by CHARLES ANDREWS
Thomas Piketty, Capital in the Twenty-First Century. Cambridge: The Belknap Press of Harvard University Press, 2014. $39.95. IMAGE/Harvard University Press
Capital in the Twenty-First Century by Thomas Piketty has caused a stir, which it deserves. Capital 21, as we will abbreviate the title, grapples with a prominent current issue: outrageously unequal incomes and wealth. It is a data-rich, wide-ranging investigation over 570 pages of text written in the smooth, often ironic, and occasionally elevated French manner. It breaks with the sterile theology that dominates bourgeois economics today. Finally, it proposes a new solution to the inequality problem at a time when many question whether capitalism can ever return to partial mass prosperity.
The concept in the title is capital, but it ties with inequality for the most page references in the index, including immediate variations. If you want data on the income and wealth of the top ten-thousandth, one-hundredth, and one-tenth of the population, use this book as well as the online database compiled by Piketty, Emmanuel Saez, and colleagues.
Tailored Concern with Inequality
However, Piketty’s concern over inequality of income and wealth is rather tailored. The rich who upset Piketty most are very wealthy rentiers. They cannot possibly consume more than a smidgeon of the return on their investments, so every year the latter grow and stand to capture more wealth the next year. In contrast, entrepreneurs are good and necessary, and they need and deserve the incentive of financial success.
Piketty notes the bittersweet dilemma that successful entrepreneurs become rentiers in their own lifetime. Bill Gates’ $50 billion or so of “wealth has incidentally continued to grow just as rapidly since he stopped working” (p. 440). Still, it would be a disaster in Piketty’s view to adopt policies so egalitarian that “there would be no more entrepreneurs” (p. 572).
Capital 21 makes a trenchant critique of the outlandish pay of corporate executives (pp. 331-335, 510). Piketty approves, though, when you get a fat income because you are a genuine entrepreneur or a highly skilled professional. He accepts the bourgeois economic doctrine of the so-called marginal productivity of skilled labor, and with it a considerable amount of income inequality.
Piketty has little interest in the inequality suffered around and below the median income (the amount in the middle of a list of everyone’s incomes from highest to lowest). Although he gives one or two figures on per capita income in France and Britain, he never examines what income equality could be in the absence of capitalists.
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