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From Piketty’s Capital to Marx’s das Kapital

Thomas Piketty’s book Capital in the Twenty-First Century has created a very new platform for a discussion of the global economy. There is possibly no other book on economy which has been published in so many languages, printed in so many copies, and has found its way to such a varied global public. Piketty’s Capital has been discussed in many high ranked academic journals, and at the same time, it has come out to a broader audience with advertisements in places like the underground public transportation in metropolises around the world. The title of the book is also very ambitious in so far as the title Capital claims to be a follow up of Karl Marx’s Das Kapital for the twenty-first century. Piketty is similar to Marx in his ambition to give a large historical, or a world historical perspective on the significance of capitalist economy for the development of global society. Given this background it could be interesting to consider the relations between Piketty’s Capital and Marx’s Das Kapital.

 

 

Main Thesis

My main thesis is that although Piketty gives a very essential theoretical and historically based prognosis and critique of the development of inequality as he expects it to increase in the twenty-first century. Ultimately, he is not able to provide a conceptual critique of capitalism which can surpass the basic market perspective in Adam Smith’s tradition of classical and neoclassical economy.

On this basis my thesis is that Marx’s conceptual determination of the capital, das Kapital, the capitalist mode of production, and capitalism in general could contribute to sharpen the outcome of Piketty’s enormous empirical and historical research on the development of inequality in capitalist societies beginning from the French Revolution. In addition, Piketty has also presented a calculated prognosis for the exacerbation of inequality in global capitalism during the twenty-first century.

According to Marx, the development of inequality is not accidental but inherent in the principle of capital and the capitalist mode of production. Therefore, Piketty’s empirically documented development of inequality should lead to a fundamental critique of capitalism. However, this is not the case.

On this background, I would like to consider a change of perspective from Adam Smith’s liberal market perspective to Marx’s productive perspective on capitalism. For Marx, capitalism is seen as an autopoietic bureaucratic and productive machinery or social system, which not only determines the production of inequality but also the basis for all social relations on a global scale.

Outline of the paper

In the following paper, I would like to substantiate this thesis with a presentation of Piketty’s theory, method and main results. I would further like to present Marx’s critical concept of the capital and capitalism. Finally, I would like to illustrate some of the consequences of Marx’s critical theory for the understanding of Piketty’s empirical work.

Piketty’s Capital

 

Piketty’s theory is situated in Adam Smith’s liberal tradition.

Piketty’s work is situated in Adam Smith’s liberal tradition. Adam Smith’s main work Wealth of Nations (1981 I-II) from 1776 is interesting because it represents the foundation of modern economy. Smith’s theory can be read in many ways and it has brought inspiration to many different perspectives on ethics, societal ethics, common moral, political philosophy, political theory, sociology and economy. Normally the economic perspective has been emphasized, but one could say the same regarding the other perspectives.

Wealth of Nations begins with a presentation of the division of labor as the basis for creation of wealth in a nation. Therefore, it should be emphasized that Smith has a general concept of work as the basis for his economic theory. Smith formulated this generalization on the basis of the Physiocrats’ more restricted idea that only agricultural work created value.

The second essential line of thought by Smith is that the products of work should be sold at a price determined in an open market, which on a larger scale implies the world market as its perspective. Therefore, the free market is essential for Smith.

The third line of thought is that the price of the commodity is determined by the work behind the creation of the product. However, Smith is not completely clear on this topic. The other perspective in Wealth of Nations is that the price is determined by the exchange in the market. In other words, Smith’s theory is ambivalent concerning the creation of value.

It is this ambivalence in Smith’s theory, which is in the center of discussion during the next two hundred years among economists, especially in the neoclassical economic tradition.

On the one hand, the work perspective leads to an internal understanding of the fundamental role of work in comprehending societal relations and institutions. This is what leads to the sociological perspective on the relationship between economy and society. Marx’s, Durkheim’s and Weber’s theories should also be mentioned here.

On the other hand, we have the price and market perspectives, which become the dominant perspectives in later economic traditions. It is in these traditions that we find the most economists having an influence on economic practice and on economic education. Thomas Piketty should be placed in these traditions.

Piketty’s research method: economy as part of the social sciences

Piketty is a market economist based in Adam Smith’s liberal tradition and the later neoclassical liberal tradition. However, Piketty has a much broader theoretical and methodical horizon, which should be understood on the background of Piketty’s French formation.

The interesting thing about Piketty’s method is that he wants to integrate economics as a sub discipline of social sciences, alongside history, sociology, anthropology, political science and even literature (Piketty 2014: 573 ff.). Piketty has his specific methodological perspective from the French Annales School and from Francois Furet’s quantitative historical method, which gives him a long and convincing historical perspective (Bouvier & Furet 1965; Piketty 1998; Piketty 2001; Piketty 2004; Piketty 2006). Piketty would not have been able to come to his results, if he had not integrated all these different perspectives.

Following this, Piketty wants to reconstruct the classical political economy as a value based science, which is connected to its political, normative and moral purpose (Piketty 2014: 573 ff.). This is the same ambition found in Adam Smith and further back in classical political philosophy by Aristotle and Thomas Aquinas. The fundamental question according to Piketty is, how public policies and institutions can bring us closer to an ideal society (Piketty 2014: 574). This was also the question raised by Aristotle, Aquinas, Adam Smith, Hegel and Marx. They had very different answers to this question, but they all had in common that the economy should be subordinated to the political, normative and moral value horizon. Economy could not be sustained independent of the moral, social and political interpretation.

According to Piketty, political economy should be a part of public discussion meaning that the shared values should be found in public democratic discussion. According to Piketty, this is not the case in most economic theory and practice in which economic models are used without regard to the political, social, cultural and historical context.

Piketty’s basic thesis: r > g – revenue is bigger than growth in a long historical perspective

Although Piketty has these critical perspectives on economy, he is in many ways still a traditional market economist based in Adam Smith’s liberal tradition and the neoclassical tradition. Piketty’s focus is price, market and equality in the distribution of goods. It is in this background that Piketty is concerned with the liberal discussion of inequality.

Piketty’s basic thesis is that revenue, r, has been bigger than growth, g, during the last two hundred years in Europe and the US, and more generally in all higher developed societies in recent history. Therefore, there has been a tendency towards a strong inequality in the last two hundred years in Europe. In general, this has also been a tendency throughout European history and in all higher developed societies. In that sense, all societies in history have been class based societies, albeit in different forms.

