Piketty's Capital Research Articles

Theoretical foundations and economic laws in Piketty's Capital: A critical analysis

Theoretical foundations and economic laws in Piketty's Capital: A critical analysis

Hypereconomics: Frank Norris, Thomas Piketty, and Neoclassical Economic Romance

HypereconomicsFrank Norris, Thomas Piketty, and Neoclassical Economic Romance Jason Puskar (bio) Thomas Piketty's Capital in the Twenty-First Century has received a remarkable amount of attention for a book that is neither all that radical in its politics nor all that likely to see the implementation of its main policy recommendations. But through the massive statistical project at its heart, Piketty's book has upended some of the most widely held and most cherished assumptions about the economics of inequality. Over fifteen years, Piketty and a team of collaborators worked to quantify levels of inequality in wealthy western nations since about 1700, and occasionally extending as far back as antiquity. Piketty acknowledges that the task would have been impossible without computers to organize, collate, and query this vast body of economic data, and by doing so he brought historical "big data" to economic policy debates on a scale never previously seen. This massive expansion of the scale of historical and statistical analysis has challenged longstanding assumptions about the relationship between capitalism and inequality, and with it, certain economic orthodoxies that have held sway for more than a century. One important factor complicates this story: another source of economic data for Piketty is literature, especially the social realist novels of Honoré de Balzac and Jane Austen. In fact, Piketty devotes more pages to either Balzac or Austen than he does to any other economist he discusses, including Milton Friedman, Friedrich Hayek, Paul Samuelson, Karl Marx, Adam Smith, or even his main antagonist, Simon Kuznets. Piketty says he includes literary evidence because "it would be a mistake to underestimate the importance of the intuitive knowledge that everyone acquires about contemporary wealth," and that "nineteenth-century novels especially, are full of detailed information about relative wealth and living standards" (2). But that turns out to be a rather surprising claim, given that Piketty's [End Page 28] statistical investigation is designed precisely to remedy the deficiencies of "intuitive knowledge that everyone acquires about contemporary wealth" today (2). The unreliability of intuitive knowledge, informed as it is by a very different kind of economics, is why he needs big data. The question, then, is how Piketty's data analysis relates to the intuitive economic knowledge that nineteenth-century realist fiction represents among its characters and presumed of its period readers, and which is different from our own; and further, how it relates not just to the realist novels Piketty cites, but also to the somewhat different economic knowledge found in naturalist fiction. As the pages that follow will make clearer, Piketty's interest in realism indicates a kinship between statistical representation and realist literary representation, both of which attempt to remedy deficiencies of economic knowledge, even if they also nostalgically represent intuitive knowledge as an ideal. The rise of nineteenth-century realism is itself part of an attempt to represent social and economic conditions that seemed to many people to have become too vast, fast, and complex to know at all. Accordingly, as many critics have argued, realism is a remedy for those who no longer feel they have a solid grasp of the real, and as such realism remains confident that it can organize and impart useful knowledge, even if that knowledge falls short of total mastery.1 In contrast, the literary naturalism of the later nineteenth century exhibits far more profound doubts about economic knowledge, and also about the ability of realist diagnostics to redress them. Many naturalist novels are highly attentive to the material conditions of late nineteenth-century capitalism, but Frank Norris's The Pit also attends to the ways in which an economy becomes known. In a novel about wheat trading in which wheat scarcely appears, the characters instead traffic in information about wheat, gleaned from newspapers, field observers, agricultural reports, crop statistics, rumors, intuitions, and above all, the seemingly magic communicator of price. Despite all this, far from fixing the vagaries of a global grain market through realistic description, The Pit metaphorizes it as an overpowering wave, a vortex, or a wild beast. As the macroeconomy takes one sensational form after another in The Pit, it retreats out of the novel's zone of realist representation...

