I've just ordered Thomas Piketty's Book - “Capital in the Twenty-first Century”

[malaise]

Last edited Sat Apr 12, 2014, 07:16 PM - Edit history (2)

In a nutshell he demonstrates that Capitalism simply isn't working and here are the reasons why (Guardian headline)

http://www.theguardian.com/commentisfree/2014/apr/12/capitalism-isnt-working-thomas-piketty
<snip>
Like Friedman, Piketty is a man for the times. For 1970s anxieties about inflation substitute today's concerns about the emergence of the plutocratic rich and their impact on economy and society. Piketty is in no doubt, as he indicates in an interview in today's Observer New Review, that the current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism. He has proved it.

It is a startling thesis and one extraordinarily unwelcome to those who think capitalism and inequality need each other. Capitalism requires inequality of wealth, runs this right-of-centre argument, to stimulate risk-taking and effort; governments trying to stem it with taxes on wealth, capital, inheritance and property kill the goose that lays the golden egg. Thus Messrs Cameron and Osborne faithfully champion lower inheritance taxes, refuse to reshape the council tax and boast about the business-friendly low capital gains and corporation tax regime.

Piketty deploys 200 years of data to prove them wrong. Capital, he argues, is blind. Once its returns – investing in anything from buy-to-let property to a new car factory – exceed the real growth of wages and output, as historically they always have done (excepting a few periods such as 1910 to 1950), then inevitably the stock of capital will rise disproportionately faster within the overall pattern of output. Wealth inequality rises exponentially.

The process is made worse by inheritance and, in the US and UK, by the rise of extravagantly paid "super managers". High executive pay has nothing to do with real merit, writes Piketty – it is much lower, for example, in mainland Europe and Japan. Rather, it has become an Anglo-Saxon social norm permitted by the ideology of "meritocratic extremism", in essence, self-serving greed to keep up with the other rich. This is an important element in Piketty's thinking: rising inequality of wealth is not immutable. Societies can indulge it or they can challenge it.

[kwassa]

1. "Capital in the Twenty-first Century" is the name of the book by Piketty

and it got a great review in the Washington Post from it's own Pulitzer-winning correspondent, Steven Pearlstein

http://www.washingtonpost.com/opinions/capital-in-the-twenty-first-century-by-thomas-piketty/2014/03/28/ea75727a-a87a-11e3-8599-ce7295b6851c_story.html

In its magisterial sweep and ambition, Piketty’s latest work, “Capital in the Twenty-first Century,” is clearly modeled after Marx’s “Das Kapital.” But where Marx’s research was spotty, Piketty’s is prodigious. And where Marx foresaw capitalism’s collapse leading to a utopian proletariat paradise, Piketty sees a future of slow growth and Gilded Age disparities in which the wealthy — owners of capital — capture a steadily larger share of global wealth and income.

“The clash of communism and capitalism sterilized rather than stimulated research on capital and inequality by historians, economists, and even philosophers,” writes Piketty.

The quest for a unifying theory on the nature of capitalism began with the earliest political economists. The Rev. Thomas Malthus theorized that population growth would keep the bulk of mankind trapped in misery and poverty, as was indeed the case for much of human history. David Ricardo theorized that the landed gentry would become ever more wealthy as the value of a fixed amount of land rose relative to the expanding supply of other goods. And Marx predicted that ruinous competition among workers and investors would inevitably drive wages to subsistence levels and investment returns to zero, concentrating wealth in fewer and fewer hands.

We now know that what each of these determinist theories failed to anticipate was an explosion of productivity driven by new technology that allowed society to escape from the dystopic futures they imagined. But Piketty, marshaling an impressive array of data going back centuries, argues that the underlying mechanisms of capitalism are likely to reassert themselves, once again generating “arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

[malaise]

3. I know but I wanted to keep the headline from the Guardian

[kwassa]

5. It does help to tell people the name of Piketty's book.

You might put that in your OP.

I think this is going to be a very important book.

[marmar]

2. k/r

[malaise]

4. I'd love Wolff's take on this book

[antigop]

9. Richard Wolff mentioned it in one of his broadcasts.

http://rdwolff.com/content/global-capitalism-february-monthly-economic-update-0

[malaise]

10. Thanks - let me listen to the entire update

[WillyT]

6. Did You Catch This...

DULink: http://www.democraticunderground.com/10024813345

[moondust]

7. Krugman likes it.

http://www.nybooks.com/articles/archives/2014/may/08/thomas-piketty-new-gilded-age/

[malaise]

13. "...we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque."

great Krugman line.

Thanks moondust

[BlindTiresias]

8. I also ordered the book

It looks pretty good so far. From summaries I have read Piketty's suggestions for policy solutions are pretty weak, though. He suggests some kind of global wealth tax as a way of limiting excessive fortunes but good luck implementing that (he does admit it probably won't happen, to be fair).

[RainDog]

11. k&r n/t

[reformist2]

12. In a way, the real economy in the US started its decline in the 1990s.

That's when global free trade took off. Especially with China, which killed any chance of the US retaining any productive job base. The slow decline in wages that resulted was masked by a series of financial bubbles - internet, housing, and now a gigantic bond bubble - that prevented us from seeing what was really going on.

[malaise]

14. But it was promoted by the Washington Consensus folks - all Friedman and Hayek

all the time.
It was 1990 by the time it begun to be felt in the US, but it began in Chile 1973 with the assassination of Allende and the displacement of the Latin American structuralists and imposition of the Friedman Chicago school trickle down model on almost an entire region.

[daleo]

15. I just bought a kindle version

I have read a number of interesting reviews of it. It should be good.

[malaise]

16. Agreed

[onethatcares]

17. but, but, but

I've been told we have the opportunity to reach unimaginable heights in our own financial lives. All we have to do is work longer and

harder than the other guy and the world is our oyster. Sadly, everyone I talk to is too damn tired to do much more than just get by.

[Curmudgeoness]

18. You forgot to mention put all that you can into your 401(k).

You will be wealthy when you retire if you start early and invest aggressively.

Or the oligarchs will have all your money that you saved instead of enjoying life.

[rhett o rick]

19. As much as I appreciate this, I dont think it will help. Those that support capitalism wont pay

attention. Those of us that pay attention need to do a whole lot more than we have shown a propensity for up to this point.

THE CLASS WAR IS WELL UNDERWAY AND OUR SIDE HASNT DONT SHIT.

[onethatcares]

20. what can we actually do?

boycotting doesn't seem to have an effect. Hiding our money in coffee cans in the yard does nothing. Working 4 jobs leaves little room

for sleep. I just don't know how to even battle at this stage.

Protesting makes one feel good but it gets ignored by the media (unless you're a cowboy).

Sometimes I think we have gone way beyond the class war tipping point. It can't be a war if it's being waged by only one side.

[rhett o rick]

22. There is a lot we can do. While contacting your Congress-critters and the media

seems like a waste of time, I think it does have an effect. Work with local groups both Democratic and progressive groups outside the party. Boycotts and protests do work. Target listened and I think Mozilla was looking ahead. Move your money did work. Keep your savings and credit cards thru local banks or credit unions. Occupy helped kick off the populace movement, and made wealth inequality part of our national discussion. While it isnt apparent via the corporate media, there are lots of protests every week. I think the movement is just waiting to break thru.

I hear you with the 4 jobs. That's a situation a lot are in. No answer there. I also hear you about the tipping point, and dont disagree. But it doesnt matter unless you are ready to lay down and give up. At some point civil disobedience will start. It's inevitable. They can only push us sooo far.

[xchrom]

21. du rec.