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Review of Thomas Piketty's Capital: Capitalism vs Democracy

51 points by rohunati 12y ago

cwal37 12y ago
As far as I can tell skimming through these comments, no one else here has actually read the thing. I'm not finished with it yet, so I won't offer a final opinion, but to the page I'm on it's been an impressive work. He's very apt at weaving together a narrative spanning far, far, longer than nearly all economics research, which is backed up with real data they (him and collaborators) spent quite a long time digging up and parsing. The book uses this sweeping dataset to color the major research/writings of prominent economists from several eras. Up to this point I had not read anything that had stepped back to this extent in terms of considering a history of economic thought, but which also backed up the history with data. Personally, I find the basic tenets of his thesis pretty convincing, although, again, I have not yet finished the book. I think this was published at a very opportune time as people begin to read more about the similarities between the wealth structure of the early 20th century and today. Considering the middle of the 20th century as something of an aberration is difficult to wrap my head around, because (like most of us I assume) I've had so little exposure to people and their experiences from before 1940. EDIT: To be clear, the foundation of this book began with research in the 1990s, so it's not as if I was trying to imply it was a completely opportunistic publishing. Rather, I consider it to be somewhat fortuitous to be able to gain a historical appreciation of these trends as they reach new peaks.
- jbooth 12y ago
  I definitely haven't read it, but it's going on my list. How does he contrast the current unemployment situation with the boom-bust cycles during the industrial age? It seems completely different to me. Currently, we've got people being priced out of the job market forever based on their skills and what robots and asian child labor can do. That seems way different from the problems faced by factory workers in the 1900s.
  - jonnathanson 12y ago
    There are a lot of parallels. The Industrial Revolution rendered obsolete a great deal of the agrarian-based economy that preceded it, and many farmers were forced out of work "forever" -- at least as farmers. They had to take up entirely new lines of work, and the transition was messy. In today's context, replace the transition from farming to industry with the transition from industry to knowledge-work and services. Robots and child labor will put a lot of people out of work, indefinitely, depending on the line of work they're in. So they'll need to find new lines of work. But it'll be a long time before robots have rendered all human work obsolete, despite what Singularity proponents would have us believe. There isn't too much fundamentally different between what happened back then and what's happening now; only the set dressing has changed. We're not yet in the era of fundamental shifts in the way labor works. We have not reached the end of history. What's changed between then and now? Predominantly, freer trade and more fluid and fungible labor markets. These have had at least as big an effect on labor as technology has (though the two forces have often worked in tandem). The book is generally pessimistic in its outlook. Some critics argue that even this book, despite the breadth of its historical analysis, doesn't rely on enough data to make predictions. In essence, the book discusses how the postwar decades were a local aberration in a global data set. But one could argue that even the book isn't global enough in its analysis. (Though I'd argue that a more sweeping, global view of history would tend to bear out the book's thesis more than confound it.)
    - loup-vaillant 12y ago
      > But it'll be a long time before robots have rendered all human work obsolete, despite what Singularity proponents would have us believe. I'm jumping on a detail here, but even if that time is near, it doesn't really matter, because the most likely scenario is intelligence explosion: the day the machines render all human work obsolete is the day they are at least as smart as us. Which means they can design AIs on their own. Smarter AIs. And those… Well this eventually means a super-intelligence that could take over the world —and will do so, if it's initial programming includes any unbounded goal, implicit or explicit. (To give you an idea of the potential gap: the other great apes don't rule the world. We do. 'Cause we're smarter, and though of things like picking up some hot blazing stick and taming it for food and shelter —or bridges and nukes, which can't even be explained in terms a chimp can understand. To the AI, we won't even look like chimps. More like mice, or bugs.) So at this point, we're not thinking about the economic consequences of human obsolescence. We're thinking of not being used for spare parts. --- In the meantime, all humans won't be obsolete, so your main point looks okay. I'll just add that however long it takes to reach intelligence explosion, it will probably be a period of perpetual transition: more and more automation, less and less human labour. Technological unemployment has already started, it will only amplify. Whether that's a tragedy or good news depends on how we handle it as a society. (Like, we could have ever more massive unemployment and inequality, or we could have basic income and 4-3-2-1 days work-week —or whatever I haven't thought of and actually works.)
- iandanforth 12y ago
  My beef with economics is the lack of experiment and falsifiable hypotheses. Or perhaps it's a failure to integrate repeated failure of hypotheses into a larger theory. Once you've finished could you report back if there is any attempt to make predictions that can be checked?
  - cwal37 12y ago
