Magazine article Times Higher Education

Middle Class? Bad Luck

Magazine article Times Higher Education

Middle Class? Bad Luck

Article excerpt

Philip Roscoe extols a mischievous economics blockbuster brimming with ideas and predictions

Capital in the Twenty-First Century

By Thomas Piketty Translated by Arthur Goldhammer

Harvard University Press 696pp, £29.95 ISBN 9780674430006

Published 30 April 2014

As everyone who works with data knows, the answer to a question depends on where you start and stop counting. Thomas Piketty's magisterial and much-hyped tome begins at the beginning (in antiquity) and ends in the not-so-distant future, at the end of the 21st century. Taking in the whole of time and beyond, he offers the staid Anglo-Saxon reader a dreamy combination: exotic, foreign intellectualism, grand theoretical ambition but an ultimately simple message (r>g, no less), and mountains and mountains of data. Small wonder it has taken the anglophone world by storm.

Piketty, professor at the Paris School of Economics and director of studies at the École des Hautes Études en Sciences Sociales, has laboured for years to update the Kuznets Curve, a 1950s vision of the end of inequality in free market America, and to bring the study of the distribution of wealth into the present and beyond.

He argues that Simon Kuznets' post-war optimism was misplaced, and that the real narrative, the long view, is one in which capital is as powerful at the beginning of the 21st century as it was 100 years earlier. What might have looked like an irreversible trend towards greater equality at the height of the Cold War was merely a blip in capital's history of dominance.

Central to his narrative is the "tendency" for the rate of return on capital to outstrip the rate of growth, a gnomic utterance that needs a bit of unpicking. Growth is the only source of returns, so what matters must be the division of spoils; if returns to capital are higher, capital must be taking the lion's share of growth. Piketty shows us that throughout history, capital managed to do just that. His radical contribution is the claim that the rampant growth and low returns of the 20th century, a combination that lowered inequality, were not the beginning of a new history but a temporary exception to the old. They resulted from a very particular combination of social upheavals, not least the Great Depression, two world wars and the collapse of European empire. Thanks to the rise of the "super-manager" in the US and slowing growth in Europe and elsewhere, the 21st century looks set to be as unequal, if not more so, as the 19th. (He has some very bad news for the middle classes, by the way, but I'll leave that discovery to the reader.) Piketty's recurrent analogy is drawn not from novels set in the future, but the classics of the 19th century, from Jane Austen and Honoré de Balzac and their preoccupation with inherited wealth. …

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