Rothwell Si, Piketty No!
I haven’t read the famous economist Thomas Piketty’s new book, but I hope to have time to do so in the future. My reader will also forgive, I hope, the “cultural appropriation” of a Cuban Revolution slogan in the title of this post. For now, I have read a review of Piketty’s book in The Economist (“A Bestselling Economist Sets Out the Case for Socialism,” March 5, 2020). From what I gather there, the book naively defends the sort of hard socialism that we would instead expect to find in the dreams of some befuddled French sociologist.
The Economist quotes the incipit of the book, where Piketty pontifies:
Every human society must justify its inequalities.
I checked on Amazon that it is a faithful translation of the French original:
Chaque société humaine doit justifier ses inégalités.
Especially for an economist, the declaration raises an immediate question: How does society do that? Is it the top 1% who must provide a justification through its collective mouth? Or the bottom 1% through its different mouth? Or some group of rationally ignorant voters? Or everybody through some mythical “social welfare function”? Or is it some philosopher-king—like Piketty, to take an example at random—who will interpret the general will?
The Economist’s reviewer explains another thought of Piketty (the quotes inside the quote are from the latter):
The notion that people have “an inviolable natural right [to] strictly private property” cannot withstand analysis, since the “accumulation of wealth is always the fruit of a social process, which depends, among other things, on public infrastructures … the social division of labour, and the knowledge accumulated by humanity over centuries.”
Could we say, in a parallel fashion, that the notion that individuals would have the right to marry whom they want cannot withstand analysis because dating and marrying are always the fruit of a social process which depends, among other things, on public roads (except when the two lovers live in the same apartment block) and on the knowledge of sex accumulated by humanity over centuries? We can’t say, except metaphorically, that “society” choses that, but we can certainly say that, until 1967 (Loving v. Virginia), certain American state governments, influenced by some majority or mob or faction, did negate the right of individuals to marry outside their race. So, Mr. Piketty, was that good?
The Economist criticizes the book for a number of different reasons, including:
After all, socialism carries its own risks and distortions. Reductions in material inequality might be offset by increases in other sorts—in access to public services, say, or in free expression and political power. Businesses run by “the workers” might be captured by trade unions. A more powerful state might become more self-serving. Would such societies be truly just and their inhabitants truly free? In the end, Marx came to worry about this complication. Not Mr Piketty.
Let’s get serious. An interesting book about equality and inequality is Jonathan Rothwell’s A Republic of Equals: A Manifesto for a Just Society (Princeton University Press, 2019). I review it in the just-out Spring issue of Regulation. (Regulation is not gated.) In line with Rothwell’s thesis, my review is titled “The One-Percenter State.” As I explain, Rothwell argues that (the quotes inside the quote are from Rothwell)
“the extreme inequality that exists in the contemporary United States and other countries is not the result of well-functioning markets,” but, on the contrary of “political inequality and corrupted markets.” In other words, “well-functioning markets—characterized by mutually beneficial exchange among political equals—lead to egalitarian outcomes with respect to income and well-being.”
The book contains many surprises documented with scholarly research and statistical analyses. The fact that Rothwell is principal economist at Gallup and senior fellow at the Brookings Institution makes his approach and conclusions even more valuable—even if I don’t always agree with him. I am not sure he will succeed selling the value of free markets to the left or, for that matter, to the right, but his book is well worth reading if one wants to think seriously about equality and inequality.
Mar 15 2020 at 7:23am
1. Extreme inequality we have.
2. Political inequality we have.
3. “Corrupted” markets we have.
# 2 and # 3 are so multidimensional that I do not see how they can be useful explanations of #1.
I do not doubt that one could write a book about scores of specific ways in which making markets less “corrupt” and more equal political access could reduce inequality in incomes and wealth. Is that what the statement means?
Mar 16 2020 at 8:25am
You express skepticism that a study of political inequality and corrupted markets can provide useful explanations for extreme inequality because they are multidimensional.
I agree that political inequality and markets are multidimensional, and I would say highly complex, but I do not believe they are beyond useful analysis.
One of the core arguments of my book, which Pierre nicely summarized in his longer review of my book, is that political equality entails equal access to markets. I discuss the point generally, but much of the discussion describes how access to markets has been controlled through political power in the cases of housing and professional services (especially medical, legal, and financial services). I focus on those industries because the largest number of top 1% income earners work in those fields.