    In the case of this book, he's proposing a new "theory" (I'm putting it in quotes because it's weaker than a scientific theory, but stronger than the popular use of the word), with the most comprehensive and far reaching national-level economic dataset that has existed up to this point (as far as I am aware). In that sense, I feel his work is more concrete than most economic research I've read, and it's several orders of magnitude away from the typical economist op-ed with a single chart, and some cherry-picked data. His predictions for the future are pessimistic, and down the line they will certainly be at least partially verifiable. Only partially, because economies are huge and ghastly things, that we apply numbers to, but don't really have a complete handle on. There are almost always enough extraneous or unaccounted for factors for an opposition group to claim an opposing viewpoint. I think part of the value from Piketty's work is that he tries to account for as much of the data that is integral to his theories as possible (moreso than most economists). Writing this has made me a bit thoughtful, so I'll also take this an an opportunity to go off on a related personal tangent/ramble. Hopefully I don't bore you too much, feel free to ignore. I have always, always, been frustrated with economics. A field that is so divisive, but represents itself as a "science", has always annoyed the hell out of me. However, my academic and professional track has brought me further into economics over time, rather than away. Right now I have a BS and MS in environmental science, and an MPA in energy policy. I'm nearly certain I want to pursue a PhD in the future, and it looks more and more like it will probably be in energy economics. One way I have calmed down my inner turmoil over this is to more frankly assess my economist and scientist sides. Basically, the scientist is in love with raw, pure, data generation, while my inner economist is about using that data to generate a picture (or a graph, so many graphs). Another side to this is that my inner economist constantly wants to generate an interesting narrative and draw out the connections between trends, while my inner scientist tears down those hypotheses or works to find the data points which are not influenced by a "narrative". I've been happy on a lab bench centrifuging, pipetting, and doing PCR in the process of splicing soybean embryos, but I also enjoy sifting through census data and plotting $/kWh trends. Ultimately, I still maintain a distrust of the broad field of economics, but I think the phenomenon we broadly place within it could do with a more thorough explication via more scientific methods.
- rosser 12y ago
  As far as I can tell skimming through these comments, no one else here has actually read the thing. This is the internet. You don't need to read something, or even know what it's actually about to have an opinion on it. (No, I haven't read the book yet, either; I'm waiting for Amazon to ship my copy. They said it'll be here by the end of the week.)
- dredmorbius 12y ago
  As far as I can tell skimming through these comments, no one else here has actually read the thing. Given it's a 696 page economics text just released in English, this doesn't much surprise me. I've only managed to 1) acquire a copy and 2) start looking at reviews and interviews with Piketty and others. Anyone who's actually read him in depth either 1) had an advance copy (and still not much time to digest the work), 2) has been following Piketty for some time (e.g., Krugman), or is fluent in French and read the original. Anyone else either hasn't, is lying, or hasn't fully processed the work. The only conclusions I've drawn so far are that Piketty is respected by many, feared by many, and has clearly struck a nerve. I have a nagging suspicion he's missed a few points I consider to be key, though that is, absolutely, based on not having read the actual book. Briefly: I put a lot of stock in the thermoeconomics / biophysical economics, and complexity economics schools (see, e.g., Herman Daly or Charles A.F. Hall, or J. Doyne Farmer and much of the Santa Fe Institute / Institute for New Economic Thinking), which at least in his interviews Piketty doesn't address. My sense is that he's hit a very strong nerve, and that yes, inequality is a significant problem. It's more symptom than a cause, though it also has both effects on the economy as a whole and can likely be addressed in at least part. The work will, I'm pretty certain, be considered important, but it's not the earth-moving revolution which economics clearly and so desperately needs. http://www.reddit.com/r/dredmorbius/comments/23jqiy/j_doyne_farmer_complexity_economics/ http://www.reddit.com/r/dredmorbius/comments/23jqiy/j_doyne_... dang recently posted a link to an excellent overview of the life of Karl Polanyi as well. It generated upvotes but no comments of note: https://news.ycombinator.com/item?id=7610550 https://news.ycombinator.com/item?id=7610550 http://prospect.org/article/karl-polanyi-explains-it-all http://prospect.org/article/karl-polanyi-explains-it-all
  - cwal37 12y ago
    Thanks for the comprehensive comment. I completely agree on the discussion here and that Piketty has struck a nerve. I was just a bit annoyed that no one was even attempting to claim actual knowledge of the book at hand, but was ready to make statements on its content, without any kind of qualifier (really, all I wanted). I have a feeling this is going to be one of those books whose influence, at least in discussion, will be greater than expected given the people in those conversations who didn't read it. I have found it an easier read than I expected though. Right now I alternate between it or Infinite Jest each night, which is a really nice change of pace in either direction. I got the ebook on my tablet to just speed through in bed, but I've realized this is going to be one I'll need a physical copy of eventually to annotate. Thanks for the link to your subreddit, I've subscribed.
jsnk 12y ago
Here is a more critical reading of Piketty (http://business.financialpost.com/2014/04/10/terence-corcoran-the-straw-dogs-of-thomas-pikettys-capitalism/ http://business.financialpost.com/2014/04/10/terence-corcora...). One thing that surprises me when I read reviews about Piketty (I haven't read the book) is that they state as if it's a surprising fact that the inequality is inherent in free market Piketty was smart enough to find out about it. Is this a news to even trained economists?
