So what’s up with this new and very hot-selling economics book, “Capital in the 21st Century” by Thomas Piketty? Published in France last year it’s become widely acclaimed and, imo, deservedly so. It’s about historic patterns regarding wealth distribution and growing associated hierarchical inequalities world-wide although the focus is primarily Western Europe, especially France.
Basically, the whole thing boils down to one major point – the rich will get richer simply because they are rich in the first place; over the long term because income from capital outpaces income from labor and the rate of population and economic growth tends in increase as well – forever – or until it bites itself in the ass. End of the book parts 1 and 2 (about half).
The second major point is related closely to the first; inherited wealth is now and ever will be, barring really radical change, more important than income from labor. Inequalities, now and forever in all likelihood, will continue to accumulate and outpace any equalizing factor or non-radical change. This is part 3.
In part 4 Piketty suggests a radical and admittedly unlikely change – a global tax on capital. Oh, the implications of that one! And although he admits it’s a utopian idea, there are possible baby steps which could be taken. With his usual penchant for details, Piketty explores the positive results of the idea. This is NOT what the book is worth buying for – (see the Economist review linked below). Piketty discounts his own idea all along the road.
In order to get to these conclusions and his brave utopian solution, the presentation and analyses of historical data is almost mind-numbing. This book may be selling like hotcakes, but I doubt it’s being read and digested to the same degree – great coffee table book for the next few months. (chuckle)
Piketty has analyzed where no economist has analyzed before. The data he uses wasn’t available for most earlier economic analysts, including Marx, but neither was the technology with which to crunch it. Piketty spent years and years, alone and in conjunction with other economists, hunting for and analyzing data, writing papers and articles, doing still more research, testing old ideas and formulating hypotheses for testing (and retesting) against other data, etc. This is an incredible work by an extraordinarily talented and very 21st century man. And it’s thorough, if not definitive – no econ book will ever be “definitive.” There is always new information to be viewed in other ways and Piketty calls on world banks and governments to provide much more.
The data comes from a wide variety of sources going back to the 18th century and the Industrial Revolution, the French Revolution for estate taxes, demographics, etc and adds to that pile as data became available, especially income taxes in various countries. But so much information can be over-loading as Piketty hammers home his point(s) in various ways and using every statistical manipulation and example he can think up – or it sometimes feels that way. This scholarship IS what makes the book worthwhile.
But! And this is where some of the fun is – at least for me, Piketty uses Flaubert, Balzac, Austen, Dickens, James and other novelists of the times where appropriate – inflation, or lack thereof, for instance, in the time of Jane Austen.
“Capital” is pretty straight economics, not quite of the textbook variety although there are a few equations and mathematical principles, lots of graphs, and exemplary source notes – there’s even an expanded table of contents (in addition to a normal index). Yup – it gets dry and repetitive in places, but not overbearingly so because there’s always some new tidbit involved. I’d say it’s generally aimed at interested lay-persons such as myself. (Professional economists will likely have been following Piketty’s work in journals for awhile.).
The hard cover went out of stock early on and the Kindle version is pricey but I recommend it if you are interested in a data-driven analysis of what’s happened ito wealth inequities, what’s happening now, and what looks like is going to happen – although all real bets are off because that gets a bit political, too.
There are a lot of reviews out there, virtually all of them glowing from liberal-leaning sources, but it feels to me like the conservatives are ignoring the book – either that or I just haven’t found the reviews.
Other reviews worth looking at:
Mother Jones – (fun)
The Economist (a teeny-tad critical)
New York Review of Books by Paul Krugman (detailed)
the Great Wiki (interesting)