Paupers and Richlings

Benjamin Kunkel

Capital in the 21st Century by Thomas Piketty, translated by Arthur Goldhammer
Harvard, 696 pp, £29.95, March, ISBN 978 0 674 43000 6

Capitalist societies today exhibit ‘an arbitrary and inequitable distribution of wealth and incomes’ as bad as or worse than in the 1930s, when Keynes declared this one of ‘the outstanding faults of the economic society in which we live’. (The other – not unrelated – was the failure to achieve full employment.) Thomas Piketty’s Capital in the 21st Century is an intelligent, ambitious and above all informative treatment of the problem. This accounts for much of the unusual excitement surrounding a lengthy, often dry economic tract. But there’s something else to the ‘Piketty bubble’: he is one of the very few contemporary economists eager to revive the old-fashioned spirit of political economy. The story of modern economic thought can after all be told as the shift from political economy, as its practitioners thought of it, to the discipline now simply called economics. With the ‘marginal revolution’ of the 1870s (named for Jevons’s theory of ‘marginal utility’), economics acquired a true scientific basis or – in the other extreme of judgment – lent itself to constructing mathematical alibis for capitalism, whose real behaviour it studiously ignored. Either way, prestige and influence migrated from the area of Smith, Malthus and Ricardo’s work as well as Marx’s ‘critique of political economy’ – a space with open borders onto what are today anthropology, sociology, history and political science – to a smaller and better defined territory, with a stricter methodological charter if not always less imperious claims to the explanation of society. Like all stories, not to speak of economic models, this oversimplifies things, but it traces the shape of the change. Did the marginal revolution ever end? In recent decades the marginalist picture of the free market as the vehicle for maximising everyone’s utility – better known around the house as satisfaction or happiness – has become the vision retailed by politicians, and the notion of economic life as a matter of individuals harmonising their preferences, as opposed to classes wrestling for control of shopfloor and government, has filtered into common sense.