'Truth spoken without moderation reverses itself'
This blog is a source for intellectual exploration. It includes a list of alternative resources and a source of free books. The placement of an article does not imply that I agree with it, merely that I found it thought-provoking. There are also poems and book reviews. Texts written by me are labelled. Readers are free to re-post anything they like.
Monday, April 21, 2014
Book review: Taking On Adam Smith (and Karl Marx)
Capital in the Twenty-First Century by Thomas Piketty
By debunking the idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to democratic governments to deal with an increasing gap between the rich and the poor
PARIS — Thomas
Piketty turned 18 in 1989, when the Berlin Wall fell, so he was
spared the tortured, decades-long French intellectual debate about the virtues
and vices of communism. Even more telling, he remembers, was a trip he took
with a close friend to Romania
in early 1990, after the collapse of the Soviet empire.
“This sort of vaccinated me for life against lazy,
anticapitalist rhetoric, because when you see these empty shops, you see these
people queuing for nothing in the street,” he said, “it became clear to me that
we need private property and market institutions, not just for economic efficiency
but for personal freedom.”
But his disenchantment with communism doesn’t mean that Mr.
Piketty has turned his back on the intellectual heritage of Karl Marx, who
sought to explain the “iron laws” of capitalism. Like Marx, he is fiercely
critical of the economic and social inequalities that untrammeled capitalism
produces — and, he concludes, will continue to worsen. “I belong to a
generation that never had any temptation with the Communist Party; I was too
young for that,” Mr. Piketty said, in a long interview in his small, airless
office here at the Paris School of Economics. “So it’s easier in a way to
reopen these big issues about capitalism and inequality with a fresh eye,
because I was too young for that fight. I don’t have to justify myself as being
pro-communist or pro-capitalist.”
In his new book “Capital in the Twenty-First Century”
(Harvard University Press), Mr. Piketty, 42, has written a blockbuster, at
least in the world of economics. His book punctures earlier assumptions about
the benevolence of advanced capitalism and forecasts sharply increasing
inequality of wealth in industrialized countries, with deep and deleterious
impact on democratic values of justice and fairness.
Branko Milanovic, a former economist at the World Bank, called
it “one of the watershed books in economic thinking.” Paul Krugman, winner of
the Nobel in economic science and a columnist for The New York Times, wrote
that it “will be the most important economics book of the year — and maybe of
the decade.” Remarkably for a book on such a weighty topic, it has already
entered The New York Times’s best-seller list.
“Capital in the Twenty-First Century,” with its title
echoing Marx’s “Das Kapital,” is meant to be a return to the kind of economic
history, of political economy, written by predecessors like Marx and Adam
Smith. It is nothing less than a broad effort to understand Western societies
and the economic rules that underpin them. And in the process, by debunking the
idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to
democratic governments to deal with an increasing gap between the rich and the
poor — the very theme of inequality that recently moved both Pope Francis and
President Obama to warn of its consequences.
Mr. Piketty — pronounced pee-ket-ee — grew up in a political
home, with left-wing parents who were part of the 1968 demonstrations that
turned traditional France
upside down. Later, they went off to the Aude, deep in southern France,
to raise goats. His parents are not a topic he wants to discuss. More relevant
and important, he said, are his generation’s “founding experiences”: the
collapse of Communism, the economic degradation of Eastern Europe
and the first Gulf War, in 1991.
Those events motivated him to try to understand a world
where economic ideas had such bad consequences. As for the Gulf War, it showed
him that “governments can do a lot in terms of redistribution of wealth when
they want.” The rapid intervention to force Saddam Hussein to unhand Kuwait
and its oil was a remarkable show of concerted political will, Mr. Piketty
said. “If we are able to send one million troops to Kuwait
in a few months to return the oil, presumably we can do something about tax
havens.”.. read more:
The boldness of Piketty’s thesis is belied by its apparent simplicity: Inequality is intrinsic to capitalism, and, if not forcefully combatted, is likely to increase—to levels that threaten our democracy and fail to sustain economic growth. Karl Marx predicted much worse—runaway inequality leading ultimately to social collapse—and Piketty takes care to distinguish his view from Marx’s apocalypse. Even so, his thesis runs directly counter to mainstream economic theory, which holds that inequality should eventually decline, a process known as "convergence."
One ironical comment from the thread beneath the above link: So, the rich get richer and the poor get poorer. Such insight is probably worth a Nobel Prize...