I’m way late in weighing in on Thomas Piketty’s great book “Capital in the 21st Century,” (note the lack of subtitle–I like that–gives the title that much more weight!). That’s because I’m reading it really slowly but I’m almost done.
Why so slow? In part, because I’m savoring it–it’s a wonderful read, with trenchant insights every few pages, and there are lots of pages. Also, the damn thing is dense, and often after reading a few pages I realize I haven’t absorbed the last few paragraphs, so I need to take a break. Probably my own absorptive capacity ain’t what it used to be.
And, of course, there’s been no shortage of insightful economists weighing in. Anyway, a very few insights off of top of head, with the caveat that I’m still processing all of this:...Jared Bernstein | On the Economy
Dude, Where’s Your Piketty Review??!!
Jared Bernstein
The book out how long? And people are already feeling they have to apologize for being late to review it. Wow. This is one hot item for a dense tome on economics and economic history.
Best line: "As [Piketty] says in the NYT today: “…capitalism and markets should be the slave of democracy and not the opposite.”
Noteworthy: "This cosmology observation is far from a critique–it’s what Krugman means when he says the book will change the way we think about the economy. I certainly hope Paul’s right about that. It’s been interesting to see the lack of response from the right, though I’m sure it’s coming."
This could actually be the Copernican Revolution in economics rather than the Newtonian as Bernstein suggests. Previously, economic both Keyensian and Neoclassical have focused on the business cycle. Piketty shifts that focus to the centrality of systems comprised of people and institutional arrangements that generate social and political results as well as economic ones.
The issue is not so much inequality, which is a symptom. The issue is the asymmetrical power that great wealth bestows and how that power adds to great wealth unless it is distributed politically through functioning democracy.
Of course, this is not unique to capitalism but rather it is the history of surplus societies where deciding who gets what share of the surplus is the overriding concern socially, politically and economically. This has almost invariably resulted in highly asymmetrical social status, political power, and economic wealth in terms of class structure and institutional arrangements.
Why do I think this is likely to be a Copernican Revolution in economics?
On the other hand...
Best line: "As [Piketty] says in the NYT today: “…capitalism and markets should be the slave of democracy and not the opposite.”
Noteworthy: "This cosmology observation is far from a critique–it’s what Krugman means when he says the book will change the way we think about the economy. I certainly hope Paul’s right about that. It’s been interesting to see the lack of response from the right, though I’m sure it’s coming."
This could actually be the Copernican Revolution in economics rather than the Newtonian as Bernstein suggests. Previously, economic both Keyensian and Neoclassical have focused on the business cycle. Piketty shifts that focus to the centrality of systems comprised of people and institutional arrangements that generate social and political results as well as economic ones.
The issue is not so much inequality, which is a symptom. The issue is the asymmetrical power that great wealth bestows and how that power adds to great wealth unless it is distributed politically through functioning democracy.
Of course, this is not unique to capitalism but rather it is the history of surplus societies where deciding who gets what share of the surplus is the overriding concern socially, politically and economically. This has almost invariably resulted in highly asymmetrical social status, political power, and economic wealth in terms of class structure and institutional arrangements.
Why do I think this is likely to be a Copernican Revolution in economics?
Just a note re his fame (see NYT link above re that). So I get a typical call from a reporter the other day, asking me what I thought about some developments around poverty policy. He then asks, “And how do you think Thomas Piketty would answer these questions?” And, having intellectually “lived with” TP for a few weeks now, I actually think I gave a pretty good answer!Not Keynes, not Hayek, not Friedman, not ..., but Piketty. The universe of discourse is changing not only in econ but also in the media.
On the other hand...
It’s been interesting to see the lack of response from the right, though I’m sure it’s coming.
I expect that a withering attack is in preparation and they are now putting together the talking points, probably in consultation with Frank Luntz.
I expect that a withering attack is in preparation and they are now putting together the talking points, probably in consultation with Frank Luntz.
ReplyDelete"There's been a lot of buzz lately about a new book by a French (chortle, guffaw) econonomist with a title "Capital in the 21st Century" that is meant to suggest a relationship to Karl Marx's great communist tome "Das Kapital." Is this a new Marx on the scene? Should we be worried?
