I read Thomas Piketty’s Capital in the Twenty-First Century last year. In fact, I was involved in two reading groups on the book, an online group organized by my friend Christopher Robichaud at the Kennedy School of Government (summer 2014), and one ‘in person’ group at the University of Toronto Law School (autumn 2014). It was the longest book that I’d read, I think, since Jonathan Strange and Mr. Norrell, but well worth it.
In the book Piketty documents the long-term tendency of capitalist societies toward what he terms ‘patrimonial capitalism.’ A patrimonial capitalist society, roughly, is one in which the members of that society’s economic elite enjoy their privileged position primarily as a consequence of inheritance, not innovation or entrepreneurship. Simplifying greatly, the reason for this tendency is that returns to capital (‘r’) generally grow at a higher rate than the overall economy (‘g’). Consequently, the already wealthy within society tend to become wealthier at a much faster rate than anyone else, and, moreover, pass this advantage on to their descendants. This economic elite becomes largely a class of rentiers. The members of this class also are able to employ their wealth to influence the political decision-making processes of their society, thereby undermining the democratic equality of citizens.
One thing that really struck my about Piketty’s book is how much it supports Rawls’s earlier, more speculative worries about the long-term tendency of capitalist societies toward growing inequality, decreasing political freedom for most citizens, and hence injustice. Rawls’s preferred regime types – which are ‘realistic utopias’ that are to be created out of our existing societies (they are regime types that have never been realized) – are ‘property-owning democracy’ and ‘liberal socialism.’ Both of these kinds of societies counteract capitalism’s tendency toward ever-increasing inequality and plutocracy, despite being (to a great extent) market societies. One way that these societies do this is by limiting the total amount of wealth that citizens can inherit. This counter-acts the intergenerational concentration of wealth within a small portion of the population, and sustains the democratic equality of all citizens over time.
Anyhow, what motivated me to post something on Piketty now is that the blog Crooked Timber is wrapping up an online ‘seminar’ on Capital in the 21st Century. I’ve only read Elizabeth Anderson’s piece so far, but the contributors are all impressive thinkers, so I look forward to checking out the other posts in the near future, as well as Piketty’s forthcoming response.