Patrimonial Capitalism

It is Piketty’s expectation that a new form of capitalism has been created, which he calls patrimonial capitalism (Piketty 2014: 173). It could seem to be a new form of capitalism, but in fact, it is a form of capitalism, which was known from the late 1800s until 1914. It is characterized on a huge accumulation of private wealth among a small part of the population, the upper 10%, 1%, 0.1% and 0.01%. At the beginning of the 1970s, the total value of private wealth in the Western societies stood between two to three and a half years of national income. Forty years later, in 2010, private wealth represented between four to seven years of national income in the Western world. The general evolution is clear: This is a strong comeback of private capital in the rich countries since 1970 (Piketty 2014: 173). This concentration of wealth is what Piketty calls ‘patrimonial capitalism’.

Piketty regards the new patrimonial capitalism as a repetition of something, which was formerly known in history from the late 19th to early 20th century. It is characterized by a high concentration of wealth in a low-growth environment like the nineteenth century (Piketty 2014: 237). The crisis of 2008 was according to Piketty the first crisis of the globalized patrimonial capitalism of the twenty-first century (Piketty 2014: 473). He expects that it will be followed by other crises. This is the scenario that Piketty expects for the twenty-first century.

Patrimonial capitalism, heirs and entrepreneurs

Consequently, the strong concentration of wealth can give rise to a tendency where the ‘entrepreneur’ transitions to the ‘heir’ as the basic figure of capitalism. According to Piketty, all large fortunes, whether inherited or entrepreneurial in origin, grow at extremely high rates, regardless of whether the owner of the fortune works or not (Piketty 2014: 439ff.).

Piketty gives a very illustrative example comparing Bill Gates, the entrepreneur among all entrepreneurs, and Liliane Bettencourt, the heiress of the cosmetics company L’Oréal. Between 1990 and 2010, Bill Gates’ fortune increased from $4 billion to $50 billion. In the same period, Liliane Bettencourt’s fortune increased from $2 billion to $25 billion. Both fortunes thus grew at an annual rate of more than 13 percent from 1990 to 2010.

Piketty also mentions Steve Jobs, who is regarded as a more creative entrepreneur than Bill Gates. But at the top of his career, his fortune was only $8 billion in 2011.

Piketty’s conclusion is that inheritance becomes the main access to the creation or growth of fortunes, and not the entrepreneurial spirit. Therefore, wealth is not just a matter of merit, and capital grows according to its own dynamic, when it has passed a certain size. The reason for this is the simple fact that the return on inherited fortunes is often very high solely because of their initial size.

Inequality – The economic system is the problem

It is a common discussion in liberal political theory that inequalities are acceptable if they serve the common good. This is also what has been stated in §1 of the Declaration 1789: “Men are born and remain free and equal in rights. Social distinctions may be found only upon the common utility”. It is on this basis that entrepreneurs becoming extremely rich while compared to other people becomes acceptable.

However, Piketty claims that the entrepreneurial argument cannot justify all the inequalities of wealth, no matter how extreme (Piketty 2014: 443). This is a claim that we find in Rawls’ liberal theory as well (Rawls 1971). As we have seen, the general class based inequality r > g combined with better returns on capital as a function of initial wealth makes it possible that fortunes can grow and perpetuate themselves beyond all rational limits and beyond any possible rational justification in terms of common utility.

In this way, it does even not take one generation to move from an entrepreneur to a rentier. Entrepreneurs can be transformed into rentiers in their own lifetime, and their wealth can be multiplied more than tenfold in twenty years as in the case of Bill Gates and Liliane Bettencourt (Piketty 2014: 443ff.).

The consequence is that even the merit criteria in §1 of Declaration that social distinctions are acceptable if they serve the common utility or the common good is very difficult not to say impossible to concretize. It is very difficult in praxis to sustain the distinction between the entrepreneur and the rentier when the first can be transformed into the second in a very short time as has been exemplified with the case of Bill Gates.

As I understand Piketty, he draws the conclusion that the most important problem is not to clarify whether inequality serves the common utility or not? The most important problem is that the accumulation of wealth among the 1%, the 0.1% and not at least the 0.01% tends to represent 70%-90% of all the countable wealth in global societies. It is this enormous concentration of wealth that justifies Piketty’s use of the concept of patrimonial capitalism.

Patrimonial Capitalism

The concept of ‘patrimonialism’ is situated in Max Weber’s classification as a traditional form of governance (Weber 1980: 682 ff). It has its origins in the specific patriarchal form of authority in the family. Following up, it can be broadened out to concern patrimonial forms of government in which political and or economic power can be concentrated. In this form of government, authority and power form a political unity. It is this traditional unity which transgresses into the power and authority of economic wealth in the patrimonial form of capitalism, as has been described above.

Problems with Patrimonial Capitalism

Per my observations, Piketty draws the following conclusions concerning the patrimonial form of capitalism.

Society will fall behind the French Revolution

Piketty’s perspective is overall that patrimonial capitalism will bring society back to before the French Revolution. Some of the modern institutions may formally be maintained but the reality may be different.

Suspension of basic principles of Human Rights 

The second point is that the basic values of modern society are suspended as they are formulated § 1 of the Declaration: “Men are born and remain free and equal in rights. Social distinctions may be found only upon the common utility”. In patrimonial capitalism, there are basic distinctions which are bound to inheritance and which therefore are transferred from generation to generation. This is exactly what characterizes a traditional pre-modern society. In such a society, men are not equal in rights, because wealth is the basic structuring parameter for the life chances of people in all matters concerning wealth, education, health, work, and political, social and other positions in society. In short, human rights are suspended in such a society.

Suspension of democracy 

The third point is that democracy will be strongly weakened or even suspended in such a society, and there can be no possibilities to develop democracy in such a society.

Stagnation of society 

The fourth point is that patrimonial capitalism will not be able to develop a society because the entrepreneur and innovator will lose their possibilities compared to the primacy of secure reproduction and accumulation of the inheritance.

Violence and corruption will dominate society 

The fifth point is that such a society will be built on violence and corruption instead of legal and deliberative political institutions.

The rule of war between states 

The rule of war between states will be dominant because interstate conflicts cannot be solved through diplomacy and international law.

