Why Piketty Matters, I

Without going into the background of the furor (both enthusiastic and apocalyptic) regarding French economist Thomas Piketty’s magnum opus Capital in the Twenty-First Century — there’s more than enough background information, misinformation, and bloviation from all sides available at one’s stiff little fingers — I want to make clear what Piketty does in the first twenty pages of his book and why it matters. The central point, even, that has largely gotten lost among the deafening background roar:

It would be absurd not to raise the question of who will own what and simply to assume from the outset that growth is naturally “balanced” in the long run… There is no fundamental reason why we should assume that growth is automatically balanced. It is long past the time when when we should have put the question of inequality back at the center of economic analysis and begun asking questions first raised in the nineteenth century.

— Capital in the Twenty-First Century (tr. Arthur Goldhammer), 15-16.

Regardless of Piketty’s policy recommendations or if, as alleged, there are flaws in the data sets he used to reach those conclusions, the necessity of reconsidering the question of inequality detached from the dogmas and assumptions of liberal capitalism is absolute. The attempts to throw shade on Piketty as an economist or intellectual via denigration of his methodology or data, or equally perniciously, just ad hominem represent a smokescreen by the financial industry and its willing enablers in the media and academia to prevent that question from being asked at all costs. It’s simple Nixonian logic — discredit the messenger and no one will remember the message. Even though Piketty himself claims not to have perfect information or perfect solutions, the emphasis is on the reintegration of the question of inequality into contemporary social, political and economic analysis. And the potential implications of confronting inequality and its pernicious effects scares the financial and political establishments to death.

Piketty matters because he dares to ask the question and to insist that the inquiry depend on empirical analysis conducted agnostically with regard to conventional assumptions. Thankfully, he’s not alone (via @ryangrim).

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Update: Former White House Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and member of President Obama’s economic team Jared Bernstein examines just why capital is so much more powerful than labor in a definite must-read for anyone interested in inequality.

 

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~ by Benji on 2 June 2014.

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