The mismeasure of Capital: a response to McCloskey

This paper is a response to Deirdre McCloskey's review essay, published recently in this journal, of Thomas Piketty's Capital in the twenty-first century. It argues that McCloskey has set up a number of straw men to attack. Furthermore, her three main arguments against Piketty are flawed. McCloskey wants human capital to be added to Piketty's measure of wealth; she contends that Piketty does not understand the supply-response mechanism; and she accuses Piketty of focusing on the wrong problem—inequality rather than poverty. This paper explains why these are all bad arguments.

Complex Fortune: F. Scott Fitzgerald, Thomas Piketty, and Capital in the Basil and Josephine Stories

Abstract This article applies the theories of wealth and income inequality popularized in French economist Thomas Piketty's recent Capital in the Twenty-First Century (2013) to the Basil and Josephine stories that F. Scott Fitzgerald wrote between 1928 and 1931. As a student of the relationship between inherited and acquired wealth and the social concerns generated from the tension between them, Fitzgerald is as ideal a writer for contemporary commentators to explore the evolving notion of capital in modern society as European novelists such as Jane Austen and Honoré de Balzac upon whom Piketty focuses. In particular, the quintet of Saturday Evening Post tales about Chicago debutante Josephine Perry that Fitzgerald published in 1930–31 capture a new kind of public scrutiny in which pressures from the outside world are exerted on the family. Individual stories in the series such as “A Snobbish Story” document how civic institutions like the opera and the theater demand support and provide respectability, opening up new forms of class mobility that threaten the upper-class presumption of a lineage of taste, style, and beliefs founded in tradition. Josephine's expectations have been hitherto founded on the logic of social order: her family represents the community, and in a fairly exalted way. Post-1914 concepts about social association threaten that logic, however, and Josephine exhibits the jitteriness of a world absorbing new forms of identity that are epitomized by her romantic antagonist John Boynton Bailey. Capturing the erosion of cultural patronage and the insurgence of new ideas of moral relativism, Fitzgerald brought the nineteenth-century novel of money up to date.

Complex Fortune: F. Scott Fitzgerald, Thomas Piketty, and Capital in the Basil and Josephine Stories

Abstract This article applies the theories of wealth and income inequality popularized in French economist Thomas Piketty's recent Capital in the Twenty-First Century (2013) to the Basil and Josephine stories that F. Scott Fitzgerald wrote between 1928 and 1931. As a student of the relationship between inherited and acquired wealth and the social concerns generated from the tension between them, Fitzgerald is as ideal a writer for contemporary commentators to explore the evolving notion of capital in modern society as European novelists such as Jane Austen and Honoré de Balzac upon whom Piketty focuses. In particular, the quintet of Saturday Evening Post tales about Chicago debutante Josephine Perry that Fitzgerald published in 1930–31 capture a new kind of public scrutiny in which pressures from the outside world are exerted on the family. Individual stories in the series such as “A Snobbish Story” document how civic institutions like the opera and the theater demand support and provide respectability, opening up new forms of class mobility that threaten the upper-class presumption of a lineage of taste, style, and beliefs founded in tradition. Josephine's expectations have been hitherto founded on the logic of social order: her family represents the community, and in a fairly exalted way. Post-1914 concepts about social association threaten that logic, however, and Josephine exhibits the jitteriness of a world absorbing new forms of identity that are epitomized by her romantic antagonist John Boynton Bailey. Capturing the erosion of cultural patronage and the insurgence of new ideas of moral relativism, Fitzgerald brought the nineteenth-century novel of money up to date.

Thomas Piketty's Capital in the Twenty-First Century: Economic Analysis or Tract for the Times?

