“The rich… divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the
necessaries of life which would have been made, had the earth been divided into equal proportions among all its inhabitants
and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.
”
Adam Smith,
The Theory of Moral Sentiments
Adam Smith’s optimism and its vulgar neoliberal reincarnation, the ‘trickledown effect’, are thankfully on the back foot these days. and once in a great while, a heavy academic tome dominates for a time the policy debate and, despite bristling with footnotes, shows up on the best-seller list. Thomas Piketty’s Capital in the Twenty-First Century is such a volume. As with Paul Kennedy’s The Rise and Fall of the Great Powers,
For those who don’t like or trust economics and economists, Piketty’s humane and urbane learning makes his analysis that much more compelling. As well it should: The issues of fairness of market outcomes that he deals with are best thought of as part of a broad contemplation of our society rather than in narrow numerical terms.
All of this is more than enough to justify the rapturous reception accorded Piketty in many quarters. But recall that Kennedy seemed to hit the zeitgeist perfectly but turned out later to have missed his mark as the Berlin Wall fell and the United States enjoyed an economic renaissance in the decade after he wrote; similarly, I have serious reservations about Piketty’s theorizing as a guide to understanding the evolution of American inequality. And, as even Piketty himself recognizes, his policy recommendations are unworldly—which could stand in the way of more feasible steps that could make a material difference for the middle class.
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