Longtime readers of this blog will call that eight years ago I wrote an extended review of Thomas Picketty’s book Capital in the Twenty-firstt Century, the review eventually running some 9000 words. I considered the book important and I learned a great deal from it. Drawing on a vast amount of statistical data assembled by himself and his colleague Emmanuel Saez, Piketty advanced two important and troubling theses about the structure and development of capitalism. The first was that the dramatic decline in economic inequality in the three decades or so after the Second World War (the period referred to by the French as les trentes glorieuses) was not the new normal of mature capitalism but a temporary dip, caused by the depression and the war, an anomaly already being replaced by the onward march of inequality. The second was that because of the relationship between the rate of growth and the profit rate in capitalism (i.e. r>g), hereditary wealth inequality – what Piketty called patrimonial capitalism – would only get worse as time went on. Despite his pro forma dismissal of Karl Marx, Piketty’s analysis struck me as an important and valuable contribution to a Marxist critique of mature capitalism.
Well, maybe it is something in the drinking water, I don’t
know, but Piketty seems to have gone all warm and fuzzy about capitalism,
particularly American capitalism. In a two-part interview excerpted in the
magazine section of yesterday’s New York Times, he more or less takes it all
back, to the evident surprise of the interviewer.
The last question of the two page interview has the
interviewer, David Marchese, asking “you know, I do find it hard to wrap my
head around the idea that after 40 years of worsening inequality you – the
inequality guy - Mr. r>g – are publishing a book saying we’re on the right
track historically. It’s sort of cold comfort to know we’re more equal today
than we were 100 or 200 years ago. Really give me a reason to feel as
optimistic as you do.” I will not quote Piketty’s answer. It sounds like a
Biden flack trying to persuade a Bernie supporter to stay on board until the
next election.
Sigh. Where is Herbert Marcuse when you need him?
31 comments:
The point about Piketty (the Capital in the 21st Century book, not the interview) and Marx is interesting. Marx thought that the distribution of income and wealth couldn't be changed unless capitalism were abolished (see e.g. Critique of the Gotha Program). Especially in the decades immediately after WW2, it looked like this position, at least as Marx categorically stated it, was wrong, since capitalist welfare states did redistribute income to some extent. Then when inequality started rising sharply again around the late '70s, it looked like Marx might be right after all. In that sense, Piketty's Capital in the 21st Century could be seen, as you say, as being sort of in the spirit of Marx, despite what you refer to as Piketty's pro forma dismissal of Marx.
If Marx had articulated his position in Critique of the Gotha Program in a more nuanced way -- i.e., if he had said that there cannot be a permanent, drastic change in the distribution of income or wealth without a change in the mode of production -- it would have held up pretty well, at least so far. (In the categorical form in which he stated the position in Gotha Program it's probably put too strongly, though.)
You're either an insider or an outsider.
Orwell says somewhere that he systematically refused invitations to literary cocktails and such gatherings because he knew that he'd end up liking the people he met there, people from the elite, educated, courteous and cosmopolitan and that liking them would weaken his critical eye.
Picketty accepted all the invitations to cocktail parties, TV panel shows, business school forums, etc., and he liked the people there. They were well read, interested in what he had to say, not parochial (to use your word from yesterday); the women were elegant, witty and attractive and little by little, he began to see the world from their of point of view.
What's more, we had Trump in the U.S., Le Pen just passed into the run-off in France and so the Biden's and the Macron's didn't look so bad in comparison.
This Piketty quote is likely the case and not encouraging:
"To me, maybe the best comparison between the U.S. is not so much with Russia today but with Europe and the Belle Époque before 1914..."
And then we stir in the 1930s...
Piketty's long view take reminded me of this observation by Keynes:
"In the long run we are all dead. Economists set themselves too easy, too useless a task if, in tempestuous seasons, they can only tell us that when the storm is long past the ocean is flat again."
Just found this:
https://twitter.com/expatua/status/1513199601477689348/photo/1
No comment needed beyond reminding folks of this 2015 Animal Farm like photo:
https://www.motherjones.com/wp-content/uploads/russia_dinner2000.jpg?w=990
I for one don't see the problem that someone had dinner with Putin.
The Chilean poet, Nicanor Parra, one of my favorite poets, had tea with Pat Nixon in the White House and the Chilean left has never forgiven him for that. I hope that he enjoyed the tea.
I might agree if one of the parties hadn't helped elect the Russian asset Trump a year later and the other was a soon to be felon for lying to the FBI and other criming.