ABSTRACTI argue that the French economist Thomas Piketty's 2014 (American) bestseller Capital in the Twenty-First Century is not the treatise of economic analysis that its author purports it to be, but is rather a work of political partisanship making claims about the supposedly inevitable increase in the share of national income deriving from capital as opposed to labor—to the point where Chinese bankers or Middle Eastern oil sheiks might own “everything,” even people's bicycles, barring either world catastrophe or broad government intervention—that lack any empirical support or logical plausibility. As a professed heir to (what he understands to be) the spirit of the French Declaration of the Rights of Man and Citizen, as distinguished from the American Declaration of Independence, Piketty displays none of the respect for the rights of the individual—including the right not to have lawfully acquired property arbitrarily confiscated by government—that the original American political tradition entails. Nor, indeed, despite his profession of staking everything on “democracy,” does Piketty display any regard for the principle of self-government. Rather, his ultimate, admittedly “utopian” goal, outlined in Part IV of his book, is of a European “budgetary parliament,” selected in vague fashion by the existing parliaments of Eurozone members (not by the people themselves), that would hold sweeping powers to confiscate any privately owned wealth that its members regarded as “excessive” and redistribute it to others they deem more needy or deserving. This body would exacerbate all the difficulties resulting from the European Union's widely publicized “democracy deficit.” Yet Piketty implies it should ultimately be a model for world governance. Ultimately, his cause is the opposite of democracy: the unfettered continental or even worldwide rule of unaccountable bureaucrats, advised by “intellectuals” like Piketty himself, convinced that they know far better than their fellows how the latter should live their lives, and claiming the authority to regulate it accordingly.

Assessing Inequality Using Percentile Shares

At least since Thomas Piketty's best-selling Capital in the Twenty-First Century (2014, Cambridge, MA: The Belknap Press), percentile shares have become a popular approach for analyzing distributional inequalities. In their work on the development of top incomes, Piketty and collaborators typically report top-percentage shares, using varying percentages as thresholds (top 10%, top 1%, top 0.1%, etc.). However, analysis of percentile shares at other positions in the distribution may also be of interest. In this article, I present a new command, pshare, that estimates percentile shares from individual-level data and displays the results using histograms or stacked bar charts.

Thomas Piketty and the Justice of Education

Thomas Piketty's Capital in the Twenty-First Century is best known for its documentation of increasing social inequality, but it also has a notable normative aspect. Although Piketty is far less clear on the normative level than on the empirical, his view of justice can be summarised as meritocratic luck egalitarianism. This leads him to condemn as unjust the fact that inheritance is once again becoming more important than education for determining social position. In this paper, I discuss whether Piketty's normative conception can justify this condemnation. My main thesis will be that Piketty ends up in a dilemma that he cannot resolve with the normative resources he has at his disposal. The horns of this dilemma are defined by whether or not we accept what Susan Hurley calls ‘the regression requirement’, and in both cases the normative distinction between inheritance and education as ways to achieve social positions disappears. Toward the end, I shall suggest an alternative justification for the moral superiority of education over inheritance, which makes use of one of Piketty's key empirical arguments.

Capitalists, Workers and Thomas Piketty's Capital in the 21st Century

ABSTRACTThis paper interprets Piketty's influential work through the lens of structuralist macroeconomic theory, which is a synthesis of the classical, Marxian and Keynesian traditions. It shows that Piketty's key inequality, (the rate of profit is greater than the rate of growth) measures the influence of capitalist consumption on capital accumulation in the context of a growth model with capitalists and workers in the tradition of Nicholas Kaldor and Luigi Pasinetti. The paper shows how in the structuralist model the connections Piketty makes between growth and inequality become more transparent and less confusing than they are in the neoclassical theory he resorts to using. The paper also examines his data with emphasis on two central paradoxes of neoliberalism: with all the upward redistribution of income, there is surprisingly little concentration of the wealth distribution; and with a higher profit rate, there has been no corresponding increase in growth. The hypothesis suggested by structuralist growth theory is that neoliberal capitalism has transformed Marx's ‘accumulate, accumulate' into ‘consume, consume.' The political-economic implications of this hypothesis are significant.