- deleted 12y ago
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- dimitar 12y ago
  I remember in that in high school when I got writing assignments that I didn't like, I made my life easier by implying that the author is just a communist. Since people in the media were doing exactly that all the time and I did had a very cool teacher I got away with it from time to time.
  - jokoon 12y ago
    Yeah it's always easy to argue that one's wrong because his opinion doesn't work in the actual world. I find it to be the worst, most myopic and misleading argument kind. That's like telling a cow is a bad cow because it's not like the other cows.
- bertil 12y ago
  I was a student in the different Master’s Piketty taught ten years ago. The debate, at the time, was a bit binary; I know the 2007 crisis changed things a bit, but not significantly. Binary: one side people arguing with simple models that one should look into rules and regulations that would promote growth, inherently leading to new elites. Cases mentioned include new wealth from tech, telcos & construction, where marginal cases where key (should software be copyrightable, licensed to be used but not copies when ‘proprietary’, patentable; should incumbent offer access to ‘essential assets’ to encourage investment in infrastructures). The support from old-money to the handful of cases of new-money was not mentioned; neither was the large role played of investment — simply (deregulated) algorithmic trading as another example of the lack of regulation replacing the old guard. Bluntly put: the assumption of perfect rationality meant that investment went to good ideas, therefore social access to wealth wasn’t supposed to be an issue. I am not making it up that any model without perfect rationality was until 2006 laughed out of most polite society: mentioning in passing a coherent model for financial bubbles with something as simple as private success information, two periods and two types of agents got two of my teachers in trouble repeatedly. The other side, namely ‘heterodoxes’, was, and probably largely still is, a very varied group: from Transaction costs economists, the closest to mainstream, who argue things similar to what I mentioned, but with consistent models, nuances and many exceptions; to more exotic animals, including self-confessed Marxists and neo-Marxists. Piketty was part of the most vocal and least theoretical sub-group; mainly thanks to amusing cases of institutional ‘hacking‘ to access national databases for wealth and revenue, he was able to prove something that can come off as obvious to non-theoretical economist. However, redistribution hasn’t really been the focus on that discipline since the 70’s. “New economics” postulated Cliton-inspired steady strong growth, fueled by the digital revolution. One was only allowed one critic: Solow’s Missing computers (“You can see computers everywhere, except in production growth.”) I’ve personally tried to mention that computeres needed a different kind of company structure, with more ad-hoc internal communication tools: that got me “Yeah… Maybe”-s; but if I tried to argue that this meant a thousand employees (Google headcount at the time) could do the work of a million, potentially leaving a generation of obsolete workers, unable to find an explanation of what to do to find a job (with detailed official data in hand), I got into real trouble and I was scolded into remembering that “New economics” meant jobs for everyone. I never dared stay in public that internet-based job search meant faster finds, a lower structural unemployment and that the stable overall numbers actually meant a growing population of long-term unemployed, dropped out of sight by counting standards. Digital Lumpen-proletariat wasn’t a word, and describing Amazon warehouse working condition wasn’t acceptable. Thanks to his incredible skill-set, Piketty was also able to stay active at the most prestigious institutions, rather than be labeled a marginal and ignored by national media. Until 2007, his position were fairly ignored by specialists. Since, critic has come, but still evolving slowly; the current leading edge to me was McAfee & Brynjolfsson last year, and more recenlty Piketty apologising for assuming that the 1% got rich, while it was the 1% of the 1%.
guylhem 12y ago
TLDR : rising inequality a return to "normal" after 2 huge destructions. Inequality is returning to pre world-wars level - ok, that's an easily verifiable fact. However, how do we know it's a bad thing? There is no conclusive evidence that rising inequality will have bad consequences on say growth - it might. We just don't know for sure. OTOH, we know quite well how we got into that "equality" period - destruction of huge amounts of capital and human lives in 2 world wars that turned European countries from world leaders into 2nd rate places - yet very equalitarian (Gini coefficients etc) compared to other places. It doesn't strike me as a "good thing".
- glesica 12y ago
  > There is no conclusive evidence that rising inequality will have bad consequences on say growth - it might. I agree that there is probably more research to be done, but I think it is important not to forget about the social and political implications of inequality. Those pre-world war inequality levels also coincided with less representative governments and more socially stratified societies, both widely viewed as being "bad" things.
  - microcolonel 12y ago
    Of course, if the government can't be malicious on behalf of malicious people, then a less representative government could be a good thing for those with lesser means.
    - glesica 12y ago
      That's an excellent point. I wish I could think of an alternative that would be an improvement, though. The "benevolent, incorruptible dictator" is kind of a cliche in the political science world I think.
- yungchin 12y ago