Another aspect of political inequality is the unequal provision of public services. I describe how education and the enforcement of criminal law have been unevenly applied across racial groups in the United States.
Taken together, inequality in access to important services and to markets has given certain groups market advantages that increase the probability that they are rich (or in the top 1%) and transferred income from everyone else, who must pay exorbitant fees for housing, healthcare, legal services, and leveraged financial services–or are denied opportunities to generate the skills that markets reward.
I do not argue that these political advantages–and those applicable to other industries–explain the entire income distribution, but I do argue that they push the distribution from moderate levels of inequality that markets would other generate to the extreme levels found both in the United States and many non-democratic authoritarian states. I provide considerable evidence on that point.
Mar 15 2020 at 8:46am
Just on the whole property rights vs marriage rights part…
Pierre, you claimed in a comment to me the other week that you weren’t making natural rights arguments, but here we are! You ask if bans on interracial marriage were good, and the answer is no, they weren’t good, but they were real. Marriage rights had to establish themselves, through a long process of political debate and iteration. Property rights have an easier time of it, because those with property often have political power, but they still have to prove their value, just like every other right.
If you’re right that very strong property rights are conducive to human thriving (and I think you are), then you’re right empirically, not a priori.
Mar 15 2020 at 12:14pm
I’m sorry, where are you seeing the natural rights argument? I see no such thing in this post. I see analogies, but no natural rights framing.
Mar 15 2020 at 9:54pm
Indeed, @Jon (and @Phil H and Mark Z). That’s why I dropped the “natural” before “right” when criticizing Piketty’s argument. I think that the criterion of consent instead of “natural rights” is more useful and, to use an expression of de Jasay, taxes our moral credibility less.
Mar 15 2020 at 3:49pm
As with Jon, I don’t see where you’re getting the natural rights from. Piketty argues that since the consequences of or ability to exercise economic rights depends on social processes, those inviolate (they’re already nowhere near inviolate as he pretends, but anyways) private rights are not justifiable. If the non-dependence on ‘social processes’ justifies public intrusion on decision-making, then this applies to other putative rights just as it does to putative economic rights. In the course of meeting and courting your wife, did you use public roads? Well then the public (really the state, self-annointed vicar of the public) gets the final say in whether you can marry; and if it thinks it would be better for society for you to marry someone else, it should be able to make you do so.
It is possible that you or some people do take a strictly utilitarian approach to rights, but I’m certain almost every socialist in the US does not. I doubt many American socialists would consider it just for the state to take into account the social utility of, say, reproductive choices, in deciding whether certain women or couples should or shouldn’t be forced or prohibited from having children.
Mar 15 2020 at 4:06pm
Not anymore, anyway. That was a big part of their platform until about 15 years ago.
Mar 17 2020 at 3:31am
Where was the natural rights argument? Here: “negate the right”; “So, Mr. Piketty, was that good?”
Here Pierre assumes that there is some pre-existing right that can be negated, and that negating that right is not “good”. Simply dropping the word “natural” doesn’t change the fundamental nature of the argument!
Here come the usual disclaimers: I agree with PL that it’s better to be able to marry whoever you want; and I agree with PL that property rights are conducive to flourishing societies and happy people. I agree that the Lovings *should have had* the right to marry.
But if you assume that (certain) rights exist and can be “negated” even when the social context clearly doesn’t recognise those rights, then I won’t agree with that bit of the argument. There are many rights that I think societies should create and protect; but they don’t exist before the society goes and does that.
Mar 17 2020 at 9:21am
That assumes the only source of rights is from nature. But if you have a contractarian perspective (like, say, James Buchanan), then rights can come from contracts (social or otherwise). Or, if you’re a conventionalist like me or Hume, then rights can come from the development of human conventions. Further, if you’re a positivist, then rights can come from the legal system. All of these methods (and more) fit into Pierre’s description.
Mar 17 2020 at 9:40am
Well. That’s a much more concise way to make the point I was trying to make. 😛 One of these days I’ll learn to be more terse!
