Friday, May 30, 2014

Dan Kervick — Piketty on the Dynamics of Inequality: Four Useful Theorems

Dan provided a detailed examination of what Piketty is actually arguing about inequality. Many other commenters are wandering in the woods.

From my (political) POV this is key:
Piketty couches most of his arguments about equality and inequality in terms of forces of divergence and forces of convergence. His approach is to identify those conditions under which the forces of divergence will predominate, and if so, how strongly they will predominate. His view is that at the beginning of the 21st century, the conditions appear to be in place for the forces of divergence to acquire renewed strength, although he also stresses that nothing is certain, and the exact course of 21st century inequality depends on a host of political, demographic, technological and economic factors. One thing Piketty routinely stresses, however, is that the forces for divergence operate very strongly when r is “significantly and durably” higher than g, and automatically lead to a very high concentration of wealth.

Wealth = power. And that power is related to class and class interests.

Once divergence of "capitalist" share and worker share sets in, power builds to maintain it and increase it. Times of convergence are rare and "capitalists" immediately set about reversing it and they have the power to do so over time, since wealth tends to concentrate through rents unless continually dispersed though effective policy.

Piketty doesn't seem to hammer on this, but it is strongly implicit at least. This is why the top tier see him as a "Marxist," even though Piketty claims not to have read Marx closely or been strongly influenced by his work.

Rugged Egalitarianism
Piketty on the Dynamics of Inequality: Four Useful Theorems
Dan Kervick

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