  He's not just saying inequality is rising, he's also pointing out how: it is because in our time, capital grows at a faster rate than labour output (this is my lay person's reduction, please do correct me if needed). Is the latter a bad thing? It depends what kind of world you'd favour. Let me put it this way: if people whose great-grandparents were innovators but who are now simply in the business of owning stuff get greater rewards in life than people who take risks, innovate and work hard to build new things, is that a bad world?
barney54 12y ago
Here'a a different view on Piketty's book: http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong http://www.bloombergview.com/articles/2014-04-20/the-most-im... TLDR: The Most Important Book Ever Is All Wrong
capz 12y ago
I really don't understand why all this Marx 2.0 stuff is on Hacker News. Marx's ideas have been tried, over and over again, and failed. There are far better essays on capital and technology out there. The Mouse and the Market "If you are for technological progress, and its wide availability, then you should be an enthusiastic supporter of capital accumulation and its rational investment." http://mises.org/daily/1786/ http://mises.org/daily/1786/ Taxing income is horrendous enough, but necessary. Taxing accumulated capital is just plain destructive.
- capz 12y ago
  I see the vanguard is already down-voting. That's fine, but anyone with any knowledge of start-ups should instantly see how the ideas put forth by Piketty are destructive. If I invest in a start-up, that's property. So next year, if the start-up grows and I'm taxed on that growth, I might be forced to sell my private shares to meet my tax obligations. How am I going to do that? And, the year after that, maybe the start-up tanks to a very low valuation, yet I still owe a tax. How is anything supposed to be created in that environment? Or are start-ups somehow special? Do they get special treatment? What about a family farm? Does the farmer have to sell off some land every year to meet his tax obligation? Or does he just continuously raise the price of food every year to offset the wealth tax? I would love to hear some answers from the Marx 2.0 crowd.
  - ahomescu1 12y ago
    I up-voted you, I think you make some very good points. There are some big errors I keep seeing in the "tax the rich arguments" over and over: 1) High income and high wealth are not the same thing. People keep mixing the two together (switching between "tax high incomes" and "tax the wealthy" like they're the same thing). 2) Many rich people don't have huge piles of money lying around, but instead own valuable companies or other assets. For example, Mark Zuckerberg owns a large part of Facebook, but that's not directly convertible into its equivalent in dollars. In fact, after the IPO, he had to pay an enormous amount of taxes on that, which was money he didn't have at the time [1]. 1 - http://www.forbes.com/sites/robertwood/2013/12/20/mark-zuckerbergs-2-billion-tax-bill/ http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke...
dnautics 12y ago
"high rates of inflation that eroded the assets of creditors" So, in theory, even higher rates of inflation would be even better for income redistribution! How did that work in Zimbabwe or Yugoslavia? Sweden, with its low headline inflation over the past 4 decades, must be a cesspool where the rich are eating the children of the poor as a delicacy!
ahomescu1 12y ago
One question that popped in my mind after reading the headline: can you possibly have a non-capitalist free democracy? You can't forbid people from "being capitalistic".
- saraid216 12y ago
  It depends on what you mean by "non-capitalist". For that matter, it depends on what you mean by "free" and "democracy", too, but at that point I'm just being pedantic. You can forbid people from axe murdering their neighbors. What is special about "being capitalistic" that makes it unforbiddable?
  - ahomescu1 12y ago
    > You can forbid people from axe murdering their neighbors. What is special about "being capitalistic" that makes it unforbiddable? Murdering someone is an act; "being a capitalist" isn't. Forbidding "being a capitalist" is like fighting thoughtcrime. You can forbid certain actions that seem "capitalist", but that's not a free society anymore. My definition of "free" is simple: able to do anything you wish, as long as you're not hurting anyone (in general, I mean hurt physically). I'll agree that the definition of "hurting" gets complicated in practice: in a competition, the losers could claim the winners are hurting them by winning (in fact, in the economic competition we all live in, that's exactly what is happening).
    - saraid216 12y ago
      > You can forbid certain actions that seem "capitalist", but that's not a free society anymore. Why not? If we can agree (and I doubt we can) that certain "capitalistic actions" do in fact hurt people, does that not make it possible to forbid capitalistic actions without losing abstract aspirations of freedom? > My definition of "free" is simple: able to do anything you wish, as long as you're not hurting anyone (in general, I mean hurt physically). To me, this reads, "able to do anything you wish, as long as you can get away with keeping others from proving you directly hurt anyone". We're actually pretty okay with people hurting each other in this society, because freedom is more important to us than human beings. Let's do a fairly standard capitalistic action: constructing a building. This is a generally uninteresting conversion of capital, through some risk, into developing property to produce more capital. Can we ever forbid this? Does that restrict freedom? Does it hurt anyone? How can you really tell? The Law of Wheaton works fine for internet conversation, but it's woefully inadequate when discussing political philosophy. You never really answered what "non-capitalist" means to you. That was kind of a more important question.
patrickg_zill 12y ago
I wonder if an equivalently argued book, that didn't encourage more government intervention and control, would get the same level of press?