Mar 17 2020 at 9:24am
Hey Phil –
Question for you. In one of his papers, Michael Huemer wrote about three broad views one might take on the foundation of property rights. While his discussion was specifically on property rights, I think these views generalize into foundations of rights as such, and can be read as general statements about any and all rights a person might (nor might not!) have. Here’s how he lays them out – and remember, you can just mentally subtract the word “property” out here and read it as just “rights,” at least for the purpose of the question I have:
It sounds to me like you’re endorsing something like b, the Extreme Legalist View of rights (not just property rights). Is that accurate?
Also, a note on terminology. You seem to be talking as though you believe anyone who doesn’t subscribe to the legalist view (or something equivalent to it) is therefore a natural rights theorist or arguing for natural rights or something like that. This is simply, wildly false. Natural rights as a school of thought has a well defined history and content. And it’s simply not the case that anything outside of a purely legalistic definition of rights is therefore an argument from “natural rights” – at least as the term is used by literally everyone else in political philosophy. Very few political philosophers I’ve read endorse anything approaching the legalistic view (for good reason, as it’s obviously false), but equally few of those who reject it argue for natural rights. There’s a really big space of ideas out there that reject the legalistic view of rights without being natural rights theories. If you’re going to use that as a term, you should try to avoid using it in a way that just creates more confusion.
Now, you might feel tempted to say, “But wait a minute, in part of that section you quoted from Huemer, he said ‘Certain broad aspects of property rights are natural, independent of conventions and laws; however, other aspects and details of property rights must be settled by conventions or laws.’ So he’s arguing for natural rights!” I would advise against that. That would be as if someone said “In Greg Mankiw’s textbook, he talked about how supply and demand are important factors in the economy! So clearly he’s advocating supply side economics!” The former would be as uninformed a statement about political philosophy as the latter would be about economic theory.
Mar 17 2020 at 11:45am
Jon: “rights can come from contracts (social or otherwise)…rights can come from the development of human conventions…rights can come from the legal system”
Sure, but I don’t think any of those applied in the case Pierre was talking about. Before a strong miscegeny-just-isnt-a-thing norm came into being, what contract do you think could support the existence of the Lovings’ “right”? What convention? And obviously, it wasn’t in the legal system. I agree all of those *could* apply, but I don’t think they do apply in this case.
Yeah, I’d take a fairly legalist line. I wouldn’t call myself “extreme”, in this way: if the constitution disappeared tomorrow, by reasons of convention and/or America’s existing social contract, most of the rights you currently have would continue for a while. But only a short while. I basically think a right without legal backing doesn’t exist/ceases to exist fast. That is, rights can exist in social conventions, but without legal backing, they will stop existing in social conventions/social contracts. That’s both practically true, and theoretically true: I haven’t been persuaded by any theory that generates rights directly out of a moral theory. For me, they’re legal fictions: wonderful, beautiful, world-transforming fictions, which we should exert ourselves to the utmost to uphold.
(Just like markets!)
Mar 17 2020 at 12:41pm
So? The legal system isn’t the only convention out there. Indeed, the legal system often runs contra conventions, as it did in the Loving case.
Mar 17 2020 at 1:57pm
Hey Phil –
Thanks for clearing that up. And for what it’s worth, I’d agree with the statement “I haven’t been persuaded by any theory that generates rights directly out of a moral theory.” I’d even go a step further – I haven’t been persuaded by any moral theory about anything. I think all currently existing moral theories are false. Unfortunately, I haven’t yet formulated the Correct Moral Theory. I doubt anyone else has either.
Still, my view is much more closely aligned with the moderate view of rights. I think the legalist view ranges between “wildly implausible” to “obviously false.” But that’s not a discussion that’s going to be settled here in the comment section, so I’ll just leave that alone for now.
Mar 15 2020 at 9:36am
Nice post, Pierre.
We see yet again in Piketty what is perhaps the single greatest misunderstanding in all of the social sciences. It’s a misunderstanding famously explained and cleared up by Scottish-enlightenment philosophers David Hume, Adam Ferguson, and (above all) Adam Smith. Many noted scholars ever since – H. Spencer, C. Menger, L. Mises, F. Hayek, B. Leoni, J. Buchanan, and V. Smith, to name only some – have emphasized the critical importance of avoiding his misunderstanding. Yet this misunderstanding persists.
