Inequality and its corrosion of the body and the soul of capitalist societies has been the hottest topic among respectable liberal economists and political analysts in the United States since the crisis of September 2008. To be sure, Left economists have been tracing the twin scourges of flatlined real wages and widening inequality since the mid-1970s. But it took a major economic shock to move the most prominent and acute liberal pundits finally to bring the issue to the front of the line. Widely read liberal economists have over the last four years written books on the evils of inequality: Joseph Stiglitz’s The Price of Inequality, James Galbraith’s Inequality and Instability, Robert Reich’s Aftershock, and its theatrically released documentary replica, Inequality For All, and Paul Krugman’s End This Depression Now! are only the most conspicuous of the outpourings of lamentation over what is now perfectly evident as inequality on the move – the gap between the very wealthy and the rest is entrenched and continuously widening. The embedded and worsening nature of capitalist inequality, and the kind of society it is creating, is one of the major foci of Thomas Piketty’s much-heralded book, Capital in the Twenty-First Century.
Before the new book, Piketty was known mainly by scholars as the co-compiler, with Emanuel Saez of Berkeley, of the most reliable and widely accessed stastistical data on the distribution of income in the United States. Piketty’s first major solo outing has been a phenomenal smash. Astonishingly, it currently ranks as Amazon’s number one seller, and is sold out. It’s at the top of The New York Times best-seller list. Branko Milanovich, former senior economist at the World Bank, described the book in The New Yorker as “one of the watershed books in economic thinking.” In The New York Times Krugman lauds the book’s “serious, discourse-changing scholarship,” and in The New York Review of Books he calls it a “magnificent, sweeping meditation on inequality… sheer, exhilarating intellectual elegance… Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.” Wow.
What elicits my “wow” is not so much Krugman’s exhilaration, but the huge disconnect, apparently unnoticed by Krugman and other impressive left-liberal economists, between Piketty’s analysis and the kind of Keynesianism that Krugman and his cohorts see as the only path to rescuing American capitalism from a future of persistent austerity and declining democracy. Piketty’s liberal champions seem to think that he has vindicated their critique of inequality by providing a rigorous methodology pinpoint appropriate to the subject matter and demonstrating conclusively that inequality is not only the most disturbing feature of capitalism, but that it is far more severe than previously imagined, and portends a future more revolting than any of us dared imagine.
– Alan Nasser