With the possible exception of Chelsea Clinton’s baby bump, no one is getting more press these days than Thomas Piketty, author of Capital in the Twenty-First Century, which has lefties like Paul Krugman all in a lather. “Inequality is the new black!” they exclaim. “We’re going to win this mother!”
Piketty’s basic pitch, delivered through some 697 pages of heavy data, is this: r>g. That is to say, under capitalism, the return on investment tends to exceed the growth rate of the economy as a whole, so that the rich get richer and richer, while the poor fall further and further behind, so that, in the future, instead of a world characterized by liberté, egalité, fraternité, which is what we want, or what we ought to want, we get capitalist oppression, a new “Gilded Age,” as Krugman tells us.
For my part, I don’t think liberté, egalité, fraternité worked out all that well the first time around, and despite ecstatic reviews from not one but two Nobel prize winners (“Thomas Piketty Is Right,” Robert Solow tells us at the New Republic), I’m not at all impressed by Piketty’s arguments, as recited by Paul and Bob and half a dozen other favorable reviewers. If you can stomach the presumption of a reviewer who takes on two Nobelists over a book that they’ve read but he hasn’t, read on.
Clive Cook and Tyler Cowen both provide intelligent rebuttals to the substance of Piketty’s arguments, but I’m more interested in his tone. When Piketty presents his data, which are nothing if not copious, he is the model of scholarly modesty and reserve. Everything is tentative, after all. To the extent that these masses of data from the past are accurate—and only to that extent—they tell us what has happened. They can’t tell us what will happen.
But once the data are on the table, Piketty extrapolates with gusto rather than caution and adores Marxist phraseology. Think things are getting better? Nuh-uh! That’s a bourgeois myth! There was a brief interlude when inequality declined, from 1910 to about 1970, but the unique historical factors that temporarily reduced the power of capital have faded. “The past eats up the future,” Piketty tells us—that is, the advantages of inherited wealth will grow greater with each passing generation, so the poor fall further and further behind—taking us back to the bad old days of capitalist oppression instead of the paradise promised by false-speaking neoliberal economists. Like Foucault (that’s why he’s in the headline), Piketty wants us to believe that “progress” is a bourgeois lie, a narcotic intended to make us the willing slaves of our heartless masters, a slavery that’s even worse than the old kind because we want to be slaves. The poor (defined by Piketty as the “bottom 50%”) can only stand by helplessly as the rich whiz by in ever faster and ever grander limousines. There’s nothing you can do, dude! It’s the “essential contradiction” of capitalism!
Like Krugman, Piketty sees a new Gilded Age dawning, though being French he prefers “La Belle Époque,” which ran from 1871 through 1914, though he gets his data a bit scrambled, because to give us an idea of what life was like back then, and give us a glimpse of what we have to look forward to, he cites Jane Austen and Honoré de Balzac to the effect that if you want real cash, you marry it, you don’t earn it, i.e., r>g. Well, Jane was writing in the first decades of the nineteenth century, when the Industrial Revolution, and “capitalism,” had barely started. Furthermore, she was writing about the predicaments of well-born girls whose entire fate depended on making a “good marriage”—one offering both economic security and social position—which in those days could only be supplied by inherited wealth. Balzac, for his part, wrote as an “artist” who would infinitely prefer to cast his soul to Hell rather than fetter it to an office stool. Jane + Honoré ≠ r>g.
But Priketty’s big lie—his really big lie—is his Marxist line that the poor have nothing but their labor as a defense against economic hardship. In fact, they have the welfare state, built up laboriously by generations of liberals and socialists. Their children don’t run wild through the streets, as they did in the nineteenth century. They’re educated in extravagantly funded school systems that reflect the educational priorities of their parents far more accurately than the chattering class can acknowledge, or even comprehend. Even in the tight-fisted U.S., there is unemployment compensation, workman’s compensation, food stamps, Medicaid, Obamacare, disability insurance, Social Security, and Medicare, all of which are likely to be around for a long time, predictions from both the left and right to the contrary notwithstanding.
Furthermore, the shocking fact is that life is much better today than it was in the supposed halcyon fifties and sixties, even allowing for the effects of the Great Contraction, which hit the poor far harder than anyone else. Of course, happiness is largely relative, and in the fifties and sixties people could look back on a life of hardship if not actual terror—the Great Depression and World War II—and contrast it with a steadily increasing standard of living. Today, life is more uncertain, but the comforts and conveniences of life are far superior, and far cheaper, than any previous generation has known. And, shockingly, I think that’s going to continue.
