The New York Times columnist Paul Krugman has written that Capital in the Twenty-First Century, Thomas Piketty’s new book on inequality and wealth, “will change both the way we think about society and the way we do economics.” Clive Crook describes the raptures with which intellectuals have greeted the book as almost “erotic.” President Obama’s advisers have been buttonholed about Piketty at speaking appearances from here to Dublin. Capital has reached number one on It will provide the template for a lot of sweeping left-wing tax proposals in the coming years. It has been likened to Paul Kennedy’s Rise and Fall of the Great Powers and Reinhardt and Rogoff’s This Time Is Different. But in appearance and éclat, this staid, graph-and-table-clogged tome bears the strongest resemblance to Charles Murray and Richard Herrnstein’s book on intelligence, The Bell Curve, published 20 years ago. Like that book it is a sober work of social science from which one or two points have been made the subject of polemic. Unlike that book, Capital is beloved of elites—which is curious, since it purports to be an attack on elites.

Piketty is a number cruncher. Economists who study inequality have argued over and cited his work for a decade and a half. This new book does something more ambitious than just compare rich and poor. Thanks to computers and the spread of English as an academic lingua franca, it has become easier to cross-compare vast economic databases across long periods of time. Piketty has used wills, census records, and tax documents to measure the distribution of wealth and income in dozens of countries over long periods—all the way back to the eighteenth century in the case of France and Britain. He defines capital (or wealth, which he uses as a synonym) as “nonhuman assets that can be owned and exchanged on some market.” He has discovered that, in the societies we can measure, the importance of capital tends to be stable across time. In the nineteenth and early twentieth centuries, the stock of capital was worth about seven times the national income in Europe and about five times the national income in the United States. (The difference has to do with the availability of cheap land and higher levels of productivity.)

Those societies were unequal: In the United States and Britain in 1910, the richest 1 percent of citizens hauled in about a fifth of the income. And such societies tended to get more unequal because the rate of return on capital (r) is generally higher than the rate of growth (g) in the economy as a whole. Remember the formula

r > g

because it will soon be on T-shirts in college bookstores near you. Investments traditionally get a return of about 5 percent in Europe, 4 percent in the United States, while leading-edge economies grow, on average, at 1 or 1.5 percent a year. So the rich get richer.

The only reason we don’t already have the class structure of a banana republic is that, for a few decades in the mid-twentieth century—roughly the years of the world wars and the Great Depression—capital stock was destroyed by bombs and its value undermined by inflation. But in recent decades r > g has once more begun doing its insidious work. Our capital/income ratios are approaching those of a century ago. In the United States, “income from labor is about as unequally distributed as has ever been observed anywhere.” At book’s end Piketty puts forward a few suggestions for action. They are quite radical. One is a global tax on wealth. Piketty also suggests that European national budgets, which take up half of GDP in some countries, might have room to grow.

Certain reviewers have conflated Piketty’s views with those of Karl Marx—hopefully in the case of the Nation, despairingly in the Wall Street Journal. The latter, in a piece called “Thomas Piketty Revives Marx for the 21st Century,” claimed to see in his work “a moral illegitimacy to virtually any accumulation of wealth” and a hostility to growth. “Not that enhancing growth is much on Piketty’s mind,” the Journal adds, “either as an economic matter or as a means to greater distributive justice. He assumes that the economy is static and zero-sum.” This is all wrong. Piketty, while a leftist of a kind, is explicitly anti-Marxist. He believes Marx’s ideas of falling rates of profit are based on a primitive conception of productivity, and he runs down a variety of French leftist philosophers—Jean-Paul Sartre, Louis Althusser, Alain Badiou—in his footnotes.

Far from ignoring growth, Piketty is obsessed with it. He worries about demographic stagnation, and he worries about productivity. When societies don’t grow, inherited wealth looms large. The societies right now in which it looms largest are geriatric Japan and Italy. Slow-growing societies become rentier societies. Rentier is the word Piketty uses in the original French to mean, neutrally, “living off rent.” But it implies disapproval, too, and it gives off an extra air of decadence and corruption in English, much as “cowboy” turns into a special kind of slur when it passes into French.

Piketty’s belief in the inevitability of certain capitalist processes is one sense in which he resembles Karl Marx. Extreme inequality is inherent to capitalism, in his view, not a product of corruption or chance. Noting that Mario Draghi, head of the European Central Bank, hopes to save the eurozone by promising to “fight against rents,” Piketty writes:

The fact that capital yields income .  .  . has absolutely nothing to do with the problem of imperfect competition or monopoly. If capital plays a useful role in the process of production, it is natural that it should be paid. .  .  . Rent is not an imperfection in the market: it is rather the consequence of a “pure and perfect” market for capital.

Piketty’s objection to Draghi sounds in places more entrepreneurial than Marxist.

