After Piketty the new question: Can we, should we, afford the rich?

from Jamie Morgan’s “Piketty’s Calibration Economics: Inequality and the Dissolution of Solutions?” – an open access paper in current issue of Globalizations

In the neoliberal age, we have naturalised the rich. However, the success of Thomas Piketty’s Capital in the Twenty-First Century has done a great deal to legitimate a rather differently inflected concern. It is now permissible to ask: can we, should we, afford the rich? Growing income and wealth inequality have gradually become areas of public concern, but this concern has become more acute, and more politically febrile, in the wake of the global financial crisis. The election victory by Syriza in Greece, and the Occupy Movement speak directly to this. Austerity responses to the crisis have distributed the fallout costs to the many from the few who benefitted most from the preceding decades. Meanwhile, central bank policy responses have created new opportunities for the global rich to become even richer.1 To a large degree, the idea that the rest of us are dragged along in the wake of the wealthy has been exposed as a myth.

Returns captured (rather than created) by the rich have affected the many, and not just in a financial sense. The associated fiscal and policy effects on welfare, health systems, pensions, collective union activity, and our simple sense of community cohesion and quality of life, rather than quantity and materiality, have all been harmed. And this is just in the Global North. For the Global South, second best ‘development’ forms have fuelled the North in many ways, creating the underlying deflationary effects that have kept the North consuming as well as contributing to the current account imbalances that lead to capital flows for asset bubbles. In return, the Global South has experienced its own problems as its nation’s reproduce the same socio-economic cleavages as the North. In 2014, Forbes identified 2325 billionaires (an increase of more than 10% than on 2013); of these, 190 were in China.

Inequality now matters more to political and economic elites and the ordinary citizen, albeit from different ends of the same reasoning focused on the economics of political stability—–protection of the right to what is ‘mine’ within the status quo versus a deep sense of injustice. A great deal has now been written regarding Piketty’s work (see Fullbrook & Morgan, 2014). It is widely acknowledged to be the well-intentioned product of an engaged and highly reasonable social democrat; one unfairly demonised at various times as a data manipulating unreconstructed Marxist—in places where such an appellation is a pejorative term.

The key questions arising from Capital are: Can it galvanise opinion in an appropriate way or will it become more of a hindrance than a help in understanding contemporary capitalism, and in constructing alternatives? Yanis Varoufakis, Greece’s short-tenured finance minister, certainly thinks it will prove a hindrance (2014). In many respects, one might argue that Capital has become successful precisely because of its flaws. It is, as Robert Wade has noted, ‘reassuringly conventional in its analysis and prescriptions, and so less threatening to familiar ways of thought’ (2014: p. 11). It is radical, but principally in the conservative context of mainstream economics. Beyond that context, one might describe it as a palatable form of radicalism whose constructions, concessions, and omissions undermine its capacity to carry the weight of expectation placed upon it.   Read more

 

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Piketty’s Capital in the Twenty-First Century

edited by Edward Fullbrook and Jamie Morgan

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This collection of 17 essays by some of the world’s most prominent economists explores Piketty’s book at depth and from various vantage points.

“Indispensable reading for everyone who is interested in one of the most important challenges of our time.” – John King