This misunderstanding is that all order that is the result of human action must necessarily be the result of human design. All perceived order in human affairs – whether this order be evaluated by the perceiver to be good, bad, or a mix of both – is mistakenly assumed to have been consciously crafted and chosen. Having been consciously crafted and chosen, human intellect and consciousness can choose to change the prevailing order into a different and presumably more suitable one – such is an incorrect conclusion from this logic that springs from a false premise.
Grand tomes, such as those written by Thomas Piketty, can be written, their theses resting on the fallacy that society, being the result of human action, is necessarily the result of human design. But the theses all crumble into incoherence once the falsity of the foundational premise is recognized.
Mar 15 2020 at 10:07pm
Thanks for your reflections, @Don. Piketty seems to be naively constructivist. He does not seem to understand the concept of spontaneous or self-regulated order, which is a bit strange for an economist (although not for a Frenchman, if we can make this nationalistic generalization). I am reminded of what Buchanan (despite not being the least constructivist of the economists we are talking about here) thought; sorry to quote a piece of mine to explain that (copy-paste is easy):
Mar 15 2020 at 9:50am
I’m starting to feel like a broken record in the comment section of this blog because everything reminds me of a Scott Alexander post, but I’ve never seen a dead horse that didn’t look like it needed a good beating, so here I go again.
Piketty says the “accumulation of wealth is always the fruit of a social process, which depends, among other things, on public infrastructures…the social division of labour, and the knowledge accumulated by humanity over centuries,” and these facts properly give the state authority over the accumulation of wealth. Pierre Lemieux counters that everything we do is a social process which makes use of public infrastructure and and the knowledge accumulated by humanity over centuries – including making a choice about whom to marry. Piketty’s argument, applied consistently (rather than in a selective and cherry-picking kind of way), would suggest that literally everything we do needs justification meeting the approval of the state.
This reminds me of Scott Alexander’s post about isolated demands for rigor. He said of Matt Yglesias: “Presumably there are lots of government programs Yglesias supports – I suggested PBS – and he would never dream of demanding that we defund them in the hopes of donating the money to malaria prevention. But if for political reasons he doesn’t support air strikes, suddenly that plan has to justify itself according to rigorous criteria that no government program that exists could possibly pass.” In the same way, Piketty is very concerned about wealth inequality, so he insists that phenomenon must justify itself according to principles he would never suggest anything else has to meet. It’s an isolated demand for rigor.
Warning – completely amateur armchair psychology incoming! To be taken with mountainous piles of salt.
I suspect the reason we see this sort of thing so often is because, as Jonathan Haidt argued in The Righteous Mind, we tend to have very lawyer-like reasoning. We approve or disapprove of something, come up with an argument that would justify that reaction, and then talk as if the argument itself came first, and the approval or disapproval is just an application of that argument. This is probably why people are so unperturbed when you point out something like “your argument, if applied consistently, would lead to an unlimited state with the authority to control everything.” This doesn’t bother people because they know on some fundamental level that the argument was never meant to be applied consistently in the first place. It was meant as a justification for their preferred policy. Arguments are not principles – they are tools, and if you treat arguments as tools, applying them inconsistently makes perfect sense. This tool is needed for this kind of job, but not that one. So when I move from this job to that, I put this tool away, obviously, and grab some other tool that will get that job done. What kind of madman would do otherwise?
(Of course, this is also just as true of libertarians who treat the non-aggression principle as if it was the One True Moral Law That Explains Everything.)
Mar 15 2020 at 10:48am
How do we know you’re not Scott Alexander in disguise? Have you and Alexander ever been seen in the same room? 😉
Mar 15 2020 at 3:04pm
You raise an excellent point, Jon. However, I must also point out that I’ve never been seen together in the same room as Batman. I’m not saying this definitively proves that I am Batman, but I think we’re all forced to assume I am. As they say – be yourself, unless you can be Batman. Always be Batman.
Mar 15 2020 at 12:17pm
“Arguments…are tools…needed for this kind of job…put this tool away…grab some other tool…”
I think this is right, and the bright side – a very very bright side! – is that as each argument-tool is proved wrong, it gradually uses its power and its utility. And then we move on, and the quality of debate is better! For example, explicitly racist arguments have been pretty much entirely expurgated from the political lexicon, and that’s within the lifetime of older people.
I know It’s frustrating for those who disagree strongly with socialism to see that word making a comeback, but it’s interesting that Sanders does finally seem to be losing.
