From UnHerd, March 10:
Thomas Piketty’s failed revolution Ten years on, society is governed for the wealthy
Think back to the political situation a decade ago, and one may have in mind a calmer, less dysfunctional time. Britain’s economy was growing, just about, and real wages were beginning to rise for the first time since the summer of 2007, even if they remained well below that peak. The steadying influence of Barack Obama in the White House and the Coalition government in Whitehall seems a world away from our current post-Brexit, post-Covid age of geopolitical upheaval and spiralling living costs. Only the looming referendum on Scottish independence seemed then to present any real challenge to the status quo, whether that be viewed as threat or opportunity. Economists speak of a “misery index”, which combines the inflation rate with the unemployment rate. By this measure, economies of the UK and the US were doing well in the spring of 2014. Interest rates remained where they had been since the banking crisis, stuck rigidly below 1%. This was a gift to mortgage-holders, and house prices reflected that.
It was into this context that a 700-page book about rentiers, wealth elites, inheritance, war, and taxation, over the previous two centuries, became an extraordinary publishing sensation. Few had heard of Thomas Piketty when Capital in the Twenty-First Century appeared, but his publisher, Harvard University Press, would soon be struggling (and failing) to keep up with demand for the book. Hundreds of thousands of copies were shifted over the summer of 2014, while A-boards appeared outside the luckier independent bookshops in hipster neighbourhoods around the world declaring “PIKETTY IN STOCK!”. Sales figures topped two million within a couple of years.
Inevitably, much of the media commentary descended into banality and crass comparison. Piketty himself was instantly declared a “rock star economist”, and compared with Karl Marx, presumably because he had published a doorstopper with the word “capital” in the title. Those who’d bothered to read (at least some of) Capital in the Twenty-First Century were surprised and impressed to discover, amid lots of graphs, references to Balzac and Jane Austen in a book notionally of economics. This was clearly more intriguing than the “economics 101” that was taught at school and university.
From the perspective of the trade publishing market, the book also had the merit of being beautifully simple to understand. Capital in the Twenty-first Century is ultimately a piece of historical statistical description, containing no real theory or mathematics to speak of. Its famous formula “R>G”, which even came to adorn t-shirts, refers to the long-standing tendency (Piketty has been adamant it’s not a “law”) of returns on capital being higher than growth in income from production. As anyone who has owned an asset (such as a house) might have noticed, its value tends to rise faster than one’s pay. Scale that up to an economy as a whole, and you have a situation where existing stocks of wealth are growing faster than GDP.
Piketty’s thesis clearly chimed with narratives about inequality that had been developing on the Left since the 2008 financial crisis. The book’s focus upon the rising incomes and wealth of the top “1%” echoed the language of the Occupy movement, language which had itself been borrowed from the study of “top incomes” that Piketty had helped pioneer some years earlier. One of Britain’s most eye-catching political reactions to the banking crisis was UK Uncut, which was founded in 2010 to campaign against corporate tax avoidance, at a time when brutal cuts to benefits, higher education and local government were being unveiled. Fred “the shred” Goodwin, the CEO of RBS that had been bailed out by the British taxpayer and who had then resigned with a knighthood and a £700,000 pension, became a symbol of something morally rotten in capitalism. There was a widespread sense of an economy that was rigged in favour of the rich, which Capital in the Twenty-first Century did much to empirically substantiate.
But the extraordinary success of the book cannot be wholly explained in terms of media hype or the immediate fall-out from 2008. No doubt, the sentiments expressed by Occupy and UK Uncut remained potent ones, contributing some years later to the unexpected rise of “Left populists” such as Bernie Sanders and Jeremy Corbyn. Piketty has expressed some political sympathy with those movements, but if one were looking for a rousing, polemical denunciation of neoliberal capitalism around which to mobilise, one probably wouldn’t turn to Capital in the Twenty-First Century. Its resonance requires some deeper explanation.
The scientific study of “top incomes” originated in the early 2000s, led by the late British economist, Tony Atkinson, who struck up a collaboration with Piketty, based in Paris, and Emmanuel Saez in Berkeley. This yielded a series of academic articles and edited volumes, which passed under the radar of general readers or the media, back when nobody had ever spoken of “the 1%”. One distinguishing feature of this programme was a willingness to use novel sources of empirical data, namely tax records. Another was the study of very long-term historical trends, over not just decades but centuries. “The Top Incomes Database”, which first presented the kinds of graphs with which Capital in the Twenty-First Century is littered, was launched at a conference hosted by Atkinson and Piketty in Paris in 2011....
....MUCH MORE
If interested here is Le blog de Thomas Piketty:
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