being damages; we conclude that most countries and individuals would be better off with €5,000 and 1.8°C than with €10,000 and 4°C, especially in a country like India, where high temperatures are likely to have a devastating impact. 

Somanchi: The key question here is how can all countries in the world reach €5,000 in per capita monthly GNI by 2100, which is slightly more than the current level in countries like the US, while at the same time preserving planetary habitability and keeping temperature rise below 2°C. 

We show that this is possible under very strict conditions. First, all countries need to rely on low-carbon energy sources, driven by massive climate investments financed by the Global Justice Fund. Next, this development path requires a large reduction in labour hours, so as to limit total growth and material footprint, especially in the North; a major shift from material to immaterial sectors, with 43 per cent of labour hours in education, health and public services in all countries by 2100; and changes in food habits, so as to allow for a gradual return of forest cover to 1900 levels. 

This ambitious structural transformation of the economy, which we call ‘sufficiency’, plays a central role in making prosperity for all compatible with planetary habitability. This is the key message of the Global Justice Report. Fast decarbonisation of energy systems alone will not suffice. It needs to be supplemented by sufficiency and by a sharp compression of inequality.

Piketty: The global rich from the North, have benefited disproportionately from global economic growth in recent decades and bear a major historical responsibility for the accumulation of GHG [greenhouse gas] emissions since the Industrial Revolution, and particularly over the 1970–2025 period, a critical period that is responsible for more than 70 per cent of total cumulative emissions since 1800.  

It is therefore perfectly legitimate that they become the prime contributors to the redistribution of income and wealth that is now necessary to repair the damage and to reconcile global socioeconomic convergence with the preservation of planetary habitability.

Somanchi: Annual labour hours have dropped from 3,000 hours in the 19th century to 2,100 in the world today, and 1,500 in Europe, and this contributed to the long-run rise in well-being. Our projected decline for the future is in line with historical trends.  

We see the projected reduction of labour hours as the logical outcome of sustained productivity growth. In our benchmark scenario, countries like India experience strong productivity growth as they converge towards the levels of today’s rich countries.  

Under the standard assumption that workers value leisure, workers would respond to rising productivity partly by working fewer hours. This effect could be especially strong for those at the lower end of the income distribution struggling to secure basic living standards. 

In India, the priority is to improve per capita incomes, and work-time reduction will obviously happen later than in rich countries. 

Piketty: The social demand for economic justice and climate justice will become stronger and stronger over the course of the 21st century, particularly in the Global South. Back in 2013, when I proposed a global wealth tax, many thought it was unrealistic. But 10 years later, it was on the official agenda of the G20, thanks to the mobilisation of countries like Brazil and South Africa.  

The same conclusion applies to the reform of international financial institutions. Countries in Europe, North America and Oceania have four times more votes at the IMF [International Monetary Fund] and World Bank than their share of the global population, while countries in Sub-Saharan Africa and South and Southeast Asia have four times fewer votes than their population share. We urgently need to move to democratic rules, one person, one vote.