(I still think this might mean that somehow, the Democrats have a fundamentally sounder mechanism for choosing candidates than the Reps.)
Mar 15 2020 at 1:47pm
Hello Phil –
I don’t think I did a very good job of describing the process I think is happening here, because what I was describing – or attempting to describe – is a process that does not have any such bright side. I think you took me to mean the process unfolds as “Arguments are employed, rebutted, refined, and then redeployed in refined terms, in a continual process over time, improving as they go along.” But that’s not the process I was describing.
My “arguments as tools” metaphor was meant to describe more of situation where people swap between whatever arguments get them the result they want in any given instance. Kettle logic, I suppose. A situation where arguments aren’t being used as ways to move closer to the truth, but as tools to achieve the task at hand of justifying whatever belief is under scrutiny. A mindset of “This argument is valid only in cases where it leads to policy conclusions I already support, but whenever it leads to policy conclusions I don’t support, it isn’t valid anymore. Therefore, I’ll use it when it serves the conclusions I like and put it away when it leads to conclusions I don’t like, then bring it out later when I like the conclusions again.” I reject the heck out of this mindset. This is not people putting arguments away and replacing them with better, more refined arguments over time. It’s people grabbing onto whichever argument they can find that justifies what they already think, and feeling free to ignore any other conclusions that argument supports if they don’t like it.
I don’t think Piketty first reached the conclusion that “anything that’s part of a social process and uses accumulated human knowledge must be justified” was true, and – what are the odds! – it just so happened that wealth accumulation met that criteria and therefore needs to be justified. I think he started with the idea that wealth accumulation needs justification, found an argument that supported it, and is just sticking with that without giving the argument itself much scrutiny. Eliezer Yudkowsky is fond of saying “Accept one lie, and the truth is forever your enemy.” In the same vein, I say “Accept one politically convenient rationalization, and good sense will forever be your enemy.”
Mar 17 2020 at 3:42am
Hi, Kevin. Sure, I recognised that you were accusing Piketty of motivated reasoning. I’m not going to contest that, because I haven’t read any of his books.
I will say though, that motivated reasoning is endemic. If you don’t notice it on this website, for example, then you’re just not looking hard enough! I also want to suggest that it’s not an entirely bad thing. Just as in a court, the goal is to obtain justice by having two parties both engage in balanced, conflicting versions of motivated reasoning, and then to decide between them, I suspect that all sciences (most obviously the social sciences) proceed in a similar fashion.
To use a more positive term, this is just the marketplace of ideas! We don’t *need* Piketty to be right, and we don’t *need* Caplan or Huemer to be right. We just need them to publish. To the extent that they are wrong, those who disagree will pick holes in their arguments.
It’s worth noting that your argument is an ad hom. There’s nothing wrong with that – ad homs have their place. But they’re never going to be the most solid foundation for anything. So the force of my comment was to say, engage with Piketty, sure; but ultimately, remember that Piketty himself is not important. The only question is whether he’s right or wrong.
Mar 17 2020 at 11:54am
Hi, Kevin. I typed out an answer to this that the internet ate… quick fire redux:
Your argument is an ad hom. For someone who’s claiming that motivated reasoning is fatal, that’s a bad look!
I know you meant Piketty was using motivated reasoning. Motivated reasoning isn’t bad because science (especially social science) is like a court of law. It’s OK for lawyers to be “wrong” about whether or not their client is guilty, because the larger institution makes the final decision. It’s OK for Piketty to be “wrong” about socialism (if he is, I haven’t read it), because ultimately the larger institution of public science will determine whether he’s right or wrong.
The whole “one untruth undermines everything” is just way too extreme. Everyone thinks some wrong stuff!
Mar 17 2020 at 2:41pm
Hey Phil –
No worries there, the internet has eaten many of my comments before as well.
My argument is not an ad hominem argument. If I had said something like “Piketty’s argument’s about economics are false because he was caught by Chris Hansen on the rebooted ‘To Catch a Predator’ series,” that would be ad hominem, because it would be attacking his character rather than his arguments. But that’s not what I did. Suggesting someone’s argument is being affected by motivated reasoning (or confirmation bias, or any other cognitive fallacy) is not using ad hominem. To recap, my statement was “Piketty says wealth accumulation should be under state control because argument X. However, X is so broad it would grant the state control over literally everything we do and every decision we make. I doubt Piketty would accept those implications. Therefore, I think he’s likely using X not because he genuinely thinks it’s true, but because it would justify the policies he already wanted to be implemented at the start.” I could be wrong about that. Maybe he really does accept the full implications of X. Or maybe X doesn’t have the implications I’m claiming it has. But if I’m wrong in my assessment of his argument, it will be for one of those reasons. Ad hominem has nothing to do with it.