Anyway the two aren't remotely similar. I believe the tea was well before the 1973 coup and given that Pat wasn't involved in policy (or much of anything), a bit remote. However, by 2015 Putin had been involved in war crimes in Chechnya, Georgia. and Ukraine as well as the poisoning of opponents. Who he was was obvious.
aaall,
Sorry, but I don't believe that Jill Stein "helped elect the Russian asset Trump".
First of all, it's not at all clear that Trump was a knowing Russian asset.
Second, I don't know the circumstances that led Jill Stein to dine with Putin. She may have just gone there out of curiosity. I suppose that I myself might accept an invitation from Putin from that motive, just I might accept one from Trump.
The Israeli historian Yuval Harari writes in his book 21 Lessons for the 21st Century how he was invited by Netanyahu to dine after his first bestseller, Sapiens and how all his
progressive friends urged him not to accept and how he went anyway, out of curiosity and how he was just bored by the experience.
I know people from the Green Party and people who voted for Stein in 2016 and they are sincere, authentic radicals and I have no reason not to believe that Stein is one too.
Moving a little bit away from the Trump fixation, it might be interesting to contemplate the current electoral situation in France--Piketty, after all, is French. Macron? Le Pen? Stay at home? I'll admit I'd be torn: the lesser evil is all too likely to move yet further to the right, no matter what he says to try to get re-elected.
https://www.lemonde.fr/en/politics/article/2022/04/10/thomas-piketty-we-will-not-see-the-peaceful-return-of-a-reassuring-left-right-divide_5980204_5.html
I'll likely face the same predicament in the next British General Election, since the Starmer Blairist dominated Labour Party is almost as despicable as the Tory Party; and were I in Scotland, there's no real challenge to the abominable SNP. Though maybe I'd be fortunate to live in a constituency with some candidate I"d find accepatable.
I agree, by the way, with s. wallerstein. We should stop all this Jill Stein nonsense, just as we shoul long ago have stopped all the Ralph Nader nonsense. rm
Tyler Cowen pushes back. A short article here:
Why I am not persuaded by Thomas Piketty’s argument
Overall, the main argument is based on two (false) claims. First, that capital returns will be high and non-diminishing, relative to other factors, and sufficiently certain to support the r > g story as a dominant account of economic history looking forward. Second, that this can happen without significant increases in real wages.
Addendum: Still, it is a very important book and you should read and study it! But I’m not convinced by the main arguments, and the positive reviews I have read worsen rather than alleviate my anxieties. I’ll cover the policy and politics of this book in a separate post. Do read my review itself, which has much more than what is in this blog post.
A longer article here:
Capital Punishment - Why a Global Tax on Wealth Won’t End Inequality
The simple fact is that large wealth taxes do not mesh well with the norms and practices required by a successful and prosperous capitalist democracy. It is hard to find well-functioning societies based on anything other than strong legal, political, and institutional respect and support for their most successful citizens. Therein lies the most fundamental problem with Piketty’s policy proposals: the best parts of his book argue that, left unchecked, capital and capitalists inevitably accrue too much power—and yet Piketty seems to believe that governments and politicians are somehow exempt from the same dynamic.
The second link I posted above is a site with a leaky paywall, which means they want smart people to break through and drive traffic to their site by quoting their articles. Since you're all smart here, here's the link to the Firefox add-on again:
Bypass Paywalls Clean
Anonymous,
It is precisely because you think it is Jill Stein and Ralph Nader nonsense that you will continue to believe that voting for the lesser of two evils is unprincipled and will continue to aid and abet electing the more evil of two evils, and then complain about the result.
I didn't say it was unprincipled, Marc. I was simply indicating that when it comes to choosing between two evils some of us are a bit more prone to nausea than others. I sat this simply to identify differences in political personality, not to disparage those who are less squeamish.
I may also have suggested--and if I didn't I would now add--that it's often quite easy to make a short-term choice between two evils, but in looking to the longer term the consequences of the lesser evil being elected might seem just as horrific, though likely in different ways, as would result from the election of the greater evil. And, yes, I know in the long run we're all dead and that politics does often impose difficult choices.
After all, there remains the problem of how one goes about elevating a much lesser evil alternative to both of them. That's why, for example some people in Britain, on the left, are directing their energies towards proportional representation in place of first past the post. (Though I'd have to warn them that Scotland's proportional system has, contrary to all expectations, turned the country from being a one-party Labour dominated system into being a one-party SNP dominated system. It's all very difficult.)