 

Patrimonial capitalism does already exist in many societies in the world

The description of patrimonial capitalism may seem like a doomsday prophecy, a description of the last days. But in fact, the reality is that this form of capitalism does already exist in different forms in many societies in the world and maybe even the most societies with a developed economy combined with a strong authoritarian and corrupt regime. Even in the US we find signs of patrimonial capitalism, when wealthy people have enormous possibilities to influence elections, political life, allocation of resources and social decisions.

Piketty’s Capital: A platform for a critique of capitalism and its perspectives

In the end, the interesting thing about Piketty’s analysis is in the end that it is an economic analysis on the basis of the fundamental principles of the French Revolution. Piketty’s own conclusion is that the French Revolution failed and is an illusion.

With this background, one could have expected that Piketty had been critical toward capitalism as an economic system. But this is not the case. Piketty is worried about the historical consequences of capitalism, but he does not criticize capitalism in itself as an economic and social system. However, this seems to be a relevant topic as he has at least created a new platform for a discussion of capitalism, because he has uncovered some of the historical destructive perspectives in capitalism.

Marx’s Das Kapital

Introduction to Marx

It is in this background that I would like to discuss Marx’s concept of capital, das Kapital, and some of his perspectives on capitalism. Marx is such an interesting thinker in this context because no one has delivered such a strong critique of capitalism and political economy as him.

If we want to understand Marx’s critique of capitalism, we have to look shortly at his intellectual background and development. Marx (1818-1883) is a German intellectual strongly influenced primarily by Hegel’s political philosophy. Marx is a Hegelian who criticizes Hegel’s perspective on state, civil society, politics, and economy in Kritik der Hegelschen Staatsphilosophie 1844 (Marx 1841/42: 20-149). His basic critique of Hegel’s Philosophy of Law (Hegel 1955; 1991) is that Hegel ‘aufhebt’, lifts up or sublates the basic contradictions in civil society into a reconciliation, ‘eine Versöhnung’, in the State as an all-encompassing unity of the contradictions in civil society. According to Hegel, the contradictions in civil society were first of all constituted through the struggle between economic agents, who were only concerned with their own business. This is an insight Hegel had acquired through Adam Smith’ Wealth of Nations (Smith I-II 1981) and David Ricardo’s Principles of Political Economy and Taxation from 1817 (Ricardo 1996).

In his Kritik der Hegelschen Staatsphilosophie 1844, Marx mostly critizised Hegel’s Aufhebung and Versöhnung. Later on, his project became to reconstruct this political and political-philosophical critique of Hegel as a critique of political economy. Therefore, it would be right also to consider Marx as a Hegelian in this later period of his life after 1849, when he arrived as a political refugee to London. This is also what Marx remarks in his postscript to the second edition of Das Kapital (Marx 1970: 27f.). Marx comments on his method and claims that there must be made a distinction between the research (die Forschungsweise), in which the subject is taken in consideration, and the presentation (die Darstellungsweise), in which the topic is reconstructed as it has taken place. Die Darstellung, the presentation, means for Marx the same as how the subject can be developed in an idealized way which gives the impression that it could be a pure construction. One could say that it could give the impression of being a pure construction without relation to the reality in so far as it should present the essential (das Wesen) of the topic. In that sense, ‘die Darstellung’ could also be considered as a form of presentation and interpretation at the same time. Although Marx claims to be a materialist, he has such a style of presentation that it does remind us of a constructed model in the idealistic tradition of Plato and Hegel.

Marx’s Hegelian method

It is very essential to understand Marx’s Hegelian method, because it indicates that for Marx and for Hegel there are always two levels in the understanding of social phenomena. On the one hand, we have the surface, ‘die Erscheinung’; this is the empirical level, where the events happen. On the other hand, we have the understanding of the phenomena; this is the level where the essence, ‘das Wesen’, is expressed. As the third step, Hegel and Marx claim that it is only from the perspective of the essence, ‘das Wesen’, that we can understand the empirical level, where the events take place. According to Marx and Hegel, this was the meaning of dialectics.

It is exactly this phenomenological double perspective with the movement from Erscheinung to Wesen and from Wesen to Erscheinung, which is so strange for the American and English way of thinking, and is also the dominant perspective in modern liberal economy. However, it is this double perspective, which gives Marx the possibility to make a critical reconstruction of the political economy and present a new perspective on the relation between economy and society.

Marx’s project is to reconstruct the classical political economy

With this background we can discuss what Marx is concerned with in Das Kapital. Here we should remark on the subtitle of Das Kapital, which is Kritik der politichen Ökonomie – Marx wanted to criticize and reconstruct the political economy because it did not present what should be its essence, das Wesen. One could say that Marx wanted to write a new edition of Smith’s Wealth of Nations. According to Marx, political economy had moved away from a scientific project to a political project that was only concerned with price and market, the surface, ‘die Erscheinung’, because it served to hide that the dominant economy’s ‘Wesen’, the workproces, was based on exploitation of the workforce, who produced value and surplus-value.

Marx did not finish his project; he did not finish the presentation of the total reproduction of the economic system. In that sense, we cannot say that Marx has presented a model for the total reproduction of the economic system. Marx edited only the first volume of Das Kapital in 1867. Friedrich Engels edited the next two volumes with support from Marx’s remaining manuscripts. Therefore, the question is what status can Marx’s theory have, when it is not finished in the same sense as Adam Smith’s Wealth of Nations is a finished work?

The three edited volumes of Das Kapital, the collection of Marx’s preparatory work papers collected in Grundrisse der Kritik der Politischen Ökonomie (Marx 196-?), combined with the rest of Marx’s work give a sufficient basis to understand Marx’s new theoretical contribution to the political economy. Marx presented the basic principles in a critical theory with a new perspective on political economy understood as the reproduction of what he called the capitalistic mode of production or the capitalistic economic system. Broadly speaking, it gives a new understanding of the basic principles in a capitalistic society. In that sense, Marx’s theory provides the basis for a sociological understanding of the relation between economy and society, and in a wider perspective for the interpretation of history.

The glorious and tragic days of Marxism have ended. Therefore, today Marx’s theory should be seen in line with other economic and sociological theories, and it should be seen as part of a hermeneutical work, which in the end determines the integration of the different possible scientific perspectives.

With this background, I would like to present some of the essential topics in Marx’s theory in Das Kapital and Grundrisse, which will be relevant for a discussion of Piketty’s Capital. I will concentrate on the first chapters of Das Kapital as it is here that we find the basis for all of Marx’s theoretical construction.