Yes, his data undermine the Panglossian position that capitalism is a perfectly self-correcting system, but this position is a straw man. A good proxy for the number of people who actually believe this would be the 1,275,951 people, or just under 1 percent, who voted for former New Mexico governor Gary Johnson, Libertarian candidate for president in 2012. But there is something more interesting about Piketty’s arguments. They are as devastating to those who hail the book as to those who deplore it. In particular, Piketty questions the idea that mid-twentieth-century welfare measures, such as the New Deal, worked to trammel capitalism at all.

Krugman, in an otherwise glowing review in the New York Review of Books, accuses Piketty of an “intellectual sleight of hand.” Krugman wants more on America’s elites. “The main reason there has been a hankering for a book like this,” Krugman writes, “is the rise, not just of the one percent, but specifically of the American one percent. Yet that rise, it turns out, has happened for reasons that lie beyond the scope of Piketty’s grand thesis.” There is actually plenty on America’s elites in Piketty’s book, but Krugman is otherwise right—what Piketty has to say about them doesn’t have much to do with the model the book lays out.

For Krugman, the hinge-year of American inequality is 1980, when Ronald Reagan was elected. “Since 1980 the one percent has seen its income share surge again,” Krugman writes. The Federal Reserve has seen “a dramatic shift in the process of US economic growth, one that started around 1980. .  .  . After 1980 .  .  . the lion’s share of gains went to the top end.” Piketty is not so wowed by 1980. For him, the only break from the perennial depredations of capital comes in a period that shows up on a graph as a U-shaped trough, starting in about 1910 and lasting about a half-century. The ratio of capital to output falls dramatically—from its usual 7 to about 2 or 3 in Europe, and from its usual 5 to about 3 or 4 in the United States. We are now returning to pre-World War I ratios, but this has been a slow process, one that began sometime between 1950 and 1970, according to Piketty’s charts.

It would be easy to read Piketty’s work as a blueprint for a future leftism—but not as a vindication of historic liberalism. “It was indeed the two world wars that wiped the slate clean in the twentieth century,” he writes. It is hard to draw any lessons from them for our own time. There has never been a successful program to tame capitalism, at least no program one would dare to replicate. Consider inflation. It is an innovation of the twentieth century, Piketty shows. In the novels of Balzac and Jane Austen, the yield on land is so steady (5 percent) that it need not even be mentioned. To have an estate worth a million francs is to have a yearly income of 50,000. “The two measuring scales were used interchangeably,” he writes, “as if rent and capital were synonymous, or perfect equivalents in two different languages.”

Piketty has been a bit overpraised for these Balzac and Austen allusions. Their import stretches only to accounting matters. Piketty does not have a great literary style, as, for instance, John Kenneth Galbraith did. But he has a clear one. His book has been excellently translated by Arthur Goldhammer, translator of Tocqueville and the historians Jacques Le Goff and Emmanuel Le Roy Ladurie. Goldhammer also writes, from Cambridge, Massachusetts, a well-informed and biting blog on French politics.

Where inflation is dangerous, so is debt. Many Americans have a vague feeling that there is something progressive and generous-hearted about permitting the government to take on debt. It allows us to go behind the backs of the greedy rich and do something for the poor. When inflation is high, it may work this way, but not in the nineteenth century and not now. Piketty—and here is another place he resembles Marx—takes a very dim view of government debt. When governments want to spend more, they have a choice. They can raise money through taxes. Or they can incur debt by issuing bonds. Doing the latter will entitle bondholders to an enduring claim on a country’s assets. We are returning to a world in which the state pays out regular tribute, even if it is disguised by the way we keep economic statistics. Italy, for instance, has borrowed $2.8 trillion. Recent figures show private wealth growing in Italy. But a quarter of that growth was in government bonds, Piketty notes, meaning it was not so much an asset as “a growing debt that one portion of the Italian population owed to another.”

Piketty presents us with interesting ways of conceiving of property, vital for thinking about inequality. One of these is “Tobin’s Q,” named for the economist James Tobin. The measure compares the market value and the book value of assets, including companies. U.S. firms tend to be worth more than 100 percent of the sum of their parts, German firms less. This, Piketty asserts, is because German firms have, by law and custom, obligations to various “stakeholders” that limit and condition their prerogatives. A large part of the increase in inequality since the war has been an increase in the depth and security of private property rights. In 1948 in most Western countries, an efficient factory might have looked like a target for nationalization or punitive taxation. Now it is to be idolized and wooed with deductions and subsidies. The privatizations of industry in the wake of the Soviet Union’s collapse are notorious to us. But sometimes the change in property rights is so slow that it nearly escapes notice. “The privatization of national wealth in the developed countries since 1970,” Piketty writes, “can be regarded as a very attenuated form of this extreme case.”

Polemics around inequality have won attention for Piketty. But his book is ultimately more interesting as a meditation on history. Piketty, born in 1971, has said he wants to “put the two world wars into proper perspective.” Many things that a quarter-century ago looked like “laws” of history now appear like overeager generalizations from two atypical episodes. He calls the aftermath of World War II a “reconstruction,” in a way that recalls Francis Fukuyama’s discussion of the redeployment of “social capital” in his 1999 masterwork The Great Disruption. Piketty prompts us to ask whether the inequality he describes—through some historic channel we have ignored in our focus on European imperial politics—might somehow have caused the wars of the twentieth century. This is a subtle, serious, and thought-provoking book.