As to the nonsense, just how long are some people going to go on blaming the failures of the Democratic Party on people who told everyone quite clearly that they were opposed to the Democrats for the policies they had pursued and were likely to go on pursuing? Shouldn't Democrats have been devoting their energies to trying to make their party better? And if they are not so inclined, aren't they just insisting that those who disagree with them politically, some in very fundamental ways, just repudiate their own political goals and values? I suppose should Macron lose to Le Pen, the blame will be heaped on the "far left" no matter that commentator after commentator has shown how Macron has alienated so many who grudgingly voted for him last time. And in Britain, should Starmer's Labour lose the next General Election, the blame will be heaped on Corbyn again no matter that Starmer has been going out of his way to purge the left and disrespect British Islamists who in the past formed a sizeable bloc of the Labour vote.Yet more nonsense. rm
asked just once out of curiosity:
does anyone know the wonderful film: "the big short" by Adam McCay, with Ryan Gosling, Steve Carall and Christian Bale?
For me a look into the engine room of so-called capitalism in the 21st century, as well as the film "Margin Call" by J.C. Chandor with Jeremy Irons, Kevin Spacey and Paul Bettany.
rm,
Do you mean British Muslims? "Islamists" connotes something, at least to me, that you may not intend.
An interesting article on Piketty by Don Boudreaux popped up today in my RRS reader. The article in not long, so I'll just post the whole thing. Basically, Piketty ignores human capital which destroys his argument.
Phillip Magness and my colleague Vincent Geloso nicely identify a critical error in Thomas Piketty’s work that is purported to show that income inequality in the U.S. was significantly reduced by the New Deal-era imposition of very high marginal income-tax rates (“Inequality and the Piketty Accounting Error,” April 12).
Piketty, whose recent book is titled Time for Socialism, often slices and dices data in ways that support his socialist agenda. An example of such motivated empirical work is the failure, in his 2014 Capital in the Twenty-First Century, to count in a nation’s capital stock its citizens’ human capital, which is the creativity, knowledge, and skills that reside between workers’ ears. Almost all of this capital is owned and controlled by the workers who possess it rather than by employers and financiers.
Piketty’s exclusion of human capital from what he does classify and measure as capital is egregious. Since the beginning of modernity ordinary people have increasingly raised their incomes by acquiring more human capital, largely through education and job training. And so by not counting as part of the capital stock this important source of income for most people, Piketty conveys the misleading impression that large numbers of ordinary men and women are bereft of capital when, in fact, they are not.
As noted by Deirdre McCloskey in her review of Piketty’s 2014 book,
The only reason in the book to exclude human capital from capital appears to be to force the conclusion Piketty wants to achieve. One of the headings in Chapter 7 declares that “capital [is] always more unequally distributed than labor.” No it isn’t. If human capital is included – the ordinary factory worker’s literacy, the nurse’s educated skill, the professional manager’s command of complex systems, the economist’s understanding of supply responses – the workers themselves, in the correct accounting, own most of the nation’s capital – and Piketty’s drama falls to the ground.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
source: On Thomas Piketty and Capital
The word "Islamist" refers to the people who follow the Wahhabi/Salafi brand of Islam, as practiced in Saudi Arabia. In other words, these ass clowns:
Nicki Minaj can twerk in Bikini while I wear ‘Abaya’ to watch her
Nicki Minaj is going to be performing in Saudi Arabia and it is creating all types of controversies. Saudi women are enraged at event organizers for suggesting that they can only attend Nicki Minaj's concert in Saudi if they wear an abaya. Women have been calling out organizers for their dual standards.
Organizers of the Jeddah Season cultural festival, a project overseen by a Saudi government agency, announced on Tuesday that Minaj would perform at the event, scheduled for July 18. The musician’s stage act, which typically features provocative dancing and songs use vulgar language, has prompted cries of hypocrisy, aimed at a government that imposes austere restrictions on women.
Nicki cancelled her appearance.
Saudi Arabia is famous for inciting attacks against Jews. In other news, Saudi Arabia and Israel are now BFFs. This is because in the Middle East, the enemy of my enemy is my friend.
Iran...
Further to my comment about Piketty and human capital,
Economists have been trying to measure the importance of human capital in recent years. One estimate (see chart) pegs the total stock of human capital in the United States at over $700 trillion. That dwarfs the physical capital stock of $45 trillion.
From an article by Tim Worstall:
The Federal Reserve has issued its usual report upon changes in US household wealth, showing a small rise of $2.3T to a total of $94.8 trillion. As long as we understand what this number is it's fine, just fine, it's the measure of net financial assets held by US households. But if we want to try to use it as a measure of the United States it's wrong. And if we want to use it as the denominator when trying to measure wealth inequality, as Mssrs. Piketty, Saez and Zucman do, among others, then it's entirely, wholly, wrong. We should instead at that point look to other measures, like perhaps the total asset value of the country, or to human capital.
