Looking at Piketty from the Periphery

Politische Vierteljahresschrift, 2015

Allegra - A Virtual Lab of Legal Anthropology, 2014

These are wild times and people have wild luck. Fortunes have been made, unmade, and taken away due to a severe shift within the capitalist world system, which became manifest to the wider public as a result of the so-called financial crisis that began in 2008. Since then, an understanding of capitalism as a rather unsustainable way of being human has been gaining significant traction within the social sciences. One of capitalism’s most powerful guises is, however, to dress luck and fortune as fate. In “Capital in the Twenty-First Century”, Thomas Piketty takes on what is probably the most significant twentieth century theorem in the academic ivory-tower inhabited by economists: Simon Kuznets’ 1950s theory that “income inequality would automatically decrease in advanced phases of capitalist development, regardless of economic policy choices or other differences between countries, until eventually it stabilized at an acceptable level” (Piketty 2014, 11).

World Economic Review, 2015

This paper reviews Piketty's book Capital in the 21st Century. Although the facts described by Piketty are widely indisputable, the paper criticizes the actual economic theory underlying the central thesis of the book, and this on two main points: first the nature and thus the consistency of capital, and second the direction of causality. The paper discusses first the confusion made by Piketty between "capital" and "wealth" which for him cover the same economic reality, and shows that productive capital, real estate capital and net financial assets cannot be put on the same conceptual level. Secondly, it shows that the rate of return on capital as the ultimate explanatory factor for the growth in inequalities does not hold, because Piketty's three laws are not acceptable as such: the first one is a mere tautology, the second implies the identity of the long-term growth rates of income and capital, and for the third law the fact that r is greater than g is not in itself a sufficient condition for β and therefore α to increase. Even in Piketty's analysis it is not really r but s, the owners of capital's consumption choices, which drive capital accumulation. The paper finally proposes an alternative explanation for the evolution of developed economies over the last 35 years.

This paper reviews Piketty's book Capital in the 21st Century. Although the facts described by Piketty are widely indisputable, the paper criticizes the actual economic theory underlying the central thesis of the book, and this on two main points: first the nature and thus the consistency of capital, and second the direction of causality. The paper discusses first the confusion made by Piketty between " capital " and " wealth " which for him cover the same economic reality, and shows that productive capital, real estate capital and net financial assets cannot be put on the same conceptual level. Secondly, it shows that the rate of return on capital as the ultimate explanatory factor for the growth in inequalities does not hold, because Piketty's three laws are not acceptable as such: the first one is a mere tautology, the second implies the identity of the long-term growth rates of income and capital, and for the third law the fact that r is greater than g is not in itself a sufficient condition for β and therefore α to increase. Even in Piketty's analysis it is not really r but s, the owners of capital's consumption choices, which drive capital accumulation. The paper finally proposes an alternative explanation for the evolution of developed economies over the last 35 years.

2014

This essay reviews Thomas Piketty's Capital in the Twenty-First Century (2014). The focus is upon the conceptual framework and theoretical interpretation of the empirical findings assembled in the book, rather than those empirical findings themselves (which are, in any case, broadly incontestable). The core theoretical logic of the distributional dynamics is explained and subjected to scrutiny with respect to the theory of distribution in particular, but also the theory of growth.

