Assessment
When I try to evaluate the state of the debate over Thomas Piketty's Capital in the Twenty-First Century two years after its first (French) publication, I find myself driven to three conclusions. The factors that Piketty identifies as leading to the melting-away of the social-democratic North Atlantic economy are operating, but so far their effects on income and wealth inequality have been smaller than other largely-unrelated factors that have been operating in the past generation and generating the rise of housing as a source of wealth and the rise of the super-incomes. Piketty's factors have been supercharged by other forces over the past generation, but that does not mean that they are not at work—and, in fact, reinforces the chances that Piketty's inequality-driving factors will be of decisive importance over the next seventy years. The question of whether our road leads to Piketty (2014)—a new Belle Époque plutocracy—or Keynes (1936)—a euthanization of the rentier in which the wealth of the rich is outlandish but their incomes are not due to low rates of profit—hinges on our politics. And our politics is something we can control.
We as a civilization could decide that we are not willing to let money talk so loudly in politics. We could keep our politics from being one of establishing monopoly after monopoly and rent-extraction chokepoint after rent-extraction chokepoint. If we manage that, then the forecasts of Keynes (1936) and Rognlie (2015) will come true, and a rise in wealth accumulation will carry with it a fall in the rate of profit, and a highly-productive not-too-unequal society.
But right now money talks very loudly indeed. And I leave the Piketty debate more depressed about our ability to keep it from talking so loudly. What makes me more depressed? The Piketty debate itself does: The eagerness of so-many economists to aggressively make so many shoddy arguments that Piketty does not know what he is talking about.Talking Points Memo
The Melting Away of North Atlantic Social Democracy
J. Bradford DeLong
Brad said Two generations ago the major North Atlantic economies were all four stable social democracies—relatively egalitarian places. ... That, Piketty argues, was an unstable historical anomaly.
ReplyDeleteExactly. Now we are reverting to the historical norm for a industrialized capitalist economy.
Dan, it was all product of WWI/WWII.
ReplyDeleteWhen the population is "pulling their weight" by fighting elite's wars the demand rights when they come home and the elite's have no option than to give up. But after a period of peace the entitled elites think the population had it enough and they don't want to pull their weight in society so they start reverting the changes.
Democracy is antithetical to capitalism after all, as Tom constantly reminds us in this blog. Both systems are intrinsically at odds.