Marx was Right Capitalism is Concentration of Wealth in Ever Fewer Hands

Capital in the Twenty-First Century, by Thomas Piketty,
Cambridge: The Belknap Press of Harvard University Press, 2014. $39.95.

“A part of the bourgeoisie is desirous of redressing social grievances in order to secure the continued existence of bourgeois society.

The socialistic bourgeois want all the advantages of modern social conditions without the struggles and dangers necessarily resulting therefrom. To this section belongs economists, philanthropists, humanitarians…. They desire the existing state of society minus its revolutionary and disintegrating elements.”

– Manifesto of the Communist Party (1848)

Arefreshing break from the reigning orthodoxy of mainstream economics, the title under review has already created a stir in the academia as well as among the general reading public. New York Times columnist and popular Blogger Paul Krugman has called the book “discourse-changing scholarship” and it has entered the magazine’s (and also Amazon’s) best-seller list – a rare achievement for a “heavy” economics text. First published last year in French and then in English this March, it is an incisive, wide-ranging, 696-page treatise, supported by an unprecedentedly vast array of data covering more than two centuries and more than twenty countries.

The discussion revolves round the theme of inequality. As we know, other left-of-centre mainstream writers have been dealing with broadly similar subjects long since, and that with great skill. Good old Amartya Sen published, back in 1973 – when TP was two years old – On Economic Inequality and wrote Inequality Re-Examined in 1992. More recently, Joseph Stiglitz wrote The Price of Inequality: How Today’s Divided Society Endangers Our Future while titles like The Haves and Have-Nots and Income Inequality: Economic Disparities and the Middle Class in Affluent Countries are coming out rather frequently since the crisis struck in 2007-08. These are valuable contributions, but two things make the new arrival very original, very special. One, the “World Top Incomes Database” and the data on the distribution and evolution of wealth, which have been collected by diligent team work over the last 15 or so years and on which Piketty’s inferences are based, will remain a great common resource for all researchers in the field, including those who totally disagree with TP.

Indeed, the author is fully justified when he writes, “The sources on which this book draws are more extensive than any previous author has assembled, but they remain imperfect and incomplete.” And he says in the same breath: “All of my conclusions are by nature tenuous and deserve to be questioned and debated. It is not the purpose of social science research to produce mathematical certainties that can substitute for open, democratic debate in which all shades of opinion are represented.”

Two, linking inequality to capital, to “its vocation, its logical destination”, as explained below.