The Piketty phenomenon continues. I re-read my almost 9000 word review of his book, and I confess that I am pleased with it. I think I managed to communicate a good deal of what is in the book in such a way as to encourage all of you to read it for yourselves. My review has triggered an unusually large number of intelligent and interesting comments, some of which I shall try to respond to in this post. In addition, I shall say something about the larger significance of the striking reaction to the book across a broad spectrum of public discourse.
Bjorn quotes a bit from my reply to Seth: "Shall we raise wages now and produce in the future at the same level we are producing now, or shall we hold wages steady and expand production by investing the social surplus in new plants, roads, high speed trains, and electronic innovations?" He says "I would very much like to hear your thoughts on this question."
This is a complex issue, to be decided, as Piketty repeatedly says, by processes of democratic deliberation. Let me offer a few observations. First, I think it is highly desirable to choose a rate of economic growth at least equal to the rate of population growth. Otherwise we are condemning our descendants to a lower general standard of living than we enjoy. Second, it is clearly possible to improve the well-being of the poorest members of society simply by diminishing the luxuries of the richest. That does not involve "eating our seed corn," which is to say diverting investment capital to consumption. It simply requires altering the mix of goods and services we purchase with our national income. I do not know how much could be accomplished by such a re-direction of consumption [that is an important factual question worth investigating], but it is clearly the place to start.
The morally and theoretically more difficult question is what rate of economic growth we should trade off against present consumption. Capitalism decides that question for us in an inhumane, unjust, and socially destructive way. "Accumulate! Accumulate! That is Moses and the prophets to the capitalist," as Marx rather colorfully puts it. No doubt wonders can be accomplished by restricting the present generation's consumption and pouring what is saved into investment. After all, a 10% growth rate doubles the size of the economy every seven years or a bit more. Even a 5% annual growth rate doubles the economy every fifteen years. In one and a half generations of self-sacrifice, a nation can leave to its descendants an economy that has expanded fourfold. Our grandchildren will honor us for the sacrifice, but we shall be dead and unable to bask in their praise. In our present political circumstances, when this question is even raised, it is answered by the rich deciding what degree of immiseration to inflict on the poor. I would much prefer that the question be answered by the poor. Needless to say, the structural arrangements needed to make such a decision and implement it do not even really exist in our society at the present time.
National cultures differ. My uninformed guess is that if one offered a choice between more leisure at the current standard of living or a higher standard of living and the same or even more time devoted to work, many people in America would opt for the higher standard of living, and many people in France would opt for more leisure.
Seth notes that the Swiss seem to be prepared to address this question directly, and that they have the political mechanisms to make a decision and implement it. We are so far from anything remotely like that state of affairs here in America that I do not even know how to think about the question concretely. I notice that our leading champion of liberty, Supreme Court Justice Antonin Scalia, yesterday unburdened himself of the opinion that young people ought to be ready to revolt if taxes get too high. There are clearly at least four votes on the High Court, and probably five, ready to place their aging bodies in the way should the electorate get it into its head to carry out serious redistribution.
Speaking more generally, I welcome the fuss being made about Thomas Piketty and his big book. Ideas make some difference in the world, albeit less difference than we philosophers would prefer. It does not trouble me that Piketty finds it necessary to diss Marx every chance he gets. If he succeeds in getting economists and others to face the fact of the concentration of capital and the return of the dominance of inherited wealth, more power to him. After the revolution [as we used to say when I was young], we can quietly unpack our copies of Capital and sing songs to the memory of old Karl.