"Well, Shawn, eternal vigilance is the price of freedom, so we should be concerned but not really worried."
"So is there anything new there, Steve?"
"No, Shawn, when all is said and done the bottom line of this book is 'tax the rich'. So it's the same old politics of envy we've come to expect from the left and no one's taking it seriously except for the usual suspects like Paul Krugman and Senator 'what's his name' from Vermont."
"Thanks, Steve, that's what I thought."
The book will have an impact equivalent to that of a wet paper towel hurled at the wall.
ReplyDeleteWhich is to say, none whatsoever beyond the cleanup to remove the damp residue.
I wouldn't say inequality is just a symptom. Rather that inequality of wealth and inequality in power are inextricably related. Each both reflects and reinforces the other.
ReplyDeleteI call it a symptom in that it is a result, an output of the system. Question is what the inputs are, that is the causal factors, and how the black box that processes them works.
ReplyDeleteThe possibilities are that the "free market" leads to inequality, that that it results from some other factor or factors, either alone or in addition. But there is never a completely free market, so that there must be other causal factors at work.
The contention is that it's institutional arrangements, not only imposed by government through legislation and regulation, but also private decisions, that lead to and reinforce asymmetries in 1) status, e.g., through class distinctions, 2) power, e.g. through social and political influence stemming from wealth and position, and 3) the ability to accumulate wealth through means other than or in addition to personal initiative.
This view allows for explanation for how different institutional arrangements lead to inequality historically, e.g., monarchy, despotism, conquest, feudalism, Soviet communism, etc., as well as capitalism.
Then the question is whether and how to design a system that reduces or eliminates asymmetries that result in social, political or economic dysfunction.
Would adopting a stricter version of economic liberalization work? If not, why not? Would some other solution work? Or are we stuck with dysfunction that is either impossible to overcome, or beyond our ability to manage?
Piketty brings up interesting points that suggest permanent dysfunction on the present course, but he leaves the remedies to be worked out.
The book will have an impact equivalent to that of a wet paper towel hurled at the wall.
ReplyDeleteWhich is to say, none whatsoever beyond the cleanup to remove the damp residue.
Party pooper. Tom is having fun waving his pom-poms in front of the cheering crowd. Let him be.
It doesn't matter with Piketty eventually fizzles. Most think that Occupy fizzled, too. "Sound and fury signifying nothing."
ReplyDeleteNot so. The universe of discourse was shifted massively already, making space for Piketty, and Occupy played a role in it. Occupy may have disappeared from the news, but Occupiers are still actively engaged now behind the scenes.
Piketty's book and his instant celebrity are another iteration in this process that is signaling the cresting of neoliberalism and the resurgence of populism and the kindling of participatory democracy.
These are moments in an unfolding series that indicates the development of a new trend and a shift in the Overton window.
@Tom Hickey
ReplyDeleteThose are encouraging thoughts, but we should not think that there is any "trend". I don't think trends exist, secular or otherwise, except in retrospect. They are as ephemeral and meaningless as the "forces of history" or, as you say, the notion of the "free market". Thinking in those terms weakens us by turning our attention away from specific actions and polices that affect society. Movements of people, with defined and well described goals, tend to succeed, so I hold greater hope for MMTers than the Occupy Movement I reckon that another decade of MMT work can create a favourable "trend".
Without a major economic collapse, it is business as usual. At this juncture, the chattering classes are talking about reforming capitalism. Big whoop-de-doo. Where is the involvement among larger segments of the electorate?
ReplyDeleteA populist movement would be a signal, although not necessarily a positive one. The sacking of union leadership by workers would also be a signal that actual change was in the works. Without pressure from below, the fraudulent defense of the status quo will continue.
Parecon remains in the intellectual wilderness. I'd say that Richard Wolff is attracting larger audiences by advocating elements of Participatory Democracy through the formation of worker cooperatives (or WSDEs). This is a concept more easily grasped by ordinary Americans.
The value of Piketty's research will be realized after the economics profession is overhauled. That task is 100% political.
Nevertheless, the more hoopla the better :)
ReplyDelete