You didn’t read what I said very carefully – or perhaps I wasn’t sufficiently clear. I didn’t say merely having an untrue belief or believing something wrong undermines everything. I said accepting a lie, or using arguments as a mean of rationalizing what you already want to believe. That’s way different from merely being wrong about something. If you’re merely wrong, you can discover your mistake and then correct your beliefs. If you use arguments as a tools to serve the purpose of rationalizing beliefs you already hold, that does spiral out of control, because it will call upon a neverending series of denying the implications of your argument in other contexts, or creating ad hoc exceptions to your argument, double think, and all sorts of other unpleasantness. It’s the epistemology of the dark side.
Mar 16 2020 at 10:31am
@KevinDC. Thank you for your clear exposition. Kudos.
Pierre Lemieux’s article is excellent of course but the discussion by so many clear thinkers like Jon Murphy, Don Boudreaux, et al, is instructive. Thank you all.
Mar 15 2020 at 10:53am
What these quotes from Piketty really highlight for me is how socialism, regardless of how it’s dressed up, must ultimately be tyrannical and totalitarian. The arbitrary nature of Piketty’s positions and arguments lends no boundaries to the ambitious. Everything is up for grabs.
Mar 15 2020 at 3:24pm
Pierre takes Thomas Piketty to task when he [Piketty] writes, “Every human society must justify its inequalities.”
In defense of Piketty’s use of language, I’d point out that it’s a metaphor, and I don’t believe that Pierre would want to rule out all metaphors. After all, Liberty Fund describes Anthony de Jasay’s The State as “a brilliant analysis of modern political arrangements that views the state as acting in its own interest contrary to the interests of individuals and even of an entire society.” Okay, but isn’t our friend de Jasay personifying the state, in other words, using a metaphor?
Mar 15 2020 at 3:49pm
I don’t understand your point. The question Pierre raises is exactly the same as de Jasay and the one I repeat over and over: who decides?
Mar 15 2020 at 9:08pm
Liberty Fund describes Anthony de Jasay’s The State as “a brilliant analysis of modern political arrangements that views the state as acting in its own interest contrary to the interests of individuals and even of an entire society.”
What does it mean to say that “the state [acts] in its own interest contrary to the interests of individuals and even of an entire society”?
“[T]he state” doesn’t act and it doesn’t pursue any interests of its own. Individual state agents define and pursue their particular interests. Likewise individual agents outside of the state define and pursue their particular interests. So how can either “the state” or “an entire society” share a common interest except in a metaphorical sense?
Mar 15 2020 at 9:19pm
Ok. I’m still not seeing your point. Spell it out for me.
Mar 15 2020 at 9:43pm
@Jon: I understand Mark as saying that if we may, like de Jasay, personalize the state, we should also be able, like Piketty, to personalize society. I suspect that Mark does not really think that we can personalize society and that it is dangerous to personalize the state. As I explained below (or above—it difficult to keep the structure of the argument in mind on this kind of software), the Hayekian distinction between an organization and a spontaneous order seems to me to solve the problem. As an organization, the state cannot but defend factional interests.
Mar 16 2020 at 8:47am
Oh ok. I understand now.
Mar 15 2020 at 9:35pm
@Mark: Your point is important, but here is, I think, the explanation. Some metaphors are more dangerous than others. We have known this since Menenius Agrippa and more modern organicist theories of society (including fascism). Another way to look at the issue is to use Hayek’s distinction between an organization and a spontaneous order. The more the reality considered is a spontaneous order or the less it is an organization, the more invalid and dangerous is the metaphor.
Mar 15 2020 at 4:00pm
I am disappointed that The Economist prints anonymous book reviews. Offhand, I can’t think of any other serious newspaper or journal that does so. Perhaps it’s to spare the authors from the wrath of their readers.
