Thomas Piketty’s new book, “Capital in the Twenty-First Century,”

29 Mar

Thomas Piketty’s new book,
“Capital in the Twenty-First
Century,”described by one
French newspaper as a “a
political and theoretical
bulldozer,” defies left and
right orthodoxy by arguing
that worsening inequality is
an inevitable outcome of free
market capitalism.

Piketty, a professor at
the Paris School of
Economics, does not stop
there. He contends that
capitalism’s inherent
dynamic propels powerful
forces that threaten
democratic societies.

Capitalism, according to
Piketty, confronts both
modern and modernizing
countries with a dilemma:
entrepreneurs become
increasingly dominant over
those who own only their
own labor. In Piketty’s view,
while emerging economies
can defeat this logic in the
near term, in the long run,
“when pay setters set their
own pay, there’s no limit,”
unless “confiscatory tax
rates” are imposed.

Piketty’s book… suggests that
traditional liberal
government policies on
spending, taxation and
regulation will fail to
diminish inequality. Piketty
has also delivered and
posted a series of lectures in
French and English outlining
his argument.

Conservative readers will
find that Piketty’s book
disputes the view that the
free market, liberated from
the distorting effects of
government intervention,
“distributes,” as Milton
Friedman famously put it,
“the fruits of economic
progress among all people.
That’s the secret of the
enormous improvements in
the conditions of the working
person over the past two
centuries.”

Piketty proposes instead that
the rise in inequality reflects
markets working precisely as
they should: “This has
nothing to do with a market
imperfection: the more
perfect the capital market,
the higher” the rate of return
on capital is in comparison to
the rate of growth of the
economy. The higher this
ratio is, the greater inequality
is.

Read the rest at The New York Times

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