We’ve been thrilled, surprised and occasionally befuddled by the tremendous (and often tremendously thoughtful) attention being paid to Thomas Piketty’s Capital in the Twenty-First Century. Early discussion has been profitably contentious, with voices from across the political spectrum, and we look forward to seeing the conversation develop further, especially as Piketty continues to speak about the book this month in the US and UK. For now, though, we’ve noticed a few persistent misreadings—perhaps inevitable with a 700-page book—that we’d like to help unravel.
First, and perhaps most significant, is the dispiriting idea that the book proves that ever-worsening inequality is a natural result of capitalism, and therefore inevitable.
Piketty himself will tell you, though, that there’s nothing “natural” about capitalism at all. He says as much midway through the book’s Introduction, just beneath a subheading announcing “The Major Results of This Study”:
What are the major conclusions to which these novel historical sources have led me? The first is that one should be wary of any economic determinism in regard to inequalities of wealth and income. The history of the distribution of wealth has always been deeply political, and it cannot be reduced to purely economic mechanisms. In particular, the reduction of inequality that took place in most developed countries between 1910 and 1950 was above all a consequence of war and of policies adopted to cope with the shocks of war. Similarly, the resurgence of inequality after 1980 is due largely to the political shifts of the past several decades, especially in regard to taxation and finance. The history of inequality is shaped by the way economic, social, and political actors view what is just and what is not, as well as by the relative power of those actors and the collective choices that result. It is the joint product of all relevant actors combined.
The fatalism ascribed to the book relates closely to the skepticism with which some readers receive Piketty’s proposals for amelioration and the political interventions they’d require—as if political solutions would be out of bounds. This, too, ignores Piketty’s demonstration of the fact that current levels of inequality are themselves politically driven.
We asked the book’s editor, Ian Malcolm, for his response to such mischaracterizations of the book’s tenor:
A number of reviewers have interpreted the book as bleak and pessimistic, as if it predicts an inevitable future of oligarchy. What it reveals about trends in inequality is certainly sobering, but the book is far from fatalistic. It’s a powerful reminder that the economy is a human artifact, not a force of nature or an entity so vast and complex it's either pointless or dangerous to try to change it. Thomas reminds us that the economy has always been shaped and molded by politics and public opinion. People have adopted policies that have reduced inequality in the past, and there are means of reducing it now if we make greater equality a political priority. Overall, I’d describe the temper of the book not as pessimistic, but as realistic and determined.
There’s another strain of comment that’s sympathetic to Piketty’s findings but nonplussed by the remarkable response to a book drawing conclusions they regard as self-evident. But these readers, too, miss a central point of the book: the sheer accumulation of evidence itself. Of his time at MIT in his early twenties, Piketty recalls realizing that professional economists—particularly Americans—had turned away from significant efforts to collect historical data on inequality, yet “continued to churn out purely theoretical results without even knowing what facts needed to be explained.” “To put it bluntly,” he continues, “the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.” With his centuries of evidence, Piketty means not just to change the way we talk about the economy, but also to reset the way we do economics.