In any event, Raghuram Rajan wrote what I suggest was a more nuanced, but nonetheless severely critical, review of Piketty’s new book in last weekend’s Financial Times. “It contains fascinating descriptions of lesser-known historical uprisings against inequality such as the Haitian revolution, and interesting details about better known ones such as the French revolution. Yet, as a call for nations to enact massive redistribution programmes to reduce inequality, this latest work will persuade few outside his devoted following.” Rajan concludes, “Read and learn from the vast amount of scholarship on display in this book. But look sceptically at its solutions.”
One other thought. The review in The Economist with its headline (“A modern Marx”) and picture of Karl Marx would lead readers to think of Piketty as a Marxist. Yet, as Rajan makes clear, he is no Marxist in the proper sense of the word.
“Unlike Marx, Piketty does not seem to believe the structure of society — the ownership of property, and the economic shares of different groups — is strongly influenced by the technology of production. Marx argued that the plough gave us the feudal manor and the steam engine gave us the capitalist mill. Piketty claims instead that the nature of property rights and their distribution is largely driven by the prevailing ideology, a vague term that seems to imply a kind of public brainwashing.” (Emphasis added.)
“So why, then, in ostensibly democratic societies do voters not do more to curb high and increasing levels of inequality? The Marxist explanation was “false consciousness” — essentially, the working masses did not understand where their true interests lie. Piketty does not address this question directly but hints at a more prosaic answer: they merely lack the data.“
Mar 15 2020 at 10:11pm
@Mark: Thanks for pointing out this interesting review. You seem to be the only one of our friends who can afford to subscribe to FT!
Mar 15 2020 at 4:15pm
Piketty makes a great argument for privatizing infrastructure! Kidding aside, inasmuch as private wealth is accrued with the help of public sibsidies, then that doesn’t suggest we should socialize the privately accrued wealth; it suggests we should stop forcing the public to subsidize its accrual. Of course, maybe Piketty thinks (I expect he does) that if we privatized everything and just left it all to Coase’s theorem to sort out, then many goods and services would be underproduced, and that it is welfare-increasing to subsidize things like roads and other infrastructure. But if that’s true, that implies that the processes by which individuals privately accrue wealth using public infrastructure is welfare increasing. Afterall, that’s why roads are useful. So we’re to subsidize certain economic activity because it’s good for society as a whole, but we must also socialize the wealth accrued from said activity because it doesn’t justly belong to those who accrued it. These two positions strike me as contradictory. Is the belief that people will still do socially useful things even without the self-interested motive of wealth accumulation? But if that’s so, then why was a subsidy needed in the first place to get them engage in socially useful economic activity?
It seems to me that socialists seamlessly oscillate between the position that people are very self-interested and this leads to collective action problems under capitalism that require the state to subsidize, penalize, or create a great many things on the one hand, and (following Duflo and Banerjee) people actually aren’t that self-interested at all and will keep engaging in socially useful economic activity even as their marginal tax rates reach 80 or 90% on the other hand.
Mar 15 2020 at 9:13pm
@Mark Z: Indeed, it is a real paradox that you underline in your last paragraph. The Economist criticized Piketty as thinking that Gates, Zuckerberg, or Bezos would continue behaving exactly as they have even if they were taxed at 80% or 90% and lost control of their companies.
Another version of the same sort of paradox was identified by James Buchanan. Here is how I paraphrased his argument in a recent Regulation review:
Mar 15 2020 at 9:53pm
I am surprised that Pierre Lemieux does not recognize that Piketty is echoing the first article of the French Revolution’s Declaration of the Rights of Man and of the Citizen.
Mar 16 2020 at 10:10am
@Kurt Schuler: Do you mean that Article 1 is (A) what Piketty believes or (B) that it actually justifies what he believes? Article 1 states:
Three comments, especially against (B): (1) The first sentence is Rousseau. That’s a big topic, but the incipit of Émile Faguet’s Le Libéralisme (1902) is a good antidote:
(2) What are the “social distinctions” to be abolished? Joe and Mrs. Piggy, the most beautiful and courted woman in France, voluntarily consent to an exclusive relationship. Is this, for Joe, a “distinction social” that should be abolished? The constituants quite certainly did not mean that?
(3) “Common utility” is far from a clear criterion, as we now know. For all we know, the “final solution” corresponded to the “common utility” of the majority of the German voters.
Comments are closed.