The English-language mondediplo.com site of Le Monde Diplomatique has
Why Piketty isn't Marx. Well, of course I clicked and was rewarded with these gems of economics, scholarship, and criticism:
1.
We should not ignore the book’s merits. Every commentator must be
impressed by the scale and quality of Piketty’s statistical work. But
its
principal virtue lies in the fact that it is a book. Most
economists, driven by the need to publish, have unlearned the skill of
writing books. Instead, they produce technical papers (not longer than
the 15 pages allowed by academic journals) so standardised that they
lose all meaning. Capital in the Twenty-First Century is the
thousand-page culmination of 15 years of dedicated toil. The usefulness
of social sciences is never so clear as when they contribute to the
political debate with solidly established facts.
But all the methodological rigour in the world will not make up for
the most basic deception, so obvious that it has passed unnoticed: the
title.
Piketty tells us he is going to discuss capital. He is aware that
a well-known author has written a book about it before him. He seems to
think “I can get away with this”. Unfortunately, it does matter: it’s
fine to call a new book Critique of Pure Reason provided you are not writing about, say, herbal medicine.
Just what is capital? Piketty, not having really read
Das Kapital,
is only able to give a very superficial definition: the wealth of the
wealthy. To Marx, capital was something else entirely, a mode of
production, a complex social relationship which, crucially, adds
employment
relationships to the monetary relationships of simple market economies.
These are based on private ownership of the means of production and on
the legal myth of the “free worker”, who is deprived of any means of
making a living
independently and therefore forced to hire himself out to survive, and to submit to domination by an employer.
...
That is what capital is, not just the
Fortune 500. In the
narrow sense of wealth, capital affects ordinary people through the
obscene spectacle of wealth inequality. But as a mode of production and a
social relationship, it affects them far more through the slavery it
creates — an eight-hour working day takes up half their waking day.
Redundant workers probably suffer less from seeing the rich parade their
wealth than from the way their lives have been wrecked by the iron law
of financial valuation. The same goes for those in work, who suffer
under the tyrannical demands of productivity and profitability, constant
threats of mass layoffs, delocalisation, restructuring — the
energy-sapping precariousness and brutal nature of employment. None of
this is even mentioned in the book.
The form and intensity of this slavery are determined by the
historical circumstances under which capitalism is manifested — for in
practice, there are many different kinds of capitalism. And it is the
inseparably linked, changing economic
and political factors that
continually steer capitalism in new directions. But Piketty is quite
unable to see things in a light that would show up the specifically
political factors in the history of capitalism.
2.
Piketty may repeat over his thousand pages that inequality increases when
r(rate of return on capital) is greater than
g
(growth rate), but he has explained nothing because he doesn’t describe
the factors that determine rates of return and growth in each era.
These depend on the organisation of structures in the particular era,
the result of political struggles — of class struggles.
3.
He is ill-equipped to tell the story. Nothing in his career has prepared him for it: he cannot go overnight
from a social-democratic, organic economist to being the Marx of the
21st century.
[La République des Idées, RI, for instance,]... has consistently taken
great care never to raise any indecorous issues... talked about
inequality for many years,
weeping over the sufferings of the workers,
but has blamed rapid technological innovation and lack of training, and
praised the virtues of academic research. What about free trade and the
devastation it brings? Or the tyranny of shareholder value? Or the EU,
now in the final stages of neoliberalism? Not a word.
RI thinks all these are our destiny. It has a strategy of evasion — and
sleight of hand. Those who claim to be serious and are keen to maintain
their influence and their reputation in the media never mention such
things.
...
Finance has been globalised and nobody had taken any notice, but it is
now clear that everything is not rosy. The economist Daniel Cohen, like
Piketty, after decades of silence on this, has suddenly realised that
the design of the EU’s monetary union was “faulty from the start”... Their belated rectifications will have very little effect.
Long-term intellectual and political habits are hard to overcome.
Capital is riddled with them; Piketty skips over the political and social history that
...
The
logical consequence of the strategy of evasion is that taxation becomes
the only remaining tool available. Giving up on trying to change
structures means taking palliative measures.
Taxation has never been
anything more than a social-democratic palliative — if we can’t tackle
the causes, let’s at least try to alleviate the effects. Piketty, torn
between the immediate problem and his desire not to disrupt anything
fundamental, would like taxation to have greater virtues than it does,
even the ability to regulate international finance. It’s hard to see
what kind of tax could substitute for the necessary major assault on the
structures of liberalised finance. What tax could replace bank separation, closure of some markets, a ban on securitisation?
4.
Piketty provides a scientific consecration, not only of the public
perception that monetary inequality exists, but also of the theme around
which the discussion of capitalism will revolve — around which it
already revolves: even
The Economist
has had years of articles on monetary inequality, which will be the
weakest link in the diagnosis, the point where the most inoffensive
critiques converge.
Monetary inequality has a great virtue: it
makes it possible to avoid talking about the other inequalities created
by capitalism, which are not accidental, but fundamental and constituent
— the political inequalities in the true sense of
hierarchical
subservience in employment; that in business, some give orders and
others must follow them. No tax, not even a global tax, will ever be
able to address this.
To ask questions about this inequality, which is ultimately about the way lucrative property (capital),
controls our lives, and of the pressure to be employed, is to ask the
key question that the real Marx asks about capital. Or anyway the key
question about capitalism’s current configuration, which a global
financial tax (that will never happen) could do nothing about. Only a
resumption of the struggle for popular sovereignty, by a single nation,
or several nations together, according to political circumstances, would
be able to do anything — by changing, through the
transformation of structures, the balance of power that allows capital to hold society to ransom.
Piketty’s critique of wealth inequality touches on none of this.
Isn't it funny how I've studied all these essays with pleasure and I still haven't read the book in question (Capital in the Twenty-First Century) yet. I have, I should mention,
studied Marx's Capital (usually known as Das Kapital) at least once. I do not endorse every idea that I re-publish here, but I do endorse rigorous debate and critique. To what extent does economics/business not know what the hell it's doing? Do we even care? (
The usual answer is of course not.) I think it is interesting too that this money blog (UpNaira / Money Talk) is becoming in some ways an anti-money blog, have you noticed?
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References:
- Quotes 1-4 above taken from "Why Piketty isn't Marx", written by Frédéric Lordon in Le Monde Diplo May 12th 2015 (
link)
The introduction/summary: Thomas Piketty’s
thousand-page economics bestseller reduces capital to mere wealth —
leaving out its political impact on social and economic relationships
throughout history.
-
Workers, a painting, by Olumide Oresegun
-
Flower seller, and other paintings of labour(ers), by Diego Rivera
- What does
Capital in the Twenty-First Century, the book, look like?