The concept of Capital – The constitution of das Kapital

It already becomes clear from the title page itself that Marx’s Das Kapital is a very special treatise. On the one hand, it is in fact very similar to Hegel’s Philosophy of Right (Hegel 1955), and on the other hand, it is very different compared to Adam Smith’s Wealth of Nations and Piketty’s Capital. Therefore, it can be enlightening to compare it with these treatises.

Smith’s theme is the nature and causes of the wealth of nations, and chapter 1 begins immediately with a presentation of the division of labor as what has mostly improved the production of wealth (Smith 1981, I: 13 ff.). All the categories here and in the rest of the treatise refer to empirical matters. All of Smith’s categories have an empirical reference.

The same could be said about Piketty’s subject, which is equality and inequality with reference to the distribution of wealth.

Marx’s Introduction does not have this character. The title of the book, Das Kapital, is an abstraction and does not have an immediate empirical reference. The subtitle is Critique of the Political Economy. This means that the treatise is concerned with a critique and reconstruction of political economy as we know it from Smith and Ricardo. The subtitle of the first volume of Das Kapital is the Capital’s Production Process. The subject in Das Kapital is the capital. This is very strange in itself. How should capital be understood in a determined form? Normally we understand capital in quantitative terms, however, in Marx’s determination of das Kapital (Marx 1970: 12) we have to do with a concept. Capital is a conceptual abstraction, and it is the production and reproduction process of this subject, which is the topic of Das Kapital. This is also, what Marx emphasizes in the introduction to the first edition of Das Kapital in 1867 (Marx 1970: 11-17). In the postscript to the second edition from 1875, Marx comes back to the same theme concerning his method, which he designates as being the same as Hegel’s method, although turned around, because Marx claims that Hegel is an idealist, and Marx claims to be a materialist (Marx 1970: 27). I think that the two methods are very closely connected, and I find it difficult from a methodological perspective to see the difference between the beginnings of Hegel’s Philosophy of Right and Marx’s Das Kapital.

Marx’s development of the concept of capital

The first chapter of Das Kapital begins in the same abstract style with an analysis of the wealth in a society dominated by the capitalist mode of production, which presents itself as an amazing collection of commodities. The skeleton, ‘die Elementarform’, the basic element of such a society is the commodity. This is the reason why Marx begins his analysis with an analysis of the commodity.

In chapters 1-3, Marx develops all the basic concepts of work such as the production of the commodity, the use and exchange value of the commodity, the equal exchange of commodities, and the invention of money as the means of exchange of equal values.

I would especially like to emphasize chapter 1, section 4, where Marx introduces the fetish character of the commodity and it’s secret. In a commodity producing society, all social relations become hidden in the commodities, which are all a product of the work process. It is the commodities that seem to be the real actors in society (Marx 1970: 86). This is the beginning of the creation of the alienation in a society dominated by the capitalist mode of production.

In the third chapter, Marx describes how money becomes the general presentation of the circulation of commodities. There is a change from the form ‘commodity – money – commodity’ to the form ‘money – commodity – money’. In this way, money comes into the center of society and becomes an aim in itself.

In the fourth chapter, The Transformation of Money into Capital, Marx questions the addition of value when only equivalents are being exchanged all the time. Marx’s simple answer is that the workforce, ‘die Arbeitskraft’, is a commodity, which has the ability to produce more value, a surplus value or ‘Mehrwert’, than it costs to reproduce it.

Marx speaks about the transformation of money into capital, when the production takes the character of a production of surplus value, ‘Mehrwert’, and in that sense a production of Capital (Marx 1970: 180 ff.). Marx speaks about society as a capitalist society when the production of capital dominates society.

The term ‘capitalism’ is a technical term, a concept for a specific form for economy and society. The concept capitalism has its origin in the Late Latin word capitale derived from caput, meaning ‘head’, which is also the origin for chattel and cattle in the sense of moveable property. Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, or money carrying interest. In English language, the word capitalism is used since the 1850s as the determination of a specific form of society, in which capital and capitalist modes of production have a determined significance.

On the basis of the concept of capital, Marx’s project is to develop an all-encompassing description of the reproduction of a society dominated by the capitalistic mode of production. As mentioned, Marx did not finish this project. In this sense we could say that Marx did not succeed. However, this would not be a correct judgement, because Marx developed the base for a new understanding of economic significance in a modern society.

I will not go in detail with a further presentation of Das Kapital, but would only like present some of the consequences of Marx’s perspective. I speak here about the abstract theory in itself and not about the specific historical forms, which are determined by many other historical and social factors. In that sense, the abstract principle of capital does only indicate the determinate productive principle in a specific historical form of society.

Marx gives a totally new perspective on liberal economy

The essence is that Marx determines a new perspective on economy and society. Das Kapital, the capital, is a driving machine or subject, which aims to produce capital in an escalating intensity and quantum. This is also determined as accumulation of capital.

Das Kapital is a critique of the liberal market economy

Marx theory is a critique of political economy. The word ‘critique’ could be mystifying. Therefore, let me first express what I think critique means in this context. It primarily means to show what is inconsistent, hidden or suppressed in the understanding of a liberal market economy, and secondarily to present a reconstruction of a basis for another understanding of economy. In the liberal economic perspective, the economy does only mediate social relations; it does not produce social relations. The basic categories are therefore price, market and commodity. In this perspective, the economy is in itself a neutral mediator. In Marx’s perspective, it is different.

Das Kapital is the productive and destructive subject of society

In Marx’s perspective, das Kapital not only produces ‘Mehrwert’ and ‘Kapital’, or is not only an economic productive force. Das Kapital forms a society, its institutions and its social relations in a specific adequate way. In this context, the following topics can be emphasized:

Commodification

Das Kapital has a tendency to create a commodification of all social relations and all human life.

Die groβe Profanierung – All pre-given norms are broken down and restructured in accordance with the new historical imperatives

All pre-given norms are broken down, because they are under pressure to be relativized and commoditized. This is ‘die groβe Profanierung’, this is the big profanation of the Holy and of all social norms. In The Communist Manifesto, it is stated in this way: “All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind” (Marx 1968b: 529).

Die groβe Verschleierung – the big concealment

The big paradox in capitalism is that its consequences are ‘verschleiert’ or veiled. The astonishing thing is that this veil is constituted through the liberal market economy, in which all distinctions are ‘aufgehoben’, lifted up and abolished in the general equivalent, money, at the market. All social distinctions are relativized and hidden on the market. In the end, there is only the distinction more or less of the general equivalent, money.