European Journal of Comparative Economics, 2014

A great fresco on political economy and the world economy: Book review of Thomas Piketty, Capital in the Twenty-First Century 1 Vittorio Valli Piketty's book is an important book, not only for its huge success and the lively and engaging style of its author, but for its powerful and controversial contents. It is no wonder that it has raised the interest of other famous economists such as Krugman, Stiglitz and Milanovic 2 , but also the attention of the media and the general public. The book begins with the statement of the goal of putting distribution again at the centre of the economic agenda. This is followed by a brief, but well written, introduction on classical authors such as Malthus, Ricardo and Marx, and also more modern classics such as Simon Kuznets, as well as the author's critique of Kuznets's famous income distribution curve. The first part of the book presents the main concepts used in Piketty's analysis. There are the definitions of income, product and capital. The latter is defined in a very broad sense, comprising both real and financial capital, and it is actually more akin to the concept of wealth than to the concept of capital used in standard macroeconomic theory. National capital is a stock value, and it is the sum of private and public capital or of domestic and net external capital. Another fundamental concept is, for Piketty, the capital/income ratio, that he calls β. The author shows that this ratio has been historically rather high (about 6-7) in the United Kingdom, France, and Germany during the 1870-1910 period. The ratio has declined to 2-3 in 1950 and then recovered to 4-6 in 2010. A beautiful chart shows for these three countries a sort of U shaped curve. In the United States, which was a much younger country than the European powers in the 19 th Century, this level was a somewhat lower than in Europe. There the capital income ratio rose from 4 in 1870 to 5 in the great depression, then it went down to 3.8 in 1950 and finally rose up to 4.3 in 2010. At this point Piketty introduces his first fundamental law: α = r × β, where α is the share of income that goes to capital, r is the rate of return on capital and β is, as before, the capital/income ratio. It must be pointed out that rather than a real economic law, this is an accounting equality, as the author himself admits. Piketty then introduces his second fundamental law: β = s/g, where s is the saving rate and g is the rate of growth of the economy. It should be noticed that this law is not particularly new. It is simply another way of stating the main Harrod-Domar result, g = s/v. Harrod's v is basically the β of Piketty, though Piketty uses a wider concept of capital than Harrod. Piketty

Basic Income Studies, 2015

The publication of Thomas Piketty's Capital in the Twenty-First Century (2014, hereafter "Capital"), and its enthusiastic reception not only among scholars but also the general public (it was a New York Times bestseller), have been important events for those interested in basic income. In the words of George Grantham (in this issue), the book is "arguably the most significant book in empirical economics since Simon Kuznetz's Modern Economic Growth (1966) and, on a theoretical plane, since Keynes's General Theory (1936)." The book pulls together years of detailed scholarship by Piketty and colleagues on the long-term trends in wealth and income inequality, across the major capitalist countries, and shows how inequality tends to increase when the rate of return on capital is greater than the growth rate of the economy ("r > g"). This tendency is not inevitable; it is sensitive to politics and public policy. Piketty's work calls to our attention the extent to which the growing gap between rich and poor is being driven by, as Grantham puts it, "differences in income resulting from unequal possession of inherited wealth, to which may be added the rise of 'norm-based' compensation of 'super-managers.'" To address the inequality, Piketty recommends more progressive taxation of inheritance, wealth, and income, including a global wealth tax. Such tax reforms open space for questions about what best to do with the revenue generated, and in particular whether some form of basic income would be a reasonable complement. The essays in this issue of BIS explore the significance of Piketty's findings for basic income research and policy. In this introduction, I will survey Piketty's earlier statements on basic income and related policies, give an overview of the other contributions, and summarize Piketty's response to critics and his current position on basic income.

Economic Geography, 2018

Romanian Journal of Communication and Public Relations, 2015

A book that will change our discourse on inequality 1. A debate without data "Every now and then, the field of economics produces an important book; this is one of them" (Cowen, 2014). These are the opening words of Tyler Cowen's presentation of Thomas Piketty's work, "Capital in the Twenty-First Century" (Piketty, 2014), in Foreign Affairs. This is a book that is visibly placed in all important bookstores around the world, widely debated, acclaimed, sold (over 1 million copies have been sold so far). It has been favorably reviewed or quoted in all major journals. The assessment of "Capital in the Twenty-First Century" by Paul Krugman, Nobel Economics Prize Laureate as a "magnificent, sweeping meditation on inequality", is highly relevant: "This is a book that will change both the way we think about society and the way we do economics" (Krugman, 2014). Finally, Piketty's book is included in the list of the year's best books by prestigious journals, such as The Economist, Financial Times, The Washington Post, Observer, The Independent, Daily Telegraph; Financial Times and McKinsey have hailed it as the best book of 2014. What makes this book so widely discussed and revered, what triggered the debate, probably one of the most interesting debates in the last decade? First, the book's title, announcing a fundamental theme: capital and its role in this century. Quite noticeable is the similarity to Marx's book, "Capital", first published some 150 years ago, especially since the French author discusses Marx's work at length, as one of its forerunners. Most importanly, Thomas Piketty puts a finger on a bleeding wound of contemporary society: increasing social inequality. As the author declared in a talk with the editor of Foreign Affairs, inequality is good as long as it is not excessive. When it reaches unbearable levels, it becomes a real risk not only to social stability, but to development as well, to capital, in the last instance. At the root of inequality lies the main theme of modern society: the distribution of income and wealth. This is also the theme of the book, which opens with the line: "The distribution of wealth is one of today's most widely discusses and controversial issues. But what do we know about its evolution over the long term?" (Piketty, 2014, p. 1) Dozens of studies, analyses, and works on inequality and its price have been published by famous names in economics, from Emanuel Saez to Gabriel Zucman or Joseph Stiglitz.

