What does James K Galbraith think of the work of Thomas Piketty?
James K Galbraith is the economist son of the famous economist John Kenneth Galbraith. Thomas Piketty is the French economist who has caused a storm in the world of economics with his book “Capitalism In The Twenty-First Century” on which I have already blogged here and here and here.
In this interesting essay, Galbraith reviews Picketty’s work and I’ve pulled out a few key quotes:
“The empirical core of Piketty’s book is about the distribution of income as revealed by tax records in a handful of rich countries—mainly France and Britain but also the United States, Canada, Germany, Japan, Sweden, and some others. Its virtues lie in permitting a long view and in giving detailed attention to the income of elite groups, which other approaches to distribution often miss.
Piketty shows that in the mid-twentieth century the income share accruing to the top-most groups in his countries fell, thanks mainly to the effects and after-effects of the Second World War. These included unionization and rising wages, progressive income tax rates, and postwar nationalizations and expropriations in Britain and France. The top shares remained low for three decades. They then rose from the 1980s onward, sharply in the United States and Britain and less so in Europe and Japan.
Wealth concentrations seem to have peaked around 1910, fallen until 1970, and then increased once again. If Piketty’s estimates are correct, top wealth shares in France and the United States remain today below their Belle Époque values, while U.S. top income shares have returned to their values in the Gilded Age. Piketty also believes the United States is an extreme case—that income inequality here today exceeds that in some major developing countries, including India, China, and Indonesia.”
“Thomas Piketty’s book about capital is neither about capital in the sense used by Marx nor about the physical capital that serves as a factor of production in the neoclassical model of economic growth. It is a book mainly about the valuation placed on tangible and financial assets, the distribution of those assets through time, and the inheritance of wealth from one generation to the next.”
“In sum, Capital in the Twenty-First Century is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world’s wealthiest countries. Piketty rightly argues, from the beginning, that good economics must begin—or at least include—a meticulous examination of the facts. Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.”
May 18th, 2014 at 1:28 am
I have been wondering, maybe you have too – the pronunciation of the author’s surname is “Peek-et-tee” (emphasis on the Peek).
“He is forty-two and trim, with a head of wavy dark hair, which put him in the top one percent, hairwise, in the room”.
From The New Yorker, May 5, 2014, p 20-21