Remember early 2014? The Winter Olympics in Sochi were just over. The Malaysian airliner went missing. Ebola broke out. I had only been on Hubski for a few months.

And in a Dutch news column, a historian was pitching this odd book:

    I want to introduce someone, a French economist whose name won't ring a bell. According to some, he already belongs among the economic greats like Adam Smith, Karl Marx and John Maynard Keynes. Last year he published his magnum opus.

    Title: Capital in the 21st Century.

    Length: 970 pages.

    Message: Rastignac's dilemma is back.

I remember that over the summer, everyone started talking about this fascinating and boring book. So I put it on my read list and never got around to it like most people.

Fast forward four years, two degrees, two transcontinental Hubski meetups and sixty (really? sixty? woah) badges. When I sent kleinbl00 an article on home ownership inequality and how it was creating an increasingly more difficult to overcome divide, he suggested it might be time to read That One Long Ass Book On Inequality.

Which I did, in less than two weeks, with more than 7,000 words of notes jotted down hastily and full of typos in my note-taking system. It's one of those rare books that sketches an ambitious big picture, but does not shy away from diving deep into smaller topics - both precise in its paragraphs and accurate when you take a step back and consider the broader strokes.

The reason I wrote down so much is precisely because he has a lot to say. I'm not the ideal person to give a good review of its contents here - what I remember from high school econ classes is vague at best. But I'll give it a shot regardless.

The broad strokes, are these: Piketty presents a Grand Theory of Capitalism, one that won't predict what the Dow will do, but does attempt to predict what will happen with capital and its distribution over the long run.

(Spoilers: it will accumulate and concentrate.)

Piketty sets himself apart from pretty much every other economist by taking a uniquely historical perspective - which makes sense, since his core argument and the long run I mentioned is on the order of decades and centuries. He shows that up until WW1, there was a steady and increasingly rich class of people who could live off the rent on their assests, known as the rentier. Then, two wars and the Great Depression happened, with inflation wiping out large shares of this wealth.

After the wars, there was a brief window of opportunity for an emerging middle class to grasp some shards from a broken rentier class to build some wealth with. Despite that, we are slowly sliding back towards levels of wealth concentration like we saw before the wars. In a society that doesn't grow as much (you know, that dropping birth rate that everyone is dealing with right now), over the long run inherited money will become more and more important, and that's exactly what we see happening between the seventies and today. Instead of a significant rentier class, we now have a petite rentier class of people who will inherit more than one person can ever earn on minimum wage in a lifetime (which is $750k in today's money). This class of people has risen from <2% of the populatoin born in 1910s to 15% for people born in the 2010s. And parallel to wealth accumulation and concentration, there is also the issue of extreme wage inequality. Piketty shows that the U.S., right now, has the largest wage inequality of any country or region at any point in history.

The datasets he uses to support his arguments are not just from old documents and tax records, but also from literature, which was a fairly reliable proxy up until the 19th century. In addition to adding history to economics, he also argues that the political and social domains are inextricably related to the economics of wealth, such that they must be studied together.

The end result is a 970 page Powerpoint presentation that weaves all of the above into one interdisciplinary fabric. Yes, it is fundamentally boring (like this review! heyooo). And it is written with the dry precision that even the best scientists can never break free from.

But Piketty neatly summarizes each chapter at the beginning and the end, and really only introduces two formulas and one inequality to wrap your head around. Really, the hardest thing, which I keep coming back to, is what exactly to do with all the content that I found worth writing down - the things I want to wrap my head around. I could've written this review in half a dozen different ways considering all the topics I could slice from it and talk about; from the death of meritocracy and social mobility, via the rise of the supermanager, to the US becoming an oligarchy devoid of its egalitarian spirit.

It's all in there. While there's a historical synthesis to be made, I think Capital's real value is in how it will inevitably clash with other books, ideas and opinions, considering it has aimed - and largely succeeded - in building an overarching narrative of capitalism, wealth, economics, and people. As someone else once said better: "individual topics tend to be less enlightening than the connections between them." I for one am curious as to how I will look back to this book in another four years - what connections I will have made with this and other books or ideas.

previously, on Veen Feels Like Writing:



kleinbl00:

The one thing missing from Capital in the 21st Century, because it would have overshadowed everything else, is the massive transfer of wealth from the rentier class prior to WWII: both from the pogroms of Russia and then the Soviet Union, and the confiscation of wealth and property of Europe.

Basically the post-war boom was fueled by money stolen from the Jews.

Piketty does point out that Chicago-school monetarism is pretty much bullshit because its models are all based on that massive influx of wealth, which is one of his arguments for bailing on the US. But yeah - think on that for a moment. Saint Milton Friedman and his posse? Yeah, their economics work best when your initial conditions involve six million dead Jews.


posted by veen: 28 days ago