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Friday, 8 May 2015

A new economics for the new millennium? Review of Thomas Piketty's "Capital in the Twenty-First Century"


At over 600 pages (don’t be put off, it’s a real finger in the face of what became the neoliberal economic orthodoxy in many pro-Austerity jurisdictions). Piketty’s book has been for some time the talk of the economics town. And it’s big in more ways than that. If ever a book called out for an E-version this is one. But disappointingly to reviewers piqued by an opportunity to contrast Piketty’s book’s heft to the disappointing anti-climax it delivers.there’s muscle here not just statistical flab.  

My Grannie knew well that the rich get richer than the 99%, not because they’re smart but because they’re rich, And for all his data – Piketty is a data guy – he can be accused of  simply putting numbers to what my Grannie and many others unread by my Grannie, like Karl Marx, for instance, have long known. To use Piketty’s notation r (return from capital) is greater than g (growth). The wealth of those who start with it grows more than the rate of economic growth would predict, or warrant. So Piketty has taken the economic world by storm by demonstrating with numbers that the rich are getting  more from our common wealth than its increase supports. And so inequality continues to grow.

If this were all Piketty were claiming then we, with my grandmother, could nod and yawn, ascribing his  sudden fame to the lamentably blinkered  normality constructed during nearly twenty years of neo-liberal hegemony in economic circles. But there’s more to it. Piketty calls for reinvestment and re-regulation to undo the damage to what he calls the social state by the anti-tax, anti-government "free market"  regimes that have dominated the world's biggest economies in recent years.Piketty is a key ally of the social economy through his data-based assault on neo-liberal  economics. But he is too much of an orthodox economist to dabble in social economic waters. Reinvesting in the post-war social state, as Piketty urges, is certainly timely and necessary, but it will not bring about the new, social economy that will avoid another boom and bust economic cycle,if the mainstream ‘free market” is left  largely to is own devices, however constrained by the social state. Another world is possible but will not come about unless social economic models are replaced.                   

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