51 points by rohunati 12y ago

As far as I can tell skimming through these comments, no one else here has actually read the thing. I'm not finished with it yet, so I won't offer a final opinion, but to the page I'm on it's been an impressive work. He's very apt at weaving together a narrative spanning far, far, longer than nearly all economics research, which is backed up with real data they (him and collaborators) spent quite a long time digging up and parsing. The book uses this sweeping dataset to color the major research/writings of prominent economists from several eras. Up to this point I had not read anything that had stepped back to this extent in terms of considering a history of economic thought, but which also backed up the history with data. Personally, I find the basic tenets of his thesis pretty convincing, although, again, I have not yet finished the book. I think this was published at a very opportune time as people begin to read more about the similarities between the wealth structure of the early 20th century and today. Considering the middle of the 20th century as something of an aberration is difficult to wrap my head around, because (like most of us I assume) I've had so little exposure to people and their experiences from before 1940. EDIT: To be clear, the foundation of this book began with research in the 1990s, so it's not as if I was trying to imply it was a completely opportunistic publishing. Rather, I consider it to be somewhat fortuitous to be able to gain a historical appreciation of these trends as they reach new peaks.

jbooth 12y ago
I definitely haven't read it, but it's going on my list. How does he contrast the current unemployment situation with the boom-bust cycles during the industrial age? It seems completely different to me. Currently, we've got people being priced out of the job market forever based on their skills and what robots and asian child labor can do. That seems way different from the problems faced by factory workers in the 1900s.
- jonnathanson 12y ago
  There are a lot of parallels. The Industrial Revolution rendered obsolete a great deal of the agrarian-based economy that preceded it, and many farmers were forced out of work "forever" -- at least as farmers. They had to take up entirely new lines of work, and the transition was messy. In today's context, replace the transition from farming to industry with the transition from industry to knowledge-work and services. Robots and child labor will put a lot of people out of work, indefinitely, depending on the line of work they're in. So they'll need to find new lines of work. But it'll be a long time before robots have rendered all human work obsolete, despite what Singularity proponents would have us believe. There isn't too much fundamentally different between what happened back then and what's happening now; only the set dressing has changed. We're not yet in the era of fundamental shifts in the way labor works. We have not reached the end of history. What's changed between then and now? Predominantly, freer trade and more fluid and fungible labor markets. These have had at least as big an effect on labor as technology has (though the two forces have often worked in tandem). The book is generally pessimistic in its outlook. Some critics argue that even this book, despite the breadth of its historical analysis, doesn't rely on enough data to make predictions. In essence, the book discusses how the postwar decades were a local aberration in a global data set. But one could argue that even the book isn't global enough in its analysis. (Though I'd argue that a more sweeping, global view of history would tend to bear out the book's thesis more than confound it.)
  - loup-vaillant 12y ago
    > But it'll be a long time before robots have rendered all human work obsolete, despite what Singularity proponents would have us believe. I'm jumping on a detail here, but even if that time is near, it doesn't really matter, because the most likely scenario is intelligence explosion: the day the machines render all human work obsolete is the day they are at least as smart as us. Which means they can design AIs on their own. Smarter AIs. And those… Well this eventually means a super-intelligence that could take over the world —and will do so, if it's initial programming includes any unbounded goal, implicit or explicit. (To give you an idea of the potential gap: the other great apes don't rule the world. We do. 'Cause we're smarter, and though of things like picking up some hot blazing stick and taming it for food and shelter —or bridges and nukes, which can't even be explained in terms a chimp can understand. To the AI, we won't even look like chimps. More like mice, or bugs.) So at this point, we're not thinking about the economic consequences of human obsolescence. We're thinking of not being used for spare parts. --- In the meantime, all humans won't be obsolete, so your main point looks okay. I'll just add that however long it takes to reach intelligence explosion, it will probably be a period of perpetual transition: more and more automation, less and less human labour. Technological unemployment has already started, it will only amplify. Whether that's a tragedy or good news depends on how we handle it as a society. (Like, we could have ever more massive unemployment and inequality, or we could have basic income and 4-3-2-1 days work-week —or whatever I haven't thought of and actually works.)
iandanforth 12y ago
My beef with economics is the lack of experiment and falsifiable hypotheses. Or perhaps it's a failure to integrate repeated failure of hypotheses into a larger theory. Once you've finished could you report back if there is any attempt to make predictions that can be checked?
- cwal37 12y ago