The reason it is important to understand the differences is this. Here is a picture of some of the poorest people in America:
(picture here of some newly minted Harvard grads)
Brand new, newly minted, Harvard graduates are some of the poorest people in America. At least some of them are. And this is why we've got to distinguish between our different forms of wealth.
source: US Household Wealth Ticks Up $2.3 Trillion to $94.8T - But This Is Wrong, Entirely Wrong
"As to the nonsense, just how long are some people going to go on blaming the failures of the Democratic Party on people who told everyone quite clearly that they were opposed to the Democrats for the policies they had pursued and were likely to go on pursuing?"
For as long as they fail to recognize that in a nation that is structurally a two party state in which one of the parties is salvageable and the other intent on establishing a fascist one party state, the proper course of action is moving the salvageable one to the left to the extent possible as opposed to ensuring the victory of the fascist party by engaging in vanity politics. This actually would involve some continuous work as opposed to feel-good posturing.
Anon, the reason to recall and analyze past errors is so that we don't repeat them which is something some on the left seem to never get.
s.w., I've also known folks in the GP. Most are nice, idealistic, and, when it comes to actually accomplishing something politically, are as dumb as a box of rocks. As for the "radical" part: We now know that downward mobility leads folks more to the right then the left. "Heightening the contradictions" in a late neo-liberal polity will likely lead to nationalism, reaction, and fascism.
You seem nicer then moi and I usually channel my inner Eeyore because experience. When a loser failson gets a two billion "investment" from a Middle Eastern strongman I feel comfortable drawing a conclusion that seems obvious. When I see a far right organization suddenly being able to spend way out of line from previous elections and when I see two folks who will be important in an election a year away breaking bread with the enemy, I see what's going on. Your mileage varies.
BTW, one of the things that puzzled me about the interview is that he ignored the leveling that took place from the early 1930s on was due to political action (FDR, Eleanor, Perkins, etc. and a solid Dem. majority) not some invisible hand. Reaction began clawing back in 1947 when voters foolishly put the Republicans in the majority in the congress.
aaall,
I agree that the U.S. has a two party system and in certain elections, such as one between Trump and any normal mainstream Democrat, the Green Party might take a break from presidential politics and concentrate on electing city council members.
My argument with you above is whether Jill Stein's dinner with Putin means more than a well meaning effort on her part to show Putin that many people in the U.S. want peace between Russia and the U.S.
My sister lives in New York State, is an environmental activist and has a friend who met several times with then Iranian president Mohammed Ahmadineyah. I believe he even traveled to Iran at his own expense to talk to the great man and to convince him that Americans want peace, as if the problems between the two nations were merely a failure to communicate.
Even a "nice" person such as myself isn't so innocent, but some people are and they often gravitate to the Green Party.
Perhaps being not a "nice" person yourself (your own self-characterization), you fail to notice how nice and innocent some people, surely Jill Stein, are.
Being fair and open-minded is not an excuse for stupidity. One should not be so open-minded that one's brains fall out. The ultimate consequence of which is causing harm to the rest of us.
I stand corrected. I did in fact mean British Muslims. Please put it down to a senior language moment. I still tand by the rest of what I wrote, appeals to the current awful US structural-political realities notwithstanding. rm
They're not stupid, Marc, they're innocent. It's not the same thing.
However, I'll make explicit what I said above: if the Republicans run Trump or a Trump-like candidate for president in 2024, the Greens should not run a presidential candidate and should concentrate on local politics that year.
Innocent? Innocent of what? How old are they? Are they prepubescent? Have they not eyes and ears to see and hear the reality around them? Their supposed “innocence” does not excuse their foolishness given what is at stake. When I was a child, I thought and spoke as a child. But when I became an adult, I put aside childish things.
s.w., If a person is able to make it through law school or organic chemistry and med school as well as the Bar and med licensing , they should be able to figure out that campaigning in a swing state in a close election is a bad idea likely to have bad consequences, esp. after 2000. No one in politics at any level is innocent (some are nice, though).
I see you ignore my points on timing - who, when is significant. The idea that talking peace with any effect with the butcher of Chechnya and Georgia (you know, the guy who poisons his opponents) is a good idea isn't innocent, it's delusional (unless, of course, gifts are exchanged - wink, wink).
Re: Running for city council. If one wants to move the Democratic Party to the left, the place to start is at local races and doing boring things like attending meetings and campaigning. Any third party activity in the United States is performative and likely destructive.
The nation is on the fascist brink because conservatives worked on local races and took over local Republican Party organs (fraudulently if necessary - personal experience).
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