Wednesday, March 26, 2014

Ryan Cooper — Why everyone is talking about Thomas Piketty's Capital in the Twenty-First Century

The French economist's magnum opus explains the history of income inequality — and represents a real threat to the reign of the 1 percent
The Week
Why everyone is talking about Thomas Piketty's Capital in the Twenty-First Century
Ryan Cooper

Watershed moment for neoliberalism?
The English translation of French economist Thomas Piketty's magnum opus Capital in the Twenty-First Century is finally out, and it's made an enormous splash (see reviews here, here, and here). It's a brilliant, surprisingly readable work that synthesizes a staggering amount of careful research to make the case that income inequality is no accident. Indeed, Piketty argues that it is a feature of capitalism itself — unless governments take action to rein in capitalism's excesses.
That may sound like an obvious point to you. But the value of Piketty's work is that it shows that capitalism's postwar heyday — in which incomes at the bottom and the top actually converged — was a historical anomaly. Piketty's analysis of the last two centuries makes the case that capital in its natural state does not tend to spread out or trickle down, but to concentrate in the hands of a few.
This is news to those on the right who have long championed capitalism's egalitarian benefits. Conservatives have been far too complacent in believing that capitalism is the only possible economic system, and far too aggressive in attempting to demolish the structures that mitigate capitalism's worst side effects. If Piketty is correct, he has laid the intellectual groundwork for a resurgence of American socialism — and conservatives are starting to feel distinctly uneasy about it.


Dan Kervick said...

I hope someone at UMKC is planning a seminar on this book.

Tom Hickey said...

Piketty is emerging as the new Keynes. All economists are going to have to deal with this or become increasingly irrelevant. The game has just changed.

Unknown said...

Pickett isn't saying anything that hasn't been said a billion times before, or making a case no one else has made. He's just the latest in the lame let's series of heroes. His work will change nothing; do you guys really think elites care about what works best for an economy?

Unknown said...

Let's = left's

Tom Hickey said...

If the dominant structure of a universe of discourse changes, everything subject to that context changes.

Regardless of originality, the GT changed the framing of economics for some decades and Piketty's Capital is poised to do that, too.

An interesting thing about it is that it stands Marx on his head. Marx thought that the Achilles heel of capitalism was falling profit rate while Piketty holds it is rising rate of return relative to growth. Can't even call him a Marxist.

The ruling elite in the US is already concerned with the controversy over inequality, which Galbraith and Stiglitz have pushed to the fore and on which the media is picking up.

I think this thing has legs.

And it's not like there isn't going to be another downturn before long. This recovery is already getting long in the tooth and we are still at historically high UE and ZIRP. Only about 20% of the US population have benefitted much so far from the "turn-around."

Dan Kervick said...

Picketty's book is full of detailed statistical documentation of the points he's making. So he's not juts "saying" things.