  In the case of this book, he's proposing a new "theory" (I'm putting it in quotes because it's weaker than a scientific theory, but stronger than the popular use of the word), with the most comprehensive and far reaching national-level economic dataset that has existed up to this point (as far as I am aware). In that sense, I feel his work is more concrete than most economic research I've read, and it's several orders of magnitude away from the typical economist op-ed with a single chart, and some cherry-picked data. His predictions for the future are pessimistic, and down the line they will certainly be at least partially verifiable. Only partially, because economies are huge and ghastly things, that we apply numbers to, but don't really have a complete handle on. There are almost always enough extraneous or unaccounted for factors for an opposition group to claim an opposing viewpoint. I think part of the value from Piketty's work is that he tries to account for as much of the data that is integral to his theories as possible (moreso than most economists). Writing this has made me a bit thoughtful, so I'll also take this an an opportunity to go off on a related personal tangent/ramble. Hopefully I don't bore you too much, feel free to ignore. I have always, always, been frustrated with economics. A field that is so divisive, but represents itself as a "science", has always annoyed the hell out of me. However, my academic and professional track has brought me further into economics over time, rather than away. Right now I have a BS and MS in environmental science, and an MPA in energy policy. I'm nearly certain I want to pursue a PhD in the future, and it looks more and more like it will probably be in energy economics. One way I have calmed down my inner turmoil over this is to more frankly assess my economist and scientist sides. Basically, the scientist is in love with raw, pure, data generation, while my inner economist is about using that data to generate a picture (or a graph, so many graphs). Another side to this is that my inner economist constantly wants to generate an interesting narrative and draw out the connections between trends, while my inner scientist tears down those hypotheses or works to find the data points which are not influenced by a "narrative". I've been happy on a lab bench centrifuging, pipetting, and doing PCR in the process of splicing soybean embryos, but I also enjoy sifting through census data and plotting $/kWh trends. Ultimately, I still maintain a distrust of the broad field of economics, but I think the phenomenon we broadly place within it could do with a more thorough explication via more scientific methods.
rosser 12y ago
As far as I can tell skimming through these comments, no one else here has actually read the thing. This is the internet. You don't need to read something, or even know what it's actually about to have an opinion on it. (No, I haven't read the book yet, either; I'm waiting for Amazon to ship my copy. They said it'll be here by the end of the week.)
dredmorbius 12y ago
As far as I can tell skimming through these comments, no one else here has actually read the thing. Given it's a 696 page economics text just released in English, this doesn't much surprise me. I've only managed to 1) acquire a copy and 2) start looking at reviews and interviews with Piketty and others. Anyone who's actually read him in depth either 1) had an advance copy (and still not much time to digest the work), 2) has been following Piketty for some time (e.g., Krugman), or is fluent in French and read the original. Anyone else either hasn't, is lying, or hasn't fully processed the work. The only conclusions I've drawn so far are that Piketty is respected by many, feared by many, and has clearly struck a nerve. I have a nagging suspicion he's missed a few points I consider to be key, though that is, absolutely, based on not having read the actual book. Briefly: I put a lot of stock in the thermoeconomics / biophysical economics, and complexity economics schools (see, e.g., Herman Daly or Charles A.F. Hall, or J. Doyne Farmer and much of the Santa Fe Institute / Institute for New Economic Thinking), which at least in his interviews Piketty doesn't address. My sense is that he's hit a very strong nerve, and that yes, inequality is a significant problem. It's more symptom than a cause, though it also has both effects on the economy as a whole and can likely be addressed in at least part. The work will, I'm pretty certain, be considered important, but it's not the earth-moving revolution which economics clearly and so desperately needs. http://www.reddit.com/r/dredmorbius/comments/23jqiy/j_doyne_farmer_complexity_economics/ http://www.reddit.com/r/dredmorbius/comments/23jqiy/j_doyne_... dang recently posted a link to an excellent overview of the life of Karl Polanyi as well. It generated upvotes but no comments of note: https://news.ycombinator.com/item?id=7610550 https://news.ycombinator.com/item?id=7610550 http://prospect.org/article/karl-polanyi-explains-it-all http://prospect.org/article/karl-polanyi-explains-it-all
- cwal37 12y ago
  Thanks for the comprehensive comment. I completely agree on the discussion here and that Piketty has struck a nerve. I was just a bit annoyed that no one was even attempting to claim actual knowledge of the book at hand, but was ready to make statements on its content, without any kind of qualifier (really, all I wanted). I have a feeling this is going to be one of those books whose influence, at least in discussion, will be greater than expected given the people in those conversations who didn't read it. I have found it an easier read than I expected though. Right now I alternate between it or Infinite Jest each night, which is a really nice change of pace in either direction. I got the ebook on my tablet to just speed through in bed, but I've realized this is going to be one I'll need a physical copy of eventually to annotate. Thanks for the link to your subreddit, I've subscribed.

jsnk 12y ago

Here is a more critical reading of Piketty (http://business.financialpost.com/2014/04/10/terence-corcoran-the-straw-dogs-of-thomas-pikettys-capitalism/ http://business.financialpost.com/2014/04/10/terence-corcora...). One thing that surprises me when I read reviews about Piketty (I haven't read the book) is that they state as if it's a surprising fact that the inequality is inherent in free market Piketty was smart enough to find out about it. Is this a news to even trained economists?

