Coming Soon:

Now Available: Volumes I, II, III, and IV of the Collected Published and Unpublished Papers.



Total Pageviews

Sunday, March 23, 2014


I have now read the first 163 pages of Thomas Piketty's CAPITAL in the Twenty-First Century, and I feel the need to write an interim report, because there is too much in the book to put this off until I have finished reading it all.  Let me begin by saying that in my opinion this is a splendid and extremely important book, one that should be read by anyone seriously interested in understanding the world we now live in.  It is so rich in insights, and has so many quotable passages, that I cannot hope to capture it all in my commentary, so I shall content myself with saying enough to encourage you to read it yourselves.

The title is a deliberate reference and homage to Marx, and the comparison is legitimate in several ways.  Recall that Marx conceived himself as studying what he called the laws of motion of capitalist society and economy, a study that he undertook by combining an historical examination of the evolution of capitalism in the part of the world he knew best with a theoretical analysis of the structure and functioning of the most mature form of capitalism available to him for study, that in England of the mid-nineteenth century.

Piketty is engaged in an analogous effort.  Although his discussion seems analytical in nature, it is deeply grounded in a detailed macro-economic study of the economic history of Europe in the first instance, of North America secondarily, and of the rest of the world where the data will permit.  His tables and graphs offer a sweeping numerical view of the evolution of a number of economic magnitudes from the beginning of the Common Era [i.e., 1 A.D.] to the present, and most particularly of France, Britain, and Germany from 1700 to the present and North America from the late 18th century to the present.  This allows him to exhibit parallel trends in a range of national economies, as well as deviations that he then explains by a combination of economic and geo-political factors.

His principal analytical magnitudes are the total national income of a nation at a point in time, the total national capital at that point in time, the net public debt and private debt, rates of price inflation, and so forth.  In other words, analytically, he is operating at a very high level of aggregation in order to reveal large movements and overall structures.  He is not looking at such things as the intersection of supply and demand in the formation of prices, or at the structure and operation of individual firms.

The literary style of the book is, in its way, as idiosyncratic as that of Marx's CAPITAL.  It is extremely clear and matter of fact, rather laconic, deliberately ironic although in a quite laidback manner, and -- a constant delight -- filled with allusions to literature and film.  To give just one example, Piketty makes repeated references to the novels of Jane Austen and Honoré de Balzac to capture the fact that the return on capital was stable over a long period of time in both England and France, so that Austen could refer to a character as "having ten thousand a year" with full confidence that the readers would immediately understand what sort of holdings of land or government bonds that translated into, and what sort of life style it would purchase.  A century and more later, during a period of rapid inflation, such allusions disappear from novels.  This really expresses quite brilliantly the same relationship between surface appearances and underlying reality in a capitalist society that Marx conjures and anatomizes in the opening chapters of Volume One of CAPITAL.  

Although his focus is on the European case [and his analysis of France in particular is lovely], Piketty does write about American slavery, briefly but penetratingly and brilliantly.  Let me close by quoting several passages from the very last pages I read before pausing to write this preliminary report.  First, an example of his dry ironic tone, from page 160:  "All told, southern slave owners in the New World controlled more wealth than the landlords of old Europe.  Their farmland was not worth very much [because, as Piketty has already explained, there was so much available land in the New World], but since they had the bright idea of owning not just the land but also the labor force needed to work that land, their total capital was even greater."

And here is what he has to say about the legacy of slavery in America:

"[T]he New World combined two diametrically opposed realities.  In the North, we find a relatively egalitarian society in which capital was indeed not worth very much, because land was so abundant that anyone could become a landowner relatively cheaply, and also because recent immigrants had not had time to accumulate much capital.  In the South we find a world where inequalities of ownership took the most extreme and violent form possible, since one half of the population owned the other half: here, slave capital largely supplanted and surpassed landed capital.

This complex and contradictory relation to inequality largely persists in the United States to this day:  on the one hand this is a country of egalitarian promise, a land of opportunity for millions of immigrants of modest background; on the other it is a land of extremely brutal inequality, especially in relation to race, whose effects are still quite visible.  (Southern blacks were deprived of civil rights until the1960s and subject to a regime of legal segregation that shared some features in common with the system of apartheid that was maintained in South Africa until the 1980s)  This no doubt accounts for many aspects of the development -- or rather nondevelopment -- of the US welfare system."  [pages 161-2.]

The chapter closes with a simply devastating attack -- without ever mentioning Gary Becker by name -- on the concept of human capital on which modern American ideological rationalizations of capitalism rest.

I have barely scratched the surface of the book, and I am only in Part Two, which precedes Piketty's discussion of the central theme of the entire book, namely inequality.  Get it and read it.  It is a major work.


Kevin said...

It's definitely making a splash in Left-y political economy circles. Many of the political theorists in my department are picking it up, too. Looking forward to your review!

Charles A said...

A Marxist review of Piketty's book is at

Robert Paul Wolff said...

Thank you, Charles A for the link. When I finally manage to plow through the entire book, I shall write an extended discussion and will refer to that review.

Joseph Streeter said...

You may well already have seen it, but Krugman's column in Monday's NY Times develops one of Piketty's arguments.

Magpie said...


There is plenty to appreciate in Charles Andrews' review.

However, before accepting his point of view in toto, I'd advice some care, as Piketty's book is long and Andrews may have overlooked some things.

One of the things that caught my attention in Andrews' review is the preferential attention he gives to the period 1913-1950.

In the section called "Analysis of 1913-1950" Andrews focuses on the period 1913-1950, which he says is Piketty's exceptional period:

"And there is justified nostalgia today for the era after Piketty's exceptional period. In the 1950s and 1960s life got better for a majority of the working people in the United States, Britain, and western Europe. The peak of working-class progress was 1973 – after Piketty's focus and years before neoliberalism, financialization, and globalization. Since 1973, real median earnings in the U.S. have stagnated and fallen. That turning point is the fact that demands explanation and action."

The period after 1950 and up to 1979 was characterized for having the lowest inequality; inequality, for instance, for whatever reason, nose-dived (with random peaks and valleys) since 1913, that's true. But even after 1950 inequality kept still falling, although much more slowly.

(You can check in the WTID website. Choose Graphics -- right side -- and the website displays by default the top income shares, United States, 1913-2012:

With or without reason, PostKeynesians attribute this fall in inequality to the establishment and expansion of the welfare state and activist fiscal policy.

The other thing is that I am not sure Andrews takes into account the limitations in the data used: I believe there is no separate data to analyse lower deciles, whether one has "little interest in the inequality suffered around and below the median income" or one is very interested in it.

I haven't reached the recommendations section yet, so I cannot say anything with certainty. However, I understand Piketty's recommendations are more towards taxation. In my opinion, this may have some direct temporary effect on inequality, but it's kind of disappointingly limited.

Robert Paul Wolff said...

Thanks for the comment. I am going to refrain from writing more about Piketty until I finish the whole book [which may tgake me a while -- I am still only 200 pages into it.] I must say, I think it is exciting that so arcane a book, even if well written, should engender so much interest. Therer will be a great deal to talk about for some while.

As they used to say at the old Jewish Catskill resorts -- I'm dancing as fast as I can.

Magpie said...

Prof. with my comment I didn't mean to suggest you were being unfair or anything.

I hope you didn't take it the wrong way; in any case my apologies.