Have you been following the action? I mean the media torrent surrounding Capital in the 21st Century, one of the hottest academic books to hit shelves in years—dare I say this lifetime? Thomas Piketty, a professor at the renowned Paris School of Economics, scoured a variety of financial data for twenty countries and found that wealth inequality is fast on the rise for developed nations. Not only is this a major assertion, but Piketty has quite a bit of data to back it up—something that economists of years past have not.
For centuries economists have largely relied on surveys, questionnaires filled out by random households that often leave out the upper echelon of money-makers. An additional pitfall to the survey is that certain countries haven’t been very detailed or consistent in their collection and keeping of these records. While Piketty isn’t the first economist to use tax data in his research, he is the first to merge tax data with other sources to better interpret survey data. Piketty looks at the work of two major economists (namely Karl Marx and Simon Kuznet) and uses a large collection of income and estate tax data in addition to other sources of wealth data to draw new (controversial) conclusions about the way we understand economics. His main finding is that the now iconic “one-percent” plays a big role in the divergence of distribution of wealth (a less “apocalyptic” version of the Marxist principle of infinite accumulation). In essence: the rich are getting richer and the poor are getting poorer, and the wealthiest people have something to do with it.
The book itself is fairly down to earth. If you’ve ever been to a cocktail party and been entranced by an academic, this book is sort of like that: encyclopedic knowledge broken down in digestible ways with room for conversation along the way. Capital never feels like a lecture.
What’s most amazing about this work is its relevance. Not only has Piketty amassed and decoded a large body of data and written a book explaining his findings, he’s put the whole project on the web, allowing for further research and debate. If you were so inclined to see the data for yourself and come to your own conclusions (good luck), here it is.
For that reason the media has been quick to not only take sides, but find fodder for criticism. Most notable has been the Financial Times, to which Piketty has issued a response. In truth the media frenzy around the book is almost as interesting as the book itself, but in order to participate in this game-changing moment you’ve first got to read Piketty’s voluminous work. Trust me, this is definitely a conversation you want to weigh in on.
Do you plan to read Capital?