‘Capital in the Twenty-First Century’, by Thomas Piketty – a round-up

A quick round-up of reactions to the book that almost everyone’s aware of.

Rather than looking it up on Amazon, start with Martin Wolf’s review in the FT which opens with:

French economist Thomas Piketty has written an extraordinarily important book. Open-minded readers will surely find themselves unable to ignore the evidence and arguments he has brought to bear.

Capital in the Twenty-First Century contains four remarkable achievements. First, in its scale and sweep it brings us back to the founders of political economy. Piketty himself sees economics “as a subdiscipline of the social sciences, alongside history, sociology, anthropology, and political science”. The result is a work of vast historical scope, grounded in exhaustive fact-based research, and suffused with literary references. It is both normative and political. Piketty rejects theorising ungrounded in data.

Quite.  Wolf goes on to address inequality:

One argument for inequality is that it is a spur to (or product of) innovation. The contrary evidence is clear: contemporary inequality and, above all, inherited wealth are unnecessary for this purpose. Another argument is that the product of just processes must be just. Yet even if the processes driving inequality were themselves just (which is doubtful), this is not the only principle of distributive justice. Another – to me more plausible – argument against Piketty’s is that inequality is less important in an economy that is now 20 times as productive as those of two centuries ago: even the poor enjoy goods and services unavailable to the richest a few decades ago.

For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality.  We should take notice.

All in all, the FT covers the book in a more rounded way than the Wall Street Journal’s parochial Daniel Shuchman (shock: fund manager defends attack on his way of life).

Nobel Prize-winning economist and New York Times columnist Paul Krugman’s review in the New York Review of Books is simply entitled “Why We’re in a New Gilded Age”.

For those looking for a simple, quick introduction to the book, I’d recommend this interview between Bill Moyers and Paul Krugman.  It is a pleasure to watch two people talking coherently without (I think) a single er or um.

The interview is also considerably less challenging than Delong’s analysis which I’m sure I’ll understand once I’ve actually read the book.