2011

Companion f o Economics and Philosophy, Edward Elgar (2004), 509+xxii pp., ISBN I-84064-964-x reviewed by Till Griine-Yanoff, Royal Institute of Technology, Dept of Philosophy and the History of Technology, Stockholm DESPITE ITS TITLE, this Companion contains little economics. Rather, it presents topics from the philosophy of economics. The title may still be appropriate, as the philosophy of economics addresses many issues that should be of great interest and importance to economists. However, many authors of this volume seem to understand their project as opposed to economics (or rather, what they call 'mainstream' economics). This is unfortunate. Philosophy of economics is dependent on the science that it purports to be of. It discusses economics' specific epistemic, conceptual and normative problems, and intends to contribute to their solution or at least clarification. Naturally, such a project requires a critical perspective. But it must be friendly criticism. If philosophers reject the core of contemporary economics, and 'seek to re-orientate the economics discipline' as a whole (Lawson in this volume, 322), they will be confined to a state of irrelevance: ignored by economists busy building their science, but unable to produce a serious alternative themselves. Nevertheless, the Companion includes many highly informative and at times provocative papers on important philosophical questions about economics. It contains twenty-three papers, categorized into three parts concerning political economy, methodology and ontology. The political economy part discusses the use of economic tools for the end of political philosophy, namely to understand and justify social order. Two papers from this part challenge contemporary economic theory to live up to this task. Hargreaves Heap points out that the rational choice model only provides incomplete explanations of institution formation. Coordination games used for this purpose typically have multiple Nash equilibria, and selecting the one that will or should be played requires reference to factors that are outside of the standard model. In particular, Hargreaves Heap argues, reference to convention alone is not enough: what motivates people to select one equilibrium is not only dictated by what they think what others will do (in accord with historical precedent), but what they

The works listed here (nearly 500 books and articles) can be viewed and downloaded immediately. I wanted to offer everyone interested the chance to read the fundamental economic works of Marx and also a wide variety of old and recent works about the most important problems of Marxist economic science. I tried to represent all currents of thoughts from within the Marxist economic sciences, along with their mutual critics or about other currents (neo-classicism or “heterodox” schools) from the whole of the economic sciences. I think that, along with these, one should also have access to the main critical works against the Marxist economic theory. All voices must be heard in a dialogue, even if it is a polemic, and Marxists should be capable of coming up with a proper answer to those critics and not to deny them just because they belong to the enemy camp. True science can only benefit from this type of dialogue. I am not against a social role of economics, but against its politicization during research. The goal of science must be the truth, and this goal must reign over the others, which cannot be adequately achieved otherwise. This could be also expressed as a necessity of turning practical consequences of the Marxian economics not into political ‘weapons’, but into social ‘tools’. Psychologically, this would be a passage from a destructive, negativist, and sometime resenting approach, to a constructive, participative, and empathic one. We need neither science for science, nor science with (political) tendency, but SCIENCE FOR TRUTH.

2019

The 2008 global capitalist crisis and its financial intricacies has shattered the Mainstream dictums of efficient market hypothesis and the benevolent role of finance and has regenerated interest in the ‘underworld’ theories of Marx and Marxist Political Economy. This return to Marx has taken place within a broader resurgence of interest in Heterodox economic approaches. However, this much needed resurgence is not without problems. A first one is that despite their obvious failure Mainstream Economics, instead of losing, they increased their grip on the economics profession and academia. The reasons for this abnormal dominance are manifold. A fundamental one is that the dominant classes have not yet found a suitable alternative and that the depth of economic turbulence does not leave them much room for economic concessions to the subaltern classes. A second reason might be that the Heterodox assault against Mainstream economics has, too a great extent, misspecified its target. The b...