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dimitar 12y ago
I remember in that in high school when I got writing assignments that I didn't like, I made my life easier by implying that the author is just a communist. Since people in the media were doing exactly that all the time and I did had a very cool teacher I got away with it from time to time.
- jokoon 12y ago
  Yeah it's always easy to argue that one's wrong because his opinion doesn't work in the actual world. I find it to be the worst, most myopic and misleading argument kind. That's like telling a cow is a bad cow because it's not like the other cows.
bertil 12y ago
I was a student in the different Master’s Piketty taught ten years ago. The debate, at the time, was a bit binary; I know the 2007 crisis changed things a bit, but not significantly. Binary: one side people arguing with simple models that one should look into rules and regulations that would promote growth, inherently leading to new elites. Cases mentioned include new wealth from tech, telcos & construction, where marginal cases where key (should software be copyrightable, licensed to be used but not copies when ‘proprietary’, patentable; should incumbent offer access to ‘essential assets’ to encourage investment in infrastructures). The support from old-money to the handful of cases of new-money was not mentioned; neither was the large role played of investment — simply (deregulated) algorithmic trading as another example of the lack of regulation replacing the old guard. Bluntly put: the assumption of perfect rationality meant that investment went to good ideas, therefore social access to wealth wasn’t supposed to be an issue. I am not making it up that any model without perfect rationality was until 2006 laughed out of most polite society: mentioning in passing a coherent model for financial bubbles with something as simple as private success information, two periods and two types of agents got two of my teachers in trouble repeatedly. The other side, namely ‘heterodoxes’, was, and probably largely still is, a very varied group: from Transaction costs economists, the closest to mainstream, who argue things similar to what I mentioned, but with consistent models, nuances and many exceptions; to more exotic animals, including self-confessed Marxists and neo-Marxists. Piketty was part of the most vocal and least theoretical sub-group; mainly thanks to amusing cases of institutional ‘hacking‘ to access national databases for wealth and revenue, he was able to prove something that can come off as obvious to non-theoretical economist. However, redistribution hasn’t really been the focus on that discipline since the 70’s. “New economics” postulated Cliton-inspired steady strong growth, fueled by the digital revolution. One was only allowed one critic: Solow’s Missing computers (“You can see computers everywhere, except in production growth.”) I’ve personally tried to mention that computeres needed a different kind of company structure, with more ad-hoc internal communication tools: that got me “Yeah… Maybe”-s; but if I tried to argue that this meant a thousand employees (Google headcount at the time) could do the work of a million, potentially leaving a generation of obsolete workers, unable to find an explanation of what to do to find a job (with detailed official data in hand), I got into real trouble and I was scolded into remembering that “New economics” meant jobs for everyone. I never dared stay in public that internet-based job search meant faster finds, a lower structural unemployment and that the stable overall numbers actually meant a growing population of long-term unemployed, dropped out of sight by counting standards. Digital Lumpen-proletariat wasn’t a word, and describing Amazon warehouse working condition wasn’t acceptable. Thanks to his incredible skill-set, Piketty was also able to stay active at the most prestigious institutions, rather than be labeled a marginal and ignored by national media. Until 2007, his position were fairly ignored by specialists. Since, critic has come, but still evolving slowly; the current leading edge to me was McAfee & Brynjolfsson last year, and more recenlty Piketty apologising for assuming that the 1% got rich, while it was the 1% of the 1%.

guylhem 12y ago

TLDR : rising inequality a return to "normal" after 2 huge destructions. Inequality is returning to pre world-wars level - ok, that's an easily verifiable fact. However, how do we know it's a bad thing? There is no conclusive evidence that rising inequality will have bad consequences on say growth - it might. We just don't know for sure. OTOH, we know quite well how we got into that "equality" period - destruction of huge amounts of capital and human lives in 2 world wars that turned European countries from world leaders into 2nd rate places - yet very equalitarian (Gini coefficients etc) compared to other places. It doesn't strike me as a "good thing".

glesica 12y ago
> There is no conclusive evidence that rising inequality will have bad consequences on say growth - it might. I agree that there is probably more research to be done, but I think it is important not to forget about the social and political implications of inequality. Those pre-world war inequality levels also coincided with less representative governments and more socially stratified societies, both widely viewed as being "bad" things.
- microcolonel 12y ago
  Of course, if the government can't be malicious on behalf of malicious people, then a less representative government could be a good thing for those with lesser means.
  - glesica 12y ago
    That's an excellent point. I wish I could think of an alternative that would be an improvement, though. The "benevolent, incorruptible dictator" is kind of a cliche in the political science world I think.
yungchin 12y ago
He's not just saying inequality is rising, he's also pointing out how: it is because in our time, capital grows at a faster rate than labour output (this is my lay person's reduction, please do correct me if needed). Is the latter a bad thing? It depends what kind of world you'd favour. Let me put it this way: if people whose great-grandparents were innovators but who are now simply in the business of owning stuff get greater rewards in life than people who take risks, innovate and work hard to build new things, is that a bad world?