The big illusion – the liberal market economy produces the big illusion about society

The liberal market economy creates or produces the big illusion about this same form of society, because the abolishment of all distinctions becomes a hindrance for critique. We are all equalized in the general equivalent, money. Therefore, there is no internal way from the liberal market economy to a critique of the specific formation of the social relations, because these distinctions are not inherent in the economic theory. The liberal market economy is constituted through an abstraction from the possible distinctions.

Summing up – Marx has presented a specific theory which can be applied on empirical work with economy and society

What I have presented are the basic principles in Marx’s critique of the political economy. As mentioned, Marx has developed a much broader and differentiated theory compared to, what has been presented here. However, in the end, what we have from Marx is a theory with a specific perspective on economy and society, making it possible to apply it in specific empirical work.

From Marx to Piketty – From Piketty back to Marx

 

Marx and Piketty on empirical work – What is the difference?

In this context, it could be interesting to question how empirical research would be different in a Marx perspective compared to a Piketty perspective. Let us imagine that Marx had conducted similar research as Piketty on the development of inequality in France the last 200 years. What would be different? I am not sure that the concrete research method would be different. Piketty has gone down to the sources and tried to give an answer to his question. The difference would lie in how the questions are posed. Piketty poses his questions inside the horizon of the liberal market economic theory and the neoclassical economic theory. He does not pose questions to or discuss this economic perspective. It is as if it were pre-given or impossible to fundamentally question it. Consequently, we do not move outside the framework of this economic perspective.

The practical results of Piketty’s research are not very significant compared to the enormous research he has done.

The taxation card is Piketty’s only solution to the huge problems created by growing inequality. However, Piketty does not really believe that it is possible to establish the necessary taxation system. Therefore, one could say that there is a lack of critical potential in his theory although he delivers amazing empirical material. The practical results of his research are not very impressive compared to the enormous research he undertook.

Marx’s perspective on empirical economic research

On the other hand, Marx has an incomparably stronger critical theory, which can help pose many interesting research questions and could be integrated in an empirical project.

In the end the dividing line between Piketty and Marx is the following. For Piketty, the liberal market economy is regarded in itself as a neutral system. For Marx, the problems of inequality observed by Piketty are an inherent consequence of capitalism. It could simply not be otherwise because a basic principle in capitalism according to Marx is capital accumulation and capital concentration. Piketty remarks that contingent historical events, the first and second world wars combined with a strong left wing policy, created the basis for diminished inequality in the period 1945-1975, and not fundamental changes in the liberal economic system.

In Marx’s perspective, it would also have been a good idea to change inequality through taxation. However, the interesting perspectives are the basic contradictions in the economic system itself, and whether these contradictions can find a practical solution is a political question.

 

Marx and Piketty – research perspectives and strategies

What to do in a world dominated by the liberal economic perspective?

A basic question would be how one should conduct research in economic oriented topics when most research resources are concentrated around the liberal economic perspective. The strategy could be to integrate research from the liberal economic perspective in a hermeneutical horizon, which is more influenced by critical theory. In this way, it would be possible to use the given empirical resources in another critical hermeneutical perspective in which an inherent critique of capitalism could be formulated.

References

Declaration of Man and the Citizen 1789

Bouvier, Jean; Furet, François; Gillet, Marcel (1965), Le mouvement du profit en France au XIXe siècle, Paris and La Haye, Mouton & Co

Hegel, G. W. F. (1955), Grundlinien der Philosophie des Rechts, Hamburg, Felix Meiner Verlag.

Hegel, G. W. F. (1991), Elements of the Philosophy of Right, Cambridge, Cambridge University Press.

Marx, Karl (1968), Die Frühschriften. Stuttgart, Alfred Kröner Verlag.

Marx, Karl (1968a), Kritik der Hegelschen Staatsphilosophie 1841/42, in. Marx, Karl (1968), Die Frühschriften. Stuttgart, Alfred Kröner Verlag

Marx, Karl (1968b), Manifest der kommunistischen Partei, in: Karl Marx, Die Frühschriften. Stuttgart, Alfred Kröner Verlag.

Marx, Karl (1970), Das Kapital band I, MEW 23, Berlin, Dietz Verlag.

Marx, Karl (196-?), Grundrisse der Kritik der politischen Ökonomie, Frankfurt, Europäische Verlagsanstalt.

Piketty, Thomas (1998), Les hauts revenus face aux modifications des taux marginaux supérieurs de l’impôt sur le revenu en France, 1970-1996, CNRS, URA928, numero 9812. [High-Income Taxpayers’ Reaction to Marginal Income Tax Rates Changes in France, 1970-1996].

Piketty, Thomas (2001), Les hauts revenus en France au 20e siècle: inégalités et redistribution, 1901-1998, Paris, B. Grasset.

Piketty, Thomas (2004), L’impact de la taille des classes et de la ségrégation sociale sur la réussite scolaire dans les écoles françaises: une estimation à partir du panel primaire 1997, EHESS, Paris-Jourdan.

Piketty, Thomas; Valdenaire, M. (2006) L’impact de la taille des classes sur la réussite scolaire dans les écoles, collèges et lycées français – Estimations à partir du panel primaire 1997 et du panel secondaire 1995, Ministère de l’éducation nationale, Paris.

Piketty, Thomas (2014), Capital in Twenty-First Century, Cambridge Massachusetts, The Belknap Press of Harvard University Press.

Rawls, John (1971), A Theory of Justice, The Belknap Press of Harvard University Press, Cambridge, Massachusetts.

Ricardo, David (1996), Principles of Political Economy and Taxation, Amherst, Prometheus Press.

Smith, Adam (1981), An Inquiry into the Nature and Causes of the Wealth of Nations, Volume I-II, First edition 1776, Indianapolis, Liberty Fund.

Weber, Max (1980), Wirtschaft und Gesellschaft: Grundriss der Verstehenden Soziologie, 5. Rev. Aufl. Tübingen, Mohr.

Thomas Piketty – The Adam Smith of the Twenty-First Century?

 

The essential achievement of Capital in Twenty-First Century is that it represents a revival of political economy, in the classical sense, on a global scale.

