Capital in the Twenty-First Century is really two books, maybe three. The first is a book of economic history. The second one advances a theory to explain that history. The third offers a policy proposals keyed to the economics, as well as a tacit political philosophy of meritocratic egalitarianism: from and to each according to his abilities. As I’m coming to the final part of the book I can see that the theory plays an important role. It provides the “laws of capitalism,” and these “laws” allow Piketty to describe a future: If unchecked, capitalism will lead to greater and greater concentrations of wealth. This specter is haunting the global economy—if I may be permitted an updating of the Communist Manifesto. It foretells the end of democracy. It’s also what gives Piketty’s book urgency. But I misspoke. It’s not the “laws of capitalism” that lead to his dire prognosis. Instead, it’s the “laws of capitalism” plus the crucial assumption r>g (the rate of return on capital is greater than the overall growth of the economy). But what about this assumption? I’m told that economist are by no means agreed that r>g. That’s not surprising. Common sense suggests that the rate of return on capital can’t be greater than the rate of growth. That’s because returns on capital are simply claims on national (or increasingly global) income. And over the long haul those returns be paid in real terms unless the national or global income increases, which is to say g increases. If an economy could pay 4 or 5% on capital while growing at 1 or 2% per annum, then we’d be in the surreal situation in which return on capital over time produces more wealth than does economic growth. In fact, because SOME collective wealth has to be spent on something other than paying returns on capital, it seems tautological that rContinue Reading »
I found myself backtracking after working through Piketty’s discussion of inequality of labor income. That’s because there’s data that works against his main thesis that, because r>g, capital becomes ever more important than labor. Continue Reading »
Piketty toggles back and forth between numbers and speculation (often political and sociological) with enough frequency to hold the lay reader’s interest. I see now why the book has been a hit. Continue Reading »
This Sunday marks the day when churches commemorate the descent of the Spirit. This feast of fiery tongues and intoxicating presence has haunted the Christian imagination. Symbolizing the divine breath that filled the first humans with life, the rushing mighty wind overwhelms the senses, reminding believers that “there lives the dearest freshness deep down things. . .Because the Holy Spirit over the bent world broods with warm breast and with ah! bright wings.” Continue Reading »
For those interested, here’s an update on that Rome conference on international religious freedom I mentioned a couple of weeks ago, co-sponsored by the Center for Law and Religion at St. John’s University. The conference will now take place over two days, Friday, June 20, and Saturday, June 21, at the main campus of the Libera Universita Maria SS. Assunta in the Borgo. The updated agenda is available here. Speakers include keynoters Tom Farr and John Witte, as well as Abduh An-Na’im, Pasquale Annicchino, Heiner Bielefeldt, Giuseppe Dalla Torre, Ken Hackett, Francisca Perez-Madrid, Olivier Roy, Nina Shea, Marco Ventura, and Roberto Zaccaria. Proceedings will be in English and Italian with simultaneous translation. If you’re in the area, please join us!
Part Two of Thomas Piketty’s Capital in the Twenty-First Century concerns history of capital in relation to income (the capital/income ratio) over the course of the twentieth century. Continue Reading »
