The Piketty Watch- Capital In the 21st Century Meets America

gordon-piketty-saez-389x400There is a stir in the hopelessness of mainstream economics and politics,  a spector rising(?) and in quite visible hands at the center of that stir is a book – again called Capital- but this time by an author called Thomas Piketty- a French Economist who studies inequality and has published plenty on the subject.

In a recent book he authored called Capital in the 21st Century it somehow of all places seems to have created an unusual ground swell in the USA. In fact I am sure the whack- a- mole response will soon be out in mainstream media as the book slowly meanders through the pathways of the press- Krugman gave it a nod,the  New Yorker gave it a review- and now some others seem to see some merit. If it dare take root and grow, it might just be the start of something worthwhile.

 

So here on LivingWork.ca I am launching the official Picketty watch- here is a Google Trend to monitor the progress. It is definitely on the rise- lets hope it will sustain. Today, the launch date- saw it correlated with the following search terms: World Bank GDP, and Inflation targets. Hmmm that might be telling, and it was also trending highest in guess which state? Washington DC! New York was second. This will be updated in real time- but I will also be providing weekly updates from Google Correlate (click here to see what states are searching for Piketty and what search terms he is correlated with). The revolution is indeed just a T-Shirt away- now I just got to get one!
 

And here for Doug Henwood from the Left Business Observer in the US, a listing of searches for Piketty over time by State. And below is a listing of searches for Freakonomics. The timeline for Freakonomics is a lot longer, but if one slides the dates back a bit on freakonomics to its first few months in publication, I would say it had a similar geographic pattern. Currently Piketty does not have enough time under his belt to do a proper comparisn, but it seems like Washington DC has more of an interest than the East coast.

And Here is the google dirt on Levitt’s popular book “Freakonomics” which for some reason my older brother bought for me for my 40th birthday- nine years ago- he is an engineer and would not read an economics book if I force fed it to him. So I have a better question for Doug is Picketty’s book the new book for brothers to get their economist brother for their 40th birthday. I wonder what I will get next year for my 50th? I will update the list.

My review of Piketty’s book

I hate to be negative as the book has a powerful message and it will do some good. It’s central focus on Income distribution as capital’s failing – is a great effort at explaining the flows and stock of wealth. However, given the reality of the actually existing capitalism we are living through- Piketty’s thesis is not capitals’ most critical flaw and therefore proves to be problematic on some fronts. Capitals central flaw is profit as it is constructed and socially defined by the big hammers of the social and cultural powers of economic wealth- which he only touches upon. If profit was forced to include all the externalities of capital’s destructive nature- there would be no profit to extract and hence never enough investment to keep the circuits flowing and the wealth piling up at the one end. (and that does not include the current debt explosion that has overtaken consumers and governments)

So the wealthy and their powers create this numerical accounting that allows profits to be defined with the current concretization. Piketty does a good job of linking the wealth and their cultural control, but does fail to clearly delineate how this wealth is created as much of the risk and the destruction of the living and dead labour, and the land is missing in the modern equations of profit.

The key to change is we need to have a proper accounting for profit and how value is created- it is not the wealth inequality that Marx foretold that destroys capital (although that is a trip wire along the pathway) it is the definition of profit and the accounting that we allow the regime of wealth to culturally control. The inequality and its instability could lead to a rationalizing of the irrational when it comes to profit and the current notions of value- but that is only an accelerator in starting a fire. However potentially that is his goal- to be a fire-starter- and making a point with the wealthy in this space- given the historical lens- does have an impact. But one does wonder- will change ever be forced from the current hands of the global wealth with such tactics? Even two world wars did little to alleviate much in the way of power sharing – the great post war era of 30 years or as we call it here in North America- the golden years of capital mentioned by Piketty- was just a temporary deal to share a bit of power and wealth to make more profit during the rebuilding phase of the post war era. So call me a deterministic fatalist- but at least I am being realistic!

On a more optimistic note, essentially this all could be cleared up with a proper statistical program and information that penetrates deep into the core of the machinations of profit and building of value. Sadly much of the truth telling machinery needed to measure and collect this information- is not available and will never be built- not with the current power in place. Information is indeed all powerful. The technology is here- and the informating ability is also here, and look big data is also starting to make a move to bring it all together.

But a true accounting is far far over the rainbow as it would take new information- and the will to informate, collect, collate, disseminate, educate, analyze, regulate and plan the scarcity we face and the sustainability we need. Yes plan- the varieties of capitalism are planning massively now to extract as much wealth from the system as it exists now- ( what do you think High frequency trading does- plans to avoid risk by controlling markets through super computing and information processing- designed by thousands of mathematical wizards who push and pull around $640 trillion worth of derivative vehicles as estimated by the bank of international settlements up from the $400 trillion prior to the financial crisis- if that is not planning to be too massive to fail I am not sure what is) then why can progressive change not bring forward a new version of a planning regime- one that defines profit and value with a much different perspective- one that indeed engages the information age with every megabyte of information possible to unleash a combination of the smarter machines, and the smarter workers to engage the future and its possibilities of sustainability and more sharing of the wealth.

So my assessment of Piketty- not quite spot on- but it does evoke the symbolism of guillotines of a time in the not so distant past in France and anything that scares the rich- is good during these times where given the gifts humanity has – so much more could be done- but it takes the tribe’s surplus resources to do that- and they are in the hands of the few.

About Paul Tulloch

@ptullochott
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