Thomas Piketty: the French economist bringing capitalism to book
I have previously done a posting about “Capital In The Twenty-First Century” by the French economist Thomas Piketty which is a stunning critique of the capitalist system. I explained that few lay people will read it because it is more than 700 pages long with footnotes, graphs and mathematical formulae.
So it is good that economists like Larry Elliot are writing pieces like this one for a general audience.
He summarises the work:
“The gist of Piketty’s book is simple. Returns to capital are rising faster than economies are growing. The wealthy are getting wealthier while everybody else is struggling. Inequality will widen to the point where it becomes unsustainable – both politically and economically – unless action is taken to redistribute income and wealth. Piketty favours a graduated wealth tax and 80% income tax for those on the highest salaries.”
The message is far from universally popular or accepted:
“Piketty finds the right’s hostility strange. Despite the title’s echo of Marx’s magnum opus, he is a mainstream European social democrat rather than a Marxist. His argument is that the world is reverting to the Belle Epoque of the late 19th and early 20th centuries when conservatives such as Bismarck and liberals such as Lloyd George, Keynes and Roosevelt knew that change had to come.”
The book has attracted the attention of people who are in a position to do something about the inequality which it describes:
“Lord (Stewart) Wood, special adviser to Ed Miliband, says it is a “really important book that has hit a nerve with its scale and scope”. Wood is impressed by the way it exposes sweeping historical trends and has shone a light on wealth as an issue. Admiring the analysis is one thing; accepting the policy prescriptions quite another. Labour will steer clear of some of Piketty’s more radical suggestions, although the author of Capital can’t see a problem.
In Britain, the poorest half of the population owns just 3-4% of the wealth. It must be possible to do better than that, Piketty says, brushing aside suggestions that a wealth tax would destroy capitalism. “You can’t say that 1% off the wealth of the richest will kill the economy,” he says.”