barney54 12y ago

Here'a a different view on Piketty's book: http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong http://www.bloombergview.com/articles/2014-04-20/the-most-im... TLDR: The Most Important Book Ever Is All Wrong

capz 12y ago

I really don't understand why all this Marx 2.0 stuff is on Hacker News. Marx's ideas have been tried, over and over again, and failed. There are far better essays on capital and technology out there. The Mouse and the Market "If you are for technological progress, and its wide availability, then you should be an enthusiastic supporter of capital accumulation and its rational investment." http://mises.org/daily/1786/ http://mises.org/daily/1786/ Taxing income is horrendous enough, but necessary. Taxing accumulated capital is just plain destructive.

capz 12y ago
I see the vanguard is already down-voting. That's fine, but anyone with any knowledge of start-ups should instantly see how the ideas put forth by Piketty are destructive. If I invest in a start-up, that's property. So next year, if the start-up grows and I'm taxed on that growth, I might be forced to sell my private shares to meet my tax obligations. How am I going to do that? And, the year after that, maybe the start-up tanks to a very low valuation, yet I still owe a tax. How is anything supposed to be created in that environment? Or are start-ups somehow special? Do they get special treatment? What about a family farm? Does the farmer have to sell off some land every year to meet his tax obligation? Or does he just continuously raise the price of food every year to offset the wealth tax? I would love to hear some answers from the Marx 2.0 crowd.
- ahomescu1 12y ago
  I up-voted you, I think you make some very good points. There are some big errors I keep seeing in the "tax the rich arguments" over and over: 1) High income and high wealth are not the same thing. People keep mixing the two together (switching between "tax high incomes" and "tax the wealthy" like they're the same thing). 2) Many rich people don't have huge piles of money lying around, but instead own valuable companies or other assets. For example, Mark Zuckerberg owns a large part of Facebook, but that's not directly convertible into its equivalent in dollars. In fact, after the IPO, he had to pay an enormous amount of taxes on that, which was money he didn't have at the time [1]. 1 - http://www.forbes.com/sites/robertwood/2013/12/20/mark-zuckerbergs-2-billion-tax-bill/ http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke...

dnautics 12y ago

"high rates of inflation that eroded the assets of creditors" So, in theory, even higher rates of inflation would be even better for income redistribution! How did that work in Zimbabwe or Yugoslavia? Sweden, with its low headline inflation over the past 4 decades, must be a cesspool where the rich are eating the children of the poor as a delicacy!

ahomescu1 12y ago

One question that popped in my mind after reading the headline: can you possibly have a non-capitalist free democracy? You can't forbid people from "being capitalistic".

saraid216 12y ago
It depends on what you mean by "non-capitalist". For that matter, it depends on what you mean by "free" and "democracy", too, but at that point I'm just being pedantic. You can forbid people from axe murdering their neighbors. What is special about "being capitalistic" that makes it unforbiddable?
- ahomescu1 12y ago
  > You can forbid people from axe murdering their neighbors. What is special about "being capitalistic" that makes it unforbiddable? Murdering someone is an act; "being a capitalist" isn't. Forbidding "being a capitalist" is like fighting thoughtcrime. You can forbid certain actions that seem "capitalist", but that's not a free society anymore. My definition of "free" is simple: able to do anything you wish, as long as you're not hurting anyone (in general, I mean hurt physically). I'll agree that the definition of "hurting" gets complicated in practice: in a competition, the losers could claim the winners are hurting them by winning (in fact, in the economic competition we all live in, that's exactly what is happening).
  - saraid216 12y ago
    > You can forbid certain actions that seem "capitalist", but that's not a free society anymore. Why not? If we can agree (and I doubt we can) that certain "capitalistic actions" do in fact hurt people, does that not make it possible to forbid capitalistic actions without losing abstract aspirations of freedom? > My definition of "free" is simple: able to do anything you wish, as long as you're not hurting anyone (in general, I mean hurt physically). To me, this reads, "able to do anything you wish, as long as you can get away with keeping others from proving you directly hurt anyone". We're actually pretty okay with people hurting each other in this society, because freedom is more important to us than human beings. Let's do a fairly standard capitalistic action: constructing a building. This is a generally uninteresting conversion of capital, through some risk, into developing property to produce more capital. Can we ever forbid this? Does that restrict freedom? Does it hurt anyone? How can you really tell? The Law of Wheaton works fine for internet conversation, but it's woefully inadequate when discussing political philosophy. You never really answered what "non-capitalist" means to you. That was kind of a more important question.

patrickg_zill 12y ago

I wonder if an equivalently argued book, that didn't encourage more government intervention and control, would get the same level of press?