Doug Henwood reviews Capital in the 21st Century

In Bookforum. The book is gaining wide reviews and Paul Krugman has called it the most important book on economics of the year, if not the  decade. Published last August in French, the book was gaining such a buzz that its original publication date was moved up a month to March. Having read most of it, Henwood is right: it is clear about the contradictions of capitalism that will lead inexorably to great inequality beyond what we are already seeing. But as Henwood notes–and I think this is generally true of a lot of political economy writing of the center-left–Picketty paints the grimmest picture, but his political answer (and his view is that the inequality is a result of politics, which is well known) is timid; the reason he gives is that he grew up during the collapse of communism. In this way, the book stands as a monument of our time: we can describe the collapse, but visions for anything else–beyond blithe talk of democratic deliberation made impossible by the vast inequalities described–are to blocked out due to the moral blackmail of visions of anything else returning us to the Soviet era. Henwood writes:

But the major frustration of the book is political. Piketty clearly shows that short of depression and war, the only possible way to tame the beast of endless concentration is concerted political action. The high upper-bracket tax rates of the immediate postwar decades couldn’t have happened without serious fears among elites—fresh memories of the Depression, threats from strong domestic unions, competition on a global scale with the USSR, which, for all its problems, was living proof that an alternative economic system was possible. As those things waned, upper-bracket taxes were lowered, wages and benefits were cut, and capital’s increased mobility led to increased competition among jurisdictions to offer a “favorable investment climate”—meaning weak regulations, low wages, and minimal taxes. All these trends have contributed to the concentration of capital over the last thirty years, as wealth and power have shifted upward on an enormous scale. None of these features will be reversed spontaneously. Nor will they be altered through “democratic deliberation”—several times Piketty notes the hefty political power of the owning class—or improved educational access, as Piketty actually urges at one unfortunate point. … Several times, Piketty disavows Marx—just a few lines later he credits “economic growth and the diffusion of knowledge” for allowing us to avoid “the Marxist apocalypse”—but he also concedes that those prophylactics have not changed capitalism’s deep structures and the tendency for wealth to concentrate. It seems, in other words, that Piketty’s own research shows that the old nineteenth-century gloomster had a point.

Unlike most modern economists, Piketