I’m way late in weighing in on Thomas Piketty’s great book “Capital in the 21st Century,” (note the lack of subtitle–I like that–gives the title that much more weight!). That’s because I’m reading it really slowly but I’m almost done.
Why so slow? In part, because I’m savoring it–it’s a wonderful read, with trenchant insights every few pages, and there are lots of pages. Also, the damn thing is dense, and often after reading a few pages I realize I haven’t absorbed the last few paragraphs, so I need to take a break. Probably my own absorptive capacity ain’t what it used to be.
And, of course, there’s been no shortage of insightful economists weighing in. Anyway, a very few insights off of top of head, with the caveat that I’m still processing all of this:
–While TPs policy advice is extremely sound, and political economy pervades the analysis, this is not so much a book about economic policy. It is a book about economic cosmology–about the mechanics of how economies work from the perspective of wealth accumulation.
–In that sense, it’s more Newtonian than Keynesian. The former changed the way we understood the universe. The latter did too (re the economic universe), but to a lesser extent, and what emerged was less a new understanding of the relationships between growth, inequality, capital, and labor, and more a very different, much more activist, policy approach to the business cycle.
–In part, this difference also stems from TPs extremely “low-frequency” look at the data–his extremely broad, historical scope. His focus is thus structural, not cyclical. I find this to be a fascinating and salutary difference between the very high-frequency work that many American economists engage in (e.g., forecasting next month’s jobs numbers–I’d love to hear what TP would say about that endeavor).
–The danger in Newtonian economics is that people will think you’re asserting immutable, deterministic relations, e.g., his famous r>g. But TP is very, very careful to hedge on that point, stressing that the forces he documents are responsive to intervention. As he says in the NYT today: “…capitalism and markets should be the slave of democracy and not the opposite.”
–This cosmology observation is far from a critique–it’s what Krugman means when he says the book will change the way we think about the economy. I certainly hope Paul’s right about that. It’s been interesting to see the lack of response from the right, though I’m sure it’s coming.
–Just a note re his fame (see NYT link above re that). So I get a typical call from a reporter the other day, asking me what I thought about some developments around poverty policy. He then asks, “And how do you think Thomas Piketty would answer these questions?” And, having intellectually “lived with” TP for a few weeks now, I actually think I gave a pretty good answer!