The French Sensation

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The hottest book everybody is talking about, that no one has read and no can get their hands on, is a giant, data-packed tome on income inequality covering three hundred years of history by the French economist Thomas Piketty. Is there a reason he’s getting the rock star treatment? Is it the symptoms that resonate (our drift into oligarchy), or is it the cure (a progressive tax on wealth)?

 

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A rock star?

For a French economist, sure: Capital in the 21st Century is expected to sell 200,000 copies in the first month. Both The New Yorker and New York have covered the book’s success and Piketty’s whirlwind tour of the States, which is surprising everyone. It’s being praised as a ‘watershed’ entry in economic thought by Paul Krugman, blogger Tyler Cowen, and Sen. Elizabeth Warren, whose own book, A Fighting Chance, was for a while runner-up to Piketty on Amazon’s bestseller list.

When asked about the book’s appeal, Warren told a crowd in Cambridge: “He’s got good historical data, and boy, what it shows is trickle down doesn’t work. Never did, doesn’t work… I just saved you 1,100 pages of reading.” The book shows more and less than that, but Warren should understand the book’s appeal. Piketty’s earlier research into income distribution helped provide the Occupy Wall Street protests with its rhetoric of 99% vs. 1%. He’s long been setting the conversation on the structure and the consequences of inequality; now he has announced himself. (Maybe if half the people who bought the book read it, there could be “Piketty clubs” the way there were once “Bellamy clubs”. Or maybe Capital could be the next Brief History of Time — millions of unread copies worldwide.)

A new Tocqueville?

Maybe. It seems strange that, months after our president abandoned the rhetoric of inequality, that Piketty, who left MIT years ago, has such a great resonance. In fact much of his book is about Britain and France, which have the deepest stores of tax data going back to the 18th century. But he does make insights, in the style of Tocqueville, into economic life today — for example, “wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities.” These aren’t necessarily unfamiliar truths, but they mean more coming from non-pundits. Arthur Goldhammer, Harvard professor and translator to both Tocqueville and Piketty, draws the comparison in The Daily Beast:

Because Tocqueville was such an assiduous researcher, who returned from his travels in the U.S. with trunkloads of documents filled with statistical data of all kinds, I have no doubt he would have found the data compiled by Thomas Piketty fascinating… He was not wedded to his preconceptions about American society; he came here with his eyes open and modified his opinions as he gathered information and talked with experts who knew more than he did about how the American political system and economy worked.

 

a Marxist?

Not really, though he’s been accused of that and worse. In the Wall Street Journal, Daniel Schuchman reads Piketty as a “bizarre ideological screed” in support of authoritarian, Communist government. Schuchman has supporters among the Amazon reviewers and in the New York Post. But  readers of the book will note that Piketty criticizes Marx for his “anecdotal” approach to economic data and disagrees with features of his picture of capitalism from the very beginning. In an uncharacteristically political interview with the Guardian, Piketty still hesitated to argue for outright socialism.  Piketty’s readers, and especially his non-readers on the American right, are conflating Marxist economics with critical thinking about the current capitalist economy, and that’s too bad.

But, as Matthew Yglesias writes a long, helpful ‘explainer’ at VoxCapital isn’t mainstream American economics, either. It bears its Marx-ish title for a reason: Piketty is worried about capitalism. From the book’s introduction, the book’s central claim is made in relation to Marx’s economic theory:

Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modified the deep structures of capital and inequality— or in any case not as much as one might have imagined in the optimistic decades following World War II.

 

a prophet of doom?

 Not according to Piketty himself, who sees himself as (almost) an optimist, according to an interview with Tim Fernholtz at Quartz. Three-quarters of the way into the book, Piketty launches into his solution to the problem of inequality: a progressive tax, coordinated globally, on wealth. He believes that a pro-tax, populist movement like the one that emerged in America in the early twentieth century could materialize and change the political realities. If not, there are problems, however: in the Guardian interview, Piketty argues that the other two roads out of the crisis are Russian-style oligarchy, which he considers “barbaric”, and inflation — a tax on the poor.

 

a savior?

As much as economists left and right have praised the book, there is far broader disagreement about Piketty’s proposed taxes. Tyler Cowen, economist behind Marginal Revolution, concluded in Foreign Affairs 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.”

And Paul Krugman, an ardent believer in Piketty and his book, still argued in the New York Review of Books that the prospects of such a tax aren’t good, when the Republican Party, on their way to more political success, “already emphasizes and celebrates capital rather than labor” even though we’re decades behind Europe’s regression into the patrimonial capitalism like that of Balzac and Austen.

Pick your Piketty, and tell us why in a voicemail or comment!

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