Over at Juncture (image from Wikimedia Commons):
Nick Pearce: Your book has received a huge amount of attention. Can we start with some of the central critiques of your core arguments? To begin with, there are those on the left who say that your treatment of the category of capital is a fairly orthodox one. It essentially puts together assets and their relative prices, instead of treating capital conceptually as constituted through relations of production and other structures of power, as it would be in Marxian and other heterodox traditions.
Thomas Piketty: I have read that. I think that it is a bit unfair in the sense that I really try hard in the book to do justice to the multi-dimensionality of capital. The history of real estate is not the history of land, it is not the history of financial assets or business assets, or the public debt; all these different assets come with different power relationships, and with different social compromises to determine their rate of return, and the labour return that is used together with these assets.
At some point in the book I also take the sum of all of these assets, and use the market prices of these different assets to compute the total capital stock of the economy. But I try to make clear in the book that while this may be fine for some purposes – this addition of different kinds of capital, in computing the capital stock – one always needs to keep in mind that this is a pretty abstract operation. I certainly don’t claim that you can summarise the multi-dimensionality of capital, and the inequality and power relationships that go with it, by making this gigantic operation of adding all of these categories together. In fact, in the book I have long parts in different chapters where I try to tell the story of the public debt, the story of real estate bubbles, the story of ‘slave capital’, which of course is a very particular kind of wealth, and of the power relationships that go along with it, and this all plays a role in the book. So, I find that this critique – although I can hear it – is not really justified in the sense that I do perfectly agree that capital is a multi-dimensional concept.
In particular, the market value of assets may not always coincide with their social values, so this does not mean that it is the only way to measure the value of capital. For instance, I have a long discussion about the value of German manufacturing companies and the fact that their market value may not be as large as British, American or French corporations, but apparently that does not prevent them from producing good cars. The market does a number of things well, but there are also a number of things that the market does not do so well, and putting a price on assets is always a complicated business.