UPDATE: Piketty responds to his critics.
Capital in the 21st Century by Thomas Piketty has drawn more attention than any economics book in recent memory. The attraction is obvious. Piketty tells us capital as a proportion of the national income has been typically high throughout the last few centuries and current levels of extreme wealth are not a surprise. He also tell us today’s inequality of income and wealth does not reflect hard work or ability but is deeply unfair.
Piketty arrives with lots of good feeling. His credibility derives from his seminal work with his colleagues Emmanuel Saez and Anthony Atkinson on the stunning rise of incomes at the very top of the spectrum—the top 1 percent, and even more so, the top 0.1 percent.
Piketty’s new work is a challenge to orthodox economists, who believe capital should be a stable–not rising–proportion of income and labor markets reward work fairly. Progressives generally welcome his implicit criticism with open arms.
But Piketty is also inconsistent. While he says labor markets fail, as Adam Smith may have predicted, he also says there are no failures in capital markets. Here, the invisible hand does work.
Returns on capital are naturally high, he argues, based on his empirical studies. But this return is not artificially inflated by monopolists or political power. It is, he says, the natural workings of an efficient market. He implicitly claims, with humility, to have found a new relationship in capitalism that requires government intervention–in particular, higher taxes–to control.
Is his new found “law” true?
To make it easier for readers to wrestle with these questions, we have created a repository of the most significant commentary on the Piketty thesis, below. We will continue to update this collection until the conversation is exhausted (which may take many years). We expect many arguments, new investigations into the data, and challenges to economic theory. In particular, Piketty argues only higher taxes are the answer to capital accumulation. Many progressive economists take exception to this. Keep track of the debate here and feel free to discuss in the comments section.
Updated list of reviews:
Lance Taylor, Schwartz Center for Economic Policy Analysis, The New School
Guillaume Allegre and Xavier Timbeau, OFCE
Benjamin Kunkel, London Review of Books
Thomas Piketty (response to Financial Times), Huffington Post
Suresh Naidu, Jacobin
Debraj Ray, Chhota Pegs
Branko Milanovic, Globalinequality
Martin Burcharth, Information
John Cassidy, The New Yorker
Mike Konczal, Next New Deal
Paul Krugman, The New York Times
Chris Giles, Financial Times
David Harvey, DavidHarvey.org
Jeff Madrick, TripleCrisis
James K. Galbraith, Dissent Magazine
Dani Rodrik, Project Syndicate's “Piketty's Charge”
Jeffrey Frankel, Project Syndicate's “Piketty's Charge”
Lance Taylor, Important Analysis of Piketty Theoretical Oversights
Lawrence H. Summers, Democracy Journal
Martin Feldstein, Wall Street Journal
Thomas Ferguson, TheRealNews.com
Heather Boushey, Challenge Magazine
Cass R. Sunstein, Bloomberg
Clive Crook, Bloomberg
Jason Furman white paper, “Global Lessons for Inclusive Growth”
David Cay Johnston in Al-Jazeera America
Robert Rowthorn essay, “A Needed Critical Account of Central Piketty Assumptions”
Paul Krugman in the New York Review of Books
Robert Solow in The New Republic
James Galbraith in Dissent
John Cassidy in the New Yorker
Branko Milanovic in The Journal of Economic Literature
Dean Baker in the Huffington Post
Lawrence Summers in the Financial Times
Tim Noah in the Pacific Standard
Robert Kuttner in the American Prospect
Jeff Faux in The Nation
Jedediah Purdy, Los Angeles Review of Books
Kathleen Geier in the Washington Monthly
Jeff Madrick for Bill Moyers.com
Jeff Madrick in the New York Review of Books
Heather Boushey, Jacob Hacker, Paul Pierson, The American Prospect
Thomas Palley for ThomasPalley.com
Brad DeLong for EquitableGrowth.org
Mike Konczal in the Boston Review
Suresh Naidu for Slackwire