Testing Piketty's Hypothesis on the Drivers of Income Inequality: Evidence from Panel VARs with Heterogeneous Dynamics

Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

Testing Piketty's Hypothesis on the Drivers of Income Inequality: Evidence from Panel VARs with Heterogeneous Dynamics

Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

Missing bridges: a pluralist analysis of the debate on Capital in the Twenty-First Century

This article analyses the debate surrounding Thomas Piketty's book Capital in the Twenty-First Century and asks whether it can be characterised as pluralist, understood as a practice of mutual engagement between researchers from different schools of thought. We review the theoretical framework of Piketty and the responses his work received in the economics community, both mainstream and heterodox. We argue that Piketty's theory remains ambiguous. It builds on ideas of mainstream economics but creates a space for broader discussions by referring to non-mainstream concepts, mainly from other disciplines and not heterodox school of thoughts. Neither the book nor the discussion around it can be characterised as pluralist: Piketty, as well as his commentators, hardly build any bridges between different schools of thought, although the topic of inequality seems to be relevant for all of them. Therefore, this analysis serves as an example for habits and problems in the economic debate.

Methodology in Capital in the twenty-first century: a "new-historical" approach to political economy

This paper explores the methodological foundations of Thomas Piketty's recent book Capital in the twenty-first century. The current literature on Piketty's work lacks consensus as to which paradigm of economic thought Capital fits into (if any). In response to that literature, this paper argues that Piketty offers a new methodological direction for economic science in the form of an analytical 'new-historicism'. The central emphasis of this methodology is an analysis of general dynamic laws on three levels: distribution, institutions, and history. A new-historical methodological framework applies new analytical tools to old economic problems raised by Smith, Ricardo, Marx, and others. This distinguishes Piketty's framework from other contending paradigms or schools of economic thought, thereby alleviating confusion in the current literature surrounding Piketty's book.

Piketty's Calibration Economics: Inequality and the Dissolution of Solutions?

By popularising interest in inequality, Thomas Piketty's Capital in the Twenty-First Century has made a significant contribution. It has helped to change the basic terms of debate regarding wealth and income. However, Capital exhibits several weaknesses. The overall statement of Piketty's 3 laws tends to confuse the reader by conflating capital with all forms of wealth, and capital with the current market valuation of wealth assets. The whole creates a form of empiricism by metrics or calibration. The aggregation also lends itself to data as history rather than as historically grounded explanation of evidence. Concomitantly, it lacks a theorisation of capitalism, of power, of the state, of social movements, and of social transformations. This affects the way in which possible solutions to inequality are conceived. However, it does provoke further grounds for ethical counterargument productive of more progressive solutions to the problems it highlights.

Dorling, D.Unequal Health: The Scandal of Our Times. Bristol: Policy Press. 2013. 400pp £24.99 ISBN 978–1‐44730513–2 (pbk)Dorling, D.Inequality and the 1%. London: Verso. 2014. 234pp £12.99 ISBN 978–1‐78168585–3 (pbk)

Dorling, D.Unequal Health: The Scandal of Our Times. Bristol: Policy Press. 2013. 400pp £24.99 ISBN 978–1‐44730513–2 (pbk)Dorling, D.Inequality and the 1%. London: Verso. 2014. 234pp £12.99 ISBN 978–1‐78168585–3 (pbk)

Inequality, sustainability and Piketty's capital

In this article I address the implications of Thomas Piketty's book Capital in the Twenty-First Century for our understanding of inequality and sustainability, drawing upon Amartya Sen's capability approach, and the revival of classical political economy it brings. I argue that Piketty's contribution is a significant one which has the potential to lead economic analysis in a more fruitful direction. But its potential becomes much greater if its empirical analysis is combined with the revival of classical political economy undertaken by Sen and other authors, rather than with marginalist theory.