In Piketty’s book, economics is initially regarded as a social science and, in the end, as a moral, philosophical and political science. Here, we are placed in the tradition of Aristotle, Thomas Aquinas, Adam Smith and Karl Marx. In this manner, Piketty utilizes an economic perspective and reconstructs the unity in the practical sciences, at the same time as he recognizes that each of the different human sciences has its special perspective.

Piketty’s book could be regarded as a revival of Adam Smith’s main work, The Wealth of Nations (1776) in which the modern political economy was grounded. Later on, economics became an independent and specialized social science that lost its relation to the other social sciences. This has especially been the case in the period after the Second World War, when economics increasingly became an exercise in mathematical calculation, a mathematical modeling technique that totally lost its connection to the other social sciences. During the same period, the global economy has been developed on an unprecedented scale. Consequently, it has become difficult to discuss global society within the perspective that signified the classical political economy.

On one hand, we had the dominating economy, where it was possible to make some mathematical calculation about specific economic topics without any relation to a broader social scientific, political, and moral understanding of the significance of the economy for society and its environments.

On the other hand, we had the social sciences, sociology, political sciences, law, humanities, historical sciences and, finally, the moral sciences in their broadest sense. These sciences could criticize the economically driven uniform creations of global society, but they were not able to substitute the economic perspective and therefore, in the end, their impact was relatively limited.

Consequently, economics had become the triumphant sovereign perspective for understanding the transformation of modern global society. Given this background, it cannot be underestimated that Piketty reintroduces the classical political economic perspective in economics and on today’s global society. This is the essential significance of Piketty’s book. It has created anew a platform for a discussion of essential topics of classical political economy.

In this context, it should be emphasized that the global perspective is the central perspective in Piketty’s book. He recognizes that the economy has transformed the world into a global world. It is from this perspective that he tries to understand the transformation of the nation states in the world. By so doing, Piketty gives an articulate understanding of how the economy may be able to transform global society in the twenty-first century. In this context, the long historical perspective from the past to the future becomes essential. Piketty’s description could be called a historical analysis of the transformation of modern society from the origins of capitalism in the 18th century until the global perspective of the 21st century.

In the following, we would like to present some of the essential topics of Capital in Twenty-First Century, and in conclusion pose some questions for a further discussion of Piketty’s book.

 

 

I.The Fundamental Arguments in Piketty’s Capital in Twenty-First Century

 

Part 1: Income Capital and Inequality

In the introduction and part One of Capital in Twenty-First Century, Piketty poses some of the fundamental questions of political economy: What is capital? How is the wealth in the world distributed? Has wealth increased so that there is more equality or is the situation of wealth the same in the world? Piketty looks at the relation between income and capital, and argues that capital still has paramount significance for income today and that this implies reproduction of inequality. Therefore, according to Piketty, it is still capital and not work that is the basis for income in society.

Piketty gives the following important definition of capital: ”The first fundamental law of capitalism is ? = r x ?, where r is the return on capital. This links the capital stock to the flow of income from capital. The capital/income ratio ? is related in a simple way to the share of income from national income, denoted ?. The formula is ? = r x ?. For example if ? = 600% and r = 5%, then ? = r x ? = 30 %. “The return on capital is the central law of capitalism. Return on capital is a broader notion than the rate of profit and the rate of interest while incorporating them both” (Piketty 2014: 52)

For example, the housing market in Paris shows how an old relation between ownership, rent, and capital is still reproduced. It was also like this in the 20th-century and 19th-century novels that just took the capital income on real estate or other capitals for granted. We can see this in the novels of Balzac or Jane Austen. The author makes many references to the description of money and wealth of characters in novels. He argues that this helps us to understand the perception of wealth and inequality, but it also shows the changes from the 19th to the 20th century, because Jane Austin and Balzac can easily use money to describe the wealth of their characters in the sense that Austin’s characters earn approximately 1,000 pounds when they are rich, and 30 pounds on average a year just to live. Balzac talks about 10,000-20,000 francs on average to live well (Piketty 2014: 105 f.). This reference to literature to understand economics is an important contribution to the creation of a methodology of economics beyond the exclusive formal references to mathematics.

In the book, the growing inequality in the world is analyzed in terms of world regions. If we compare the numbers of population with input-output of capital/production in different parts of the world, we cannot really document a convergence of equality between the parts of the world even if the number of people and total output in Europe and America has decreased. Due to the increase of population in Asia and Africa, inequality between the regions still becomes bigger (Piketty 2014: 60-61).

Piketty says: “To sum up, global inequality ranges from regions in which the per capita income is on the order of 150-250 Euros per month (Sub-Saharan Africa, India) to regions where it is as high as 2,500 Euros to 3,000 Euros per month (Western Europe, North America, Japan) that is ten to twenty times higher. The global average, which is roughly equal to the Chinese average, is around 600-800 Euro per month.” (Piketty 2014: 64)

But these figures have to be corrected with regard to differences in purchasing power and exchange rates in different regions. So there may be important regional differences to take into account. We still see a situation where the rich countries have a higher income of their domestic product because they invest more abroad, and own more than their domestic product abroad. This is particularly true of Africa where foreign investors akin to the old colonial days still own more than 20% of the country’s capital producing units. So the rich countries earn money on capital ownership in the poor countries.

One possible conclusion from this is the following: That the rich countries still own a large part of the poor countries could be regarded both as good and bad. It can facilitate access to the international economy and growth, but it can also be a danger to development and self-determination, in consideration of marginal utility theory, meaning that the poor countries do not equally get access to their goods like the rich countries, who get increased wealth but do not need it as much as the poor countries.

The book discusses the law of cumulative growth. There is a close link between demographic growth and economic growth. Capital ownership structure has a close influence on this relation: “The central thesis of this book is that an apparent small gap between return on capital and rate of growth can in the long run have powerful and destabilizing effects on the structure and dynamics of social inequality. In a sense everything follows from the laws of cumulative growth and cumulative returns” (Piketty 2014: 77).

According to the law of cumulative growth in demography, we were 600,000,000 in year 1700, now we are 7 billons, and if this continues with cumulative growth dependent on life expectancy and birth rate in year 2300, we may be 70 billion. The accumulation of people in the developing world, and the stagnation of people in the developed world will lead to greater inequality due to the inequality of capital income in the developed and the developing world. The people in the regions with little demographic growth will become richer because of their increased capital income. On the other hand there is no doubt that growth has been extremely important for the developing countries. We have now moved from a life expectancy of 40 in the 18th Century to 80 in the 21st century, and today it has become normal to have access to health care and cultural goods. But can we sustain this kind of growth?

