Ramblings on Piketty
I’ve finally received my copy of Capital in the Twenty-First Century, Thomas Piketty’s magnum opus that has already risen to the status of a cult book for the political left. It is a good rule never to comment on a book you haven’t read cover to cover. I’m not going to stick with this rule, this time, for two reasons. First of all, I am not up to comment competently on the book, neither now nor when I’ll put it down: I simply lack both the statistical training and the economic knowledge that is needed to tackle the many arguments made by Piketty. I hope somebody writes a good review of the book. Paul Krugman wrote a long and enthusiastic one, but my ideal candidate would be Deirdre McCloskey. Second, I find Piketty’s book a most intriguing read (I’m reading the English translation, and I find it extremely well written: clear and evocative at a time), and every page prompts comments, reflections, and occasional outrage.
However, there are a couple of comments I’d like to share.
First, the author maintains that inequality is the central issue of the political debate. He writes:
(…) the distribution of wealth is too important an issue to be left to economists, sociologists, historians and philosophers. It is of interest to everyone, and that is a good thing. The concrete, physical reality of inequality is visible to the naked eye and naturally inspires sharp but contradictory political judgments. Peasant and noble, worker and factory owner, waiter and banker: each has his or her own unique vantage point and sees important aspects of how other people live and what relations of power and domination exist between social groups, and these observation shape each person’s judgment of what is and is not just.
Piketty maintains that “social science research on the distribution of wealth was for a long time based on a relatively limited set of firmly established facts together with a wide variety of purely theoretical speculations”, and he wants to fill in with some better grounded information. Fair enough, but is it really true that the distribution of wealth is the central problem we confront, as we enter the public debate? I mean, couldn’t it just be that some of us do not care about inequalities? I know somebody may reply that indeed, there are people that do not care about inequalities: the rich. But why should the drive towards a more equal distribution of wealth be the central question for all those interested in politics? Surely inequalities are often visible to “the naked eye”: but so are, for example, asymmetries in the distribution of not wealth, but power. We live in societies that are centered around stable power asymmetries: and yet we tend to make fun of those that would like to equalize the power of men over men, as most people think that anarchists rightly belong to the periphery of the learned debate.(*)
Piketty’s book is being praised for its scientific worth, but also because he argues that
Since the 1970s, income inequality has increased significantly in the rich countries, especially the United States, where the concentration of income on the first decade of the twenty-first century regained – indeed, slightly exceeded – the level attained in the second decade of the previous century.
Well, I am surely totally mistaken, but isn’t this a wonderful argument for not caring that much about inequalities per se (vis-à-vis, for example, inequalities as the result of perverse incentives, exploitation, legal privilege or political intrigues)? Piketty reminds his readers of the poverty and destitution experienced by the masses in the 19th century, painting a Dickensian picture of those times. Whatever we may think of bankers’ bonuses, is today’s situation, in the Western world, really comparable?
(*) Piketty asks “how would one arrange the division between capital and labor” in “an ideal society” (emphasis added). He maintains that “political economy ought to study scientifically, or, at any rate rationally, systematically, and methodically, the ideal role of the state in the economic and social organization of a country” (emphasis added). He seems to believe this to be a rather uncontroversial statement. Is it really?