Evatt Foundation
Conclusion: the upshot
Politically, the work has brought an international left to life that includes almost everybody except the neo-liberals, leaving the latter seriously on the defensive for the first time in recent memory. This is not to say that every non-neo-lib loves the book. The jury is out on the question of whether the ‘elasticity of substitution is greater than one’. Larry Summers thinks not, but imagines that the Jetsons will finally arrive to exacerbate inequality after we get sick of Facebook. James Galbraith jnr has pooh-poohed everything in the name of the original ‘war of the Cambridges’. He has his points (as always), but it’s difficult to see why they need detract from the analysis. Others will no doubt think the whole situation outrageous, Piketty's approach too modest, and call for stronger society-changing action. Even among the most ardent supporters of policy change, there are disagreements all over the place about the best solutions, and alternative proposals are tumbling out by the day – including a new brace from the OECD last week. Last year's Nobel laureate, Robert Shiller, has argued for governments to devise 'inequality insurance'. The policy movements are likely to play out over some time, and it’s hard to tell the effects, if any, at this stage, but there’s no doubting that the conversation is underway everywhere, and for this alone, Thomas Piketty warrants congratulations. If the first step toward change is to raise our collective consciousness of the issue, he’s ticked the box.
The work is pregnant with other issues crying for attention, but only two more points can be afforded. In the first place, no book becomes a blockbuster unless it resonates with the spirit of the times. Capital in the Twenty-First Century has been brought to the surface by a steadily rising tide of concern about its subject worldwide. Internationally, the book has arrived after much excellent work by Galbraith, Krugman, Stiglitz, Robert Reich and many others in the wake of the GFC and the ‘Occupy Wall Street’ movement. It’s no coincidence that Barack Obama has made inequality the key theme of his administration; that the IMF has just produced a report showing that inequality offers nothing to help economic growth; and that Oxfam has been pressing the issue. Even the Pope recently tweeted that ‘inequality is the root of social evil’. In Australia, one thinks of the work of people such as John Quiggin, Frank Stilwell, and especially Andrew Leigh’s work with Piketty’s Oxford collaborator, Anthony Atkinson. There are of course countless others, but the point is that the fruit has ripened in well fertilised soil.
In the second place, as we head toward some new form of the late 19th/early 20th century social order, we might do well to remember that 1890-1914 was not just a time of ugly inequality and no opportunity for nearly all, but a very creative period. Electricity, the telephone, the motor car, cinematography, aeronautics and the radio were all created, as were factory acts, public education, social security, mass trade unionism, the women’s movement, the labour movement, the universal franchise, income tax, and indeed, Australia itself. It’s eerie to think that, as we approach the 100-year anniversary of the Guns of August, we also find ourselves going back to the same social order, having to get creative all over again. Back then, capital was civilised by an alliance between working-class social and political movements and middle-class liberal reformers. The potential for a broad movement seems just as propitious today, given we’re talking about the interests of at least 90 per cent of individuals, perhaps 99 per cent. The odds look good, unless the wealthy already have the democracy sown up. It would a devilish result if Piketty’s optimism proves to be misplaced because his thesis proves to have already become only too true.
Capital in the 21st Century: Review article
Christopher Sheil | President of the Evatt Foundation at the University of Sydney, a research fellow in history at the University of New South Wales, an adjunct professor in social policy at Boston University
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