Thomas Piketty and Millennial Marxists on the Scourge of Inequality


Timothy Shenk in The Nation (Photo: Emmanuelle Marchadour)):

Chest-pounding about methodology and decrees on capitalism would be of little interest if they were not joined to substantive intellectual discoveries. Piketty’s contributions on this front come in three interlocking clusters: historical, theoretical and political. Relying chiefly on data from Britain, the United States and France, he casts his gaze over what the French historian Fernand Braudel, cited by Piketty as one of his inspirations, termed the longue durée. Much of Capital in the Twenty-First Century is, essentially, a history of the modern world viewed through the relationship between two factors: economic growth, with all its promises, and the return on capital, a reward that goes to the small fraction of the population that has mastered what Tina Fey’s character in 30 Rockreferred to as “that thing that rich people do where they turn money into more money.”

The rich perfected that art a long time ago. According to Piketty, the average return on capital, after adjusting for inflation, has hovered around 5 percent throughout history, with a slight decline after World War II. Whatever problems capitalists will face in the future, he suggests, a crisis generated by falling profits is not likely to be among them. Economic growth, by contrast, has a far more abbreviated chronology. According to the most reliable estimates—sketchy, but better than nothing—for most of human history, economic growth was on the order of 0.1 percent a year, provided there were no famines, plagues or natural disasters. This gloomy record began to change for part of the world during the Industrial Revolution. Judged by later standards, “revolution” might seem too generous a phrase for growth rates in per capita output that ran to under 1.5 percent in both Western Europe and the United States; but compared with the entire earlier history of human existence, those rates were astonishing.

More impressive developments were in store. The twentieth century, Piketty writes, was the moment when “economic growth became a tangible, unmistakable reality for everyone.” In the United States, which had benefited earlier from high growth rates, per capita output ticked up to just under 2 percent between 1950 and 1970. In the same period, growth in Europe doubled that; Asian countries averaged just a step behind Europe; and many African nations reached numbers closer to—but ahead of—the United States.

Piketty is less concerned with this global story, however, than with a concurrent development in Europe. In the nineteenth century, growth had done nothing to reduce income inequality. This was the world Marx diagnosed in Capital, and in crucial respects, Piketty thinks he got it right. Not that the entire apparatus of Marxist political economy holds, if it ever did. On the key issue of the tendency for wealth to accumulate in fewer hands, though, Piketty believes Marx arrived at a profound insight.

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