That does not mean that Piketty is a particularly astute or subtle historian. Interviewed in the New Left Review about the mid-twentieth-century history he describes, Piketty seemed to have little interest in the question of whether communism, through public opinion or otherwise, had placed pressure on the capitalist West to make concessions to the working classes and the poor. He misrepresents something the economist Simon Kuznets said in a 1955 talk. Kuznets described certain countries as being “within the orbit of the free world.” Piketty ascribes to him a desire “to maintain the underdeveloped countries ‘within the orbit of the free world.’ ” Piketty offers a partisan narrative of the Socialist/Communist government of François Mitterrand in France after 1981, attributing its capitalist turn to a series of privatizations undertaken by conservatives in 1986, not to Mitterrand’s own surrender after his economic program’s failure in 1983. In establishing the common European currency, the euro, the European Union did not “neglect” taxation and debt in favor of currency. It pursued the euro because it lacked the legitimacy to pursue taxation and debt.

The very best review of Piketty’s book to have appeared is the one the MIT economist Robert M. Solow wrote in the New Republic. Naturally—Solow shaped the modern way economists think about growth. For him, the great achievement of Piketty’s book is its unity. Other explanations of inequality—technology here, globalization there—seemed “a little adventitious, accidental; whereas a forty-year trend common to the advanced economies of the United States, Europe, and Japan would be more likely to rest on some deeper forces within modern industrial capitalism.” For this reason it will be good to fix Capital’s merits in one’s mind. It is likely to become a political weapon in the hands of those whom the historian Jacob Burckhardt called, in 1889, “terribles simplificateurs.”

Piketty has not exactly tried to dodge this outcome. He lauds radicalism and activism. He is full of admiration for the packet of “confiscatory” taxation on top earners passed by Franklin Roosevelt in 1937, even if “by its very nature, such a tax brings in almost nothing.” At such moments the United States was in the world’s left-wing vanguard. He notes that the country had top income-tax rates of 80 percent at a time when no country in the West had seen anything like it before. In the same spirit, Piketty proposes his own innovation: a Europe-wide, and eventually a worldwide, annual tax on capital. It would start at 1 percent for fortunes from $1.4 million to $7 million, and 2 percent for bigger ones. He wants to publish detailed accounts of corporate holdings, because “the accounting data that companies are currently required to publish are entirely inadequate for allowing workers or ordinary citizens to form an opinion about corporate decisions, much less to intervene in them.” Intervene how?

Piketty is right that there is no technical reason why such a tax could not be put into place. In fact, it could fit seamlessly into the regime of financial surveillance that the Obama administration has urged—and many politicians of both parties have abetted—both in broadening sanctions against Putin’s Russia and in forcing an end to bank secrecy in Switzerland. It is democratic politics at the national level that makes such schemes unworkable. Who would get to build the new international system of taxation? The people who know the most, and care the most, about international taxation. That means the people most subject to it. To take nation-states out of the business of revenue collection might actually be giving the wealthy what they’ve sought all along. Piketty seems insufficiently mindful of the risk of regulatory capture.

Or is he ambivalent, even conflicted, in his own attitude towards elites? On one hand, Piketty worries about the way “modern meritocratic society, especially in the United States, is much harder on the losers.” He takes aim at yuppie elites who think that modern capital has somehow “become more ‘dynamic’ and less ‘rent-seeking.’ ” On the other hand, he talks this way himself sometimes, calling our society “hypermeritocratic,” to distinguish it from “hyperpatrimonial” societies. Although he admits there can be overlap, this sounds more like a defense of Western capitalism than a condemnation.

Piketty seems to draw his own ethics of inequality from Article I of the 1789 Declaration of the Rights of Man and of the Citizen, which he quotes several times in the course of the book. “I have no interest in denouncing inequality or capitalism per se,” Piketty writes, “especially since social inequalities are not in themselves a problem as long as they are justified, that is ‘founded only upon common utility.’ ” He keeps finding different ways to say this. “Democratic modernity,” he says, “is founded on the belief that inequalities based on individual talent and effort are more justified than other inequalities.” Whose democratic modernity? Ayn Rand’s? And then: “I want to insist on this point: the key issue is the justification of inequalities rather than their magnitude as such.”

There is a Christian distrust of wealth that you can find in the Gospels and R. H. Tawney. There is of course a Marxist case against exploitation. But it gets harder to justify an all-out expropriation once you are, as they used to say in France, without Marx or Jesus. Amartya Sen and John Rawls, whom Piketty invokes in passing, are poor substitutes. In the end, it would help to know more about the ethical basis for Piketty’s argument against inequality—especially since a depression and two doses of world war seem to be the only proven antidote for the ailment he has diagnosed.

Christopher Caldwell is a senior editor at The Weekly Standard.

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