Editor’s Note: Today’s entry in our forum on Thomas Piketty’s Capital in the Twenty-First Century is by Andrew Lucius, a PhD candidate in political science who specializes in international relations. He is also the co-leader of our Theology & Economics reading group. Our series kicked off yesterday with an introductory post. There, you’ll also be able to access an index of all present and future posts in the forum.
No book received more attention in 2014 than Thomas Piketty’s Capital in the Twenty-First Century. As University of Minnesota economist (and reading group co-leader) Jay Coggins put it, “Arguing over Capital has become something of a cottage industry.” Indeed, googling “capital in the twenty-first century” reveals an almost shocking number of reviews, with responses running the gamut from dismissive to fawning. While our group’s range of reaction was smaller (most would fall on the positive end of the spectrum), we also ended up clustering around two differing views: one clearly positive, one decidedly mixed.
The positive perspective came primarily from group members working in finance. This group found that the trends documented by Piketty fit well with their work experience. In particular, rising inequality was consonant with the increase in compensation they’ve witnessed among colleagues and high-end clients since the 1980s, as well as the general importance of loopholes to their industry. Both elements bolstered Piketty’s claim that inequality gives the wealthy greater influence over various social institutions, which they often use without regard to merit or morality. Perhaps unexpectedly, the strongest criticism in this vein was leveled at the Obama administration, which was accused of providing preferential treatment to finance executives in the aftermath of the 2007-8 financial crisis.
The mixed reviews emanated from those working within the academy. This group was consistently puzzled by Piketty’s imprecise causal arguments. The confusion came primarily from two sources:
- the lack of a comprehensive mathematical model
- the determined, yet cursory, ways in which Piketty associated inequality with political instability
The first issue made it difficult to understand the economic forces underlying and (potentially) sustaining inequality. The second made it clear that–while it may be viscerally distasteful–the social consequences of high inequality (particularly in a post-industrial setting) are not entirely clear.
Overall, both groups agreed with what has become a cliché of Piketty reviews: the data is fascinating and impressive, but the theory falls short by comparison. Interestingly, while it was a weakness for professionals, the vague nature of Piketty’s explanations was an asset for our conversations. We never lacked for compelling questions or interest in outside perspectives. As was remarked numerous times, it almost seemed as if the book was written with such discussions in mind. Given Piketty’s history as a top-notch economic theorist, this may ultimately have been the point.