Thursday, November 5, 2020

Review of Capital in the Twenty-First Century by Thomas Piketty

This review was written by Eugene Kernes

Book can be found in:
Genre = Economics
Intriguing Connections = 1) The Impact of Inequality 2) Capitalism, Socialism, their Alternatives and Critiques

Elaborate Description

Largely a book that describing the statistics as was its purpose, to update the statistics on capital and inequality. Although I do not agree with the authors economic view, this book is important in discussion of wealth distribution. The author alters and simplifies many definitions which alters the discussion that will proceed. As the author mentions, growth was usually very slow and high growth are related to countries catching up to others. The biggest takeaway is that to make a country more egalitarian, that country needs a major shock like a war.

The proposal to make the world more egalitarian is a tax on capital, which transfers wealth from those who have it to those who do not. The author believes that an inegalitarian country faces becoming less democratic, while not recognizing that arbitrarily placing a higher tax means that someone is taking away property from someone else which is the opposite of a democratic country. The first country to create a democratic tax to fund war, Greece, inevitably used that tax to tyrannize the surrounding city-states which caused a major war to break out; not sure if the author studied the world pre-statistically available data. Another proposal for the socialist state was for government to pay for education, health, culture, development, but then states that "no one wants to empower a head of state to replace university presidents and professors at will, much less to define the content of their teaching". Not sure how the author reconciles the fact that most of what is taught is based on the culture, for instance as global warming debate has entered the culture, more and more universities offer classes that deals with various ways to discuss and solve the problems. A more serious problem would be when the culture teaches something horrendous, like when the democracy of Germany elected Hitler who changed German culture.

The countries used are mostly capital intensive which gives a particular relation between capital and labor, but the opposite relation in labor intensive counties which the author neglects. The countries chosen are part of the so-called developed world only, and mostly from the West. The claim is lack of data. If it does not exist in the statistics found, the author will not mention to the point of misrepresenting the past. For example in his analysis of inflation, claiming that before WWI inflation was close to zero and that "inflation is largely a twentieth-century phenomenon" missed the centuries prior to the data sets of eighteens-century were so many empires fell due to drastic inflation, or in their time a debasement of currency. In describing inequalities, the author does point out the differences between income brackets but mentions that age-cycle, or the age bracket, is not sufficient to alter the individuals inequalities, which fails to notice that people move to different income brackets in their lifetime but usually not in a single year.

Book Details

Edition ISBN:  9780674430006
Pages to read:   579
Publication:     2014
1st Edition:      2014
Format:            Hardcover

Ratings out of 5:
Readability    3
Content          3
Overall           3