Social Accounting for Inequality: Applying Piketty's Capital in the Twenty-First Century

This essay reviews the potential of Thomas Piketty's Capital in the Twenty-First Century (2014. Cambridge, MA: Harvard University Press) to inform social accounting research into economic inequality. Economic inequality is conceptually central to social accounting agendas, yet there has been surprisingly little accounting research in this area. Piketty's text can help build this research agenda by providing a systematic account of the growth and structure of economic inequality, especially since his analysis follows a similar underlying approach to influential texts in social and environmental accounting research. At the same time, the essay argues that social accountants can address limitations of Piketty's analysis, particularly by offering a more nuanced analysis of how economic inequality is embedded in corporate structures and practices. Thus, Piketty's text is not only a timely reminder of why the social distribution of economic resources matters, but also an invitation for social accountants to engage more fully in unfolding public debates about the future of resource distribution.

Wealth and Inequality: Thomas Piketty's Capital in the Twenty-First Century

Wealth and Inequality: Thomas Piketty's Capital in the Twenty-First Century

Anxious intellectuals in a globalising economy

This reivew of Thomas Piketty's Capital in the 21st Century argues that the book's appeal can be explained by the effect of globalisation upon journalists, academics and civil servants. The gains from global trade flow to those who can participate in economic activity across borders, but these three groups of people operate in largely national labour markets and have fallen behind their intellectual peers in the international private sector. Pikettian redistribution may bring the rich down, but it won't improve the intelligentsia's absolute situation.

Progressive Inequality : Rich and Poor in New York, 1890–1920, by David Huyssen

Progressive Inequality: Rich and Poor in New York, 1890-1920, by David Huyssen. Cambridge, Harvard University Press, 2014. 378 pp. $39.95 US (cloth). Given the title chosen by David Huyssen and the debates sparked by Thomas Piketty's Capital in the Twenty-First Century (Cambridge, 2014), I expected the book under review to delineate the measureable inequalities that separated rich and poor in early twentieth-century New York City. Instead Huyssen dissects the qualitative and discursive aspects of class relations and the rhetorical devices that cloaked the reality of inequality. He takes as a given that Progressive-era New York was characterized by a two-class social structure, a ruling class that owned property (or capital) and a subaltern class that faced a precarious existence and lacked adequate and secure income. Huyssen also emphasizes the shifting relationship between class and gender. For Huyssen domestic progressive reform as instituted by the city's upper class became an integral part of the nation's larger imperial project. What does Huyssen add to a story that has had a myriad of narrators and consumed reams of paper from scholars such as Sven Beckert, Allen Davis, Nancy Schrom Dye, and Robin Jacoby? Certainly it is not a single-city variation of Piketty's thesis on how unregulated capitalism creates ever greater levels of inequality. It does not alter Beckert's tale of how moneyed New Yorkers cemented their class power in the city and wielded it in practice. Nor do I think that Huyssen alters what others have previously written about strikes in early twentieth-century New York, the activities of the Women's Trade Union League (WTUL), and the role of social settlements. He does, however, approach the role of the WTUL through the lens of contemporary gender studies and relate the attitudes of upper-class social reformers to the era of high Western imperialism. Huyssen's choice of subjects raises questions as does his selection of actors. Why choose Richard Watson Gilder, Stanford White, Josephine Shaw Lowell, Jacob Schiff, and Lillian Wald as primary reformers? The choice of Gilder makes some sense as he was a key architect of the tenement house reform movement. White seems an odd choice beyond serving as the favoured architect of the city's wealthy and as designer of the new Bowery Savings Bank, a building that Huyssen designates as symbolic of the imperialistic ambitions of New York's dominant class. Lowell personifies the governing values of the city's dominant private charity, the Charity Organization Society (COS), another subject of the book's opening chapters. The COS introduced modern scientific methods of studying and assisting the needy, yet continued to rely on traditional notions that distinguished the deserving from the undeserving poor. Similar questions concern Huyssen's choice of strikes to investigate, the subject of the book's final six chapters. More than half those chapters examine the strikes of immigrant women garment workers, most notably the uprising of the 20,000, the 1909-10 struggle by shirtwaist makers, in which Huyssen toys with gender relations as exposed in the interactions between immigrant workers and upper class women in the WTUL. …