When we look at growth in the 20th century we see that rapid growth only happened in Europe in the glorious period between 1945 and 1970. This was due to the fact that Europe was far behind the US and could reach the US quickly during that period. After that period, growth has been slower, close to an average of 1.5 % annually. In fact, liberalization policies in the 1980s did not change this, and there is no evidence that state intervention really caused harm to growth. However, it is difficult to foresee growth and we cannot predict how growth will increase in the future and growth may also decrease in the 21st century.

Piketty talks about the “double bell curve of global growth”: “To recapitulate, global growth over the past three centuries can be pictured as a bell curve with a very high peak. In regard to both population growth and per capita output, the pace gradually accelerated over the course of the eighteenth and nineteenth centuries, and especially the twentieth, and is now most likely returning to much lower levels for the reminder of the twenty-first century” (Piketty: 2014: 99).

 

 

Part 2: The Economic Dynamics of Inequality

In part two of Capital in Twenty-First Century, the dynamics of capital/income ratio over time are analyzed. Piketty argues that the present state of inequality in the 21st century in Europe is just a return to the situation of the 19th century, which was interrupted by the public policies following the Second World War. Starting with the references to Balzac and Jane Austen, where the unequal distribution of wealth in 19th-century society is clear, Piketty analyzes the distribution of wealth in western societies today. He shows that a small group of people owns virtually most of the wealth, while millions of people have a very limited relation to capital. Piketty shows that the richest 10 % owns 60 % of the wealth, while the remaining 90 % owns very little and of only 40 % of the wealth (Piketty 2014: 259). They own so little that capital for them is a very abstract concept. The growth of the middle class in the 20th century was the social invention that contributed to hide these differences in wealth from view and, possibly, from memory.

 

 

Part 3: What was the Justification of Inequality?

In the third part of Capital in Twenty-First Century, Piketty questions the justification of this inequality. We can call it a hyper-patrimonial society, that is, a society based on inherited wealth. This was the case in Europe. In the US there was hyper-meritocratic society, a society of super-managers, but this distinction does not hold. Piketty does not only make the mathematical measures of inequality by Gini and Pareto, but he also uses real examples from life to illustrate inequality. However, if we look at the numbers, the fall in inequality in the 20th century is due to the collapse of rentiers and high income from capital, at least this is the case in France (Piketty 2014: 274). But, we have gone from a society of rentiers to a society of managers (Piketty 2014: 278), where the managers today are the ones with the high income. After ’68, a minimum wage was introduced in France and this increased equality, but from the 1980s this trend did not continue so strongly and from the 1990s super-salaries was introduced to top managers. In the US, the numbers of rentiers in the beginning of the 20th century were lower than in Europe, but they existed. The US were even more egalitarian than France between the 1950s and 1980s. However, since then inequality has exploded and contributed to the instability of the US economy and led to the financial crisis. The highly paid superstar managers in the US have recently contributed to the increase of inequality.

How should we understand wage difference and inequality? Education plays a key role. In particular, minimal wages are important to avoid inequality in combination with investment in education. But the race between technology and wages cannot explain the increase of top-income in the US since the 1980s.

In the beginning of the 20th century, inequality in Europe was bigger than in the US, even in the Scandinavian countries, including Denmark. The top incomes in Germany increased during the Nazi-period 1933-1938, and later in the 1950s. We can also document rising inequality in salaries in the developing world, particularly in China, after the changes to a capitalist system in the 1980s.

Piketty has also studied inequality of capital ownership. In France a tax on estate and gifts was established in 1791, and this gives us a historical picture of wealth distribution since that time. In fact, we can document hyper concentration of wealth during the Belle Epoque in France, and we can also document hyper-concentration of wealth in Europe in the 19th century, particularly in societies prior to the First World War. The society of rentiers flourished during “la belle époque”. It seems that the return on capital is greater than the growth rates in such “inheritance societies”.

Inequality remains very big: “To recap: the inequality r > g (return on capital is bigger than growth) is a contingent historical proposition, which is true in some periods and political contexts and not true in others. From a strictly logical point of view it is perfectly possible to imagine a society in which the growth rate is greater than the return on capital – even in the absence of state intervention” (Piketty 2014: 358). This is a historical relation that changes in different historical periods. The fundamental inequality r > g can explain the failure of the French revolution (Piketty 2014: 365). The concentration of wealth today, though markedly lower than in 1900-1910, remains extremely high (Piketty 2014: 375), and taxation may not change this fact.

Piketty says: “To sum up: the fact that wealth is noticeably less concentrated in Europe today than it was then in the Belle Epoque is largely a consequence of accidental events (the shocks of 1914-1945) and specific institutions such as taxation of capital and its income. If those institutions were ultimately destroyed, there would be a risk of seeing inequalities of wealth close to those observed in the past or, under certain conditions, even higher. Nothing is certain: inequality can move in either direction. Hence I must now look at the dynamics of inheritance and at the global dynamics of wealth. One conclusion is already quite clear, however: it is an illusion to think that something about the nature of modern growth or the laws of the market economy ensures that inequality of wealth will decrease and harmonious stability will be achieved” (Piketty 2014: 376).

Piketty studies capital accumulation in the long run. Referring to Balzac he asks whether study and hard work or marriage with a rich person or inheritance leads to wealth. He looks at the annual flow of inheritances in the long run, and he can document that “the inheritance flow accounts for 20-25% of annual income every year in the nineteenth century with a slight upward trend toward the end of the century” (Piketty 2014: 379). From 1910 until 1920 it diminished, and from 1920 until 1980 it was rather low (from 10% to 4% to 7%). From the 1980s it began to rise again, and in the year 2010 it seems to be 12% (Piketty 2014: 380). The baby boomers had very little inheritance, but the children born in the 1970s and 1980s have already inherited. For them the decision to buy a house may have been dependent on this (Piketty 2014: 381).

Decreasing mortality rates do not necessarily influence the transmission of gifts as inheritance. Inheritance is also realized through the transmission of gifts. Inheritance occurs later in aging societies but is still very important. In the aging society there is a growing importance of inheritance and gifts are given approximately ten years before the death of the donor. Gradual increase of gift giving between generations contributes to enforce this trend (Piketty 2014: 393). In an aging society people also inherit a larger amount. If we look at the distribution of inherited wealth since 1790, we can see that 25 % of income comes from heritage while 75 % from work. But this is very unequally distributed. This explains the young man Rastignac’s dilemma, that is, rich people were a very little group so it is difficult to find a rich girl, so it may be better to work to get a decent salary (to be or not to be!).

Inheritance represents one quarter of total lifetime resources of cohorts born in 1970 or later. So we are moving towards the society of petits rentiers (Piketty 2014: 418). The fact of living of money from the past will increase. This is the case with the movie Dirty Sexy Money. In France today we see the reemergence of inherited wealth – and not only wealth achieved by hard work, education or merit. This is the case even though the words rents and rentiers took on very pejorative connotations in the 20th century. In the book the concepts are used in their descriptive sense. Capitalism remains a society of rentiers even though it has become more democratic. The return of inherited wealth seems to be a global phenomenon. This is the case not only in Europe and the United States, but globally as well. We can see this among others with the increase in global billionaires.

The wealthiest 0.1 % on the planet, some 4-5 million out of an adult population of 4-5 billion apparently possess fortunes in the order of 10 million Euros on average, nearly 200 times of the average global wealth. The wealthiest 45 million possess 3 million euros on average (Piketty 2014: 438). Liliane Bettencourt, the heiress of L’Oreal had a fortune that increased from 2 billion to 25 billion dollars from 1990 to 2010. This was a little less than Bill Gates and more than Steve Jobs (Piketty 2014: 440). However, the entrepreneurial argument cannot justify such differences in wealth. Is the inequality of the fortunes justified? Moreover, Piketty discusses the Sovereign Funds of the Oil states like Norway, Abu Dhabi, Saudi Arabia and other gulf states. What about all the people who worked very hard in the businesses? Maybe we need a progressive fiscal tax on capital!

 

 

Part 4: Regulation of Capital in Twenty-First Century

In part four of the book, Piketty deals with this question about regulation of capital in the Twenty-First Century. Can we imagine political institutions that contribute to the regulation of these issues?

Piketty thinks that a progressive tax on capital is the way to solve the challenges of the 21st century. Piketty argues for greater state intervention in the economy. He looks at different solutions to inequality problems in relation to university systems, pension systems, tax systems etc. Then he argues that we need to rethink the progressive income tax and introduce a global tax on capital in chapters 14 and 15 of the book. It is argued that estates must be more heavily taxed than income.

Piketty argues that it was war, not democracy that gave us progressive taxation. We need to rethink income tax in a more egalitarian way in the globalized economy. However, a global tax on capital is a utopian idea. It is difficult to impose a tax on global wealth. A simpler solution could be automatic transmission of banking information.

There is a contributive and intensive justification for capital tax. The three types of tax on income, on capital, and on inheritance complement each other.

Piketty proposes also a European wealth tax enforced by European institutions and the European central bank. A tax on capital is a better and less totalitarian solution than a centrally planned economy. Piketty says: “To sum up: the capital tax is a new idea, which needs to be adapted to the globalized patrimonial capitalism of the twenty-first century. The designers of the tax must consider what tax schedule is appropriate, how the value of taxable assets should be assessed, and how information about asset ownership should be supplied automatically by banks and shared internationally so that the tax authorities need not rely on taxpayers to declare their own asset holdings” (Piketty 2014: 534).

The tax on private capital is the most efficient solution to reduce public debts. This is a way to solve the problems of the current crisis in many states. It is presupposed that this would be the solution for the European Union.

 

 

II. Some Essential Questions for a Further Discussion of Capital in Twenty-First Century

Instead of moving towards a society of equal chances and resources, we face a society with increased inequality. In this sense, Piketty’s book represents an important challenge to mainstream ethics and political philosophy.

However, we can still point to a number of important questions that remain after this discussion of Piketty’s work. In particular, it would be possible to address the following questions to Piketty’s work:

1. Are Marx and Piketty right when they argue that capital will be the basis for income rather than work in the long run, or do they forget that value-creation through work will still makes work very important?

2. How should we evaluate the dangers to democracy of increased individual wealth? Should we argue that this is not only a challenge to equality, but also to political freedom and social cohesion in democratic societies?

3. Does the law of accumulative growth work? The belief in the existence of such an economic law seems to be the fundamental presupposition of the work of Piketty.

4. How should we evaluate the use of literary examples in Piketty? They seem to be very important. But can we give them an essential significance for economic theory?

5. Is Piketty right in saying that, due to capital ownership, the developing world is still owned by the developed world?

6. Is it really true that we live in a hyper-patrimonial society where richness and wealth are based on inheritance and rentiers after all? It seems that this is the case, and that it is an illusion to believe that we live in a kind of democracy with equal conditions for everyone – given for example the fact that most students at Harvard have parents who belong to the richest 2% in the US.

7. What should we say about the idea that it was accidental that there was equality in the 20th century due to the world wars. How do we ensure equality in the future, without wars?

8. What about Piketty’s analysis that we live in a society where people get 25% of their life income from inheritance, and that this will also be the case in an aging society because even though inheritance will only come later, it will still be a general part of society’s function? Is that not contradictory to the idea that older people today want to spend their money rather than to give it to their children? Maybe Piketty underestimates the egoism of the ‘68 generation?

9. Is the idea of a global tax on capital income the way to proceed? If it is only possible at the EU-level, what does it mean for the national tax systems?

10. What will happen if we do not have such a tax in the future – will we, as Piketty suggests, experience further increase of inequality throughout the world?

These questions do not exclude the significance of Piketty’s research. As mentioned in the introduction, the essential achievement of Piketty’s book is that this book represents a revival of political economy, scaled for global society, in the classical sense. Economics is placed as a social science and a humanistic science, and in the end as a moral and political science. In this manner Piketty utilizes an economic perspective and reconstructs the unity in the practical sciences. At the same time as he recognizes that each of the different human sciences has its special perspective.

Piketty’s reconstruction could be called a historical analysis of the transformation of modern society from the origin of capitalism in the 18th century till the global perspective in the twenty-first century. In conclusion, Piketty revives the political-economic project of Adam Smith and Piketty’s work has already had an impact comparable to that of Adam Smith during the 1770s. Therefore, it would be fair to see Piketty as the Adam Smith of the Twenty-First Century.

 

Reference Piketty, Thomas (2014), Capital in the Twenty-First Century, The Belknap Press of Harvard University Press, Cambridge, Massachusetts and London.