After Financial Times’ botched and bungled attack on Piketty’s Capital in the Twenty–First Century fainted, in order to escape from dealing with the essence Bloomberg BusinessWeek chose a different tactic which is a) kind of funny, b) pathetic.
Follow ES/PE on Facebook
Follow ES/PE on Twitter
My TweetsTags
- academia
- accounting
- austerity
- banking
- banking system
- capital
- capitalism
- central banking
- China
- class
- commercialization
- comparative political economy
- consumerism
- consumption
- corporations
- COVID-19
- credit
- crisis
- Culture
- debt
- democracy
- development
- diffusion
- economic history
- economics
- Economic Sociology
- education
- elite
- embeddedness
- environment
- ethics
- ethnography
- Europe
- European Union
- finance
- financial crisis
- financialization
- financial system
- financial markets
- fiscal sociology
- France
- gender
- Germany
- global governance
- globalization
- global political economy
- Greece
- growth
- higher education
- history of economic thought
- ideas
- inequality
- institutional change
- institutions
- interest groups
- Karl Marx
- Karl Polanyi
- knowledge
- labor
- Latin America
- law
- marketization
- markets
- Marxism
- media
- Middle class
- money
- morality
- neoliberalism
- networks
- policy
- Political economy
- politics
- poverty
- power
- privatization
- public sociology
- race
- regulation
- socialism
- social movements
- social networks
- social sciences
- social studies of finance
- sociology
- Sociology of economics
- sociology of knowledge
- state
- taxation
- trade
- Unions
- United Kingdom
- United States
- valuation
- varieties of capitalism
- wealth
- welfare
- work
- market fundamentalism
- culture
Top Posts & Pages
- Polanyi's Prescience: Covid-19, Market Utopianism, and the Reality of Society
- Remember the Golden Rule! Whoever has the gold, makes the rules!
- Ulrich Beck has died. His powerful concept of 'Risk Society' is relevant as never before
- Foucault: Neoliberalism Redefined Homo Economicus
- Rise like Lions after slumber in unvanquishable number, Shake your chains to earth like dew... Ye are many — they are few
- Albert Einstein on the power of ideas and imagination in science
- If you think the economy is more important than the environment, try holding your breath while counting your money
- Thatcherism's greatest achievement
- Karl Polanyi on the Rise of Fascism and Market Economy
- Being the 1%, or What It Means to Be Entitled
Categories
Archives
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- March 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- September 2013
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
ES/PE on Social Media
According to Megan McArdle review of Piketty’s book in Bloomberg Businessweek, “Piketty has touched off the most vigorous public conversation about inequality since Occupy Wall Street—only this time it’s a conversation about data and economics, rather than the wealth of certain bankers and the propriety of camping in the streets. That’s a lot of progress to come from one man.” While her review does cite some critics of the book whose views seem more focused on discrediting the book’s conclusions and recommendations, most of the review is a solid consideration of what the book says and what it might mean for our future. That said, McArdle does slip in some conclusions of her own that seem intended to take the wind out of Piketty’s arguments and particularly his pointing the finger at capital accumulation (very much intentionally set up by folks who benefit from it) as a major (perhaps “the” most important) concern facing the world (and particularly the US) today. She quotes Rogoff and Winship dismissing the notion that r had been greater than g as a “non-problem” since “… you have to have some compensation for risk.” There are two problems with this dismissal. First, risk is not unproblematic. That is, that some actions or situations are riskier or safer than others is invented in particular situations by particular actors for particular reasons. For example, to say that investors are taking greater risk by investing in an urgent care facility as opposed to liquor store in a poor neighborhood is based on a scenario that gaining payment for liquor by the poor inhabitants of the neighborhood is more likely than gaining payment from those inhabitants for urgent health care. Considering all the pressures that can be brought to bear on the inhabitants today this assumed difference in risk seems unreasonable. McArdle also concludes that even if the return on capital is higher than the growth rate of the economy, that doesn’t mean capital will accumulate and concentrate itself indefinitely; the capitalists might spend it, give it away, or divide it among heirs faster than it accumulates. Problem being that none these alternatives addresses how to deal with the wide ranging impacts of wealth accumulation inequality. McArdle also comments (a la Larry Summers) that it is not the case that capital can always be easily substituted for labor, thus allowing capitalists to gain greater returns (and thus wealth accumulation) by simply substituting investments in capital (e.g. automation, robots) for labor. What she fails to recognize is that even if capital investment can’t always provide greater return when substituted for labor the choice as to which action to take is entirely in the hands of the capitalist (the investors). Whether new machines are built and deployed or laborers laid off or hours reduced is wholly and completely the decision of investors. Finally, and most egregiously McArdle lays the blame for the decline of the security for the lives of 75% of Americans (and more in the rest of the world) at the feet of low skills/lack of education, and globalization. What she fails to mention is that the same capitalists (with some exceptions to be sure) who benefit from them invented globalization to increase returns and were prime movers in both changing education from a public good into a market commodity and increasing the cost and debt involved in gaining the skills and education to “compete” in the globalized economy (again to increase returns). And with this I arrive at the real and in many respects non-economic (both in terms of the discipline and the kinds of actions taken) importance of Piketty’s book. Large inequalities of wealth in societies not only place an unsustainable burden on the actors (human and nonhuman) that make up that society to continue the tasks that keep the society functional but also actually creates pressures to terminate the society. Monarchs did not invoke the name of God just because it sounded good. They invoked God’s name to justify the actions they took because God was a force so great that members of society largely felt compelled to accept and adhere to His word. This power of God is largely gone in today’s western world. So what do they invoke in its stead? Markets (and democratic liberty they are claimed to protect), incentives to take risks and be inventive, forcing the largely lazy and shiftless majority of humans to work hard, and protecting families and our Christian heritage. If Piketty had extended his analysis back to the period going from the 10th to the 11th century he would have found the same problem, only more pronounced, the rich getting rich and poor getting poorer. That problem is less pronounced as we go from the 20th to the 21st century primarily due to the spread of democratic decision making, not the spread of investor capitalism. The latter made possible the creation of more wealth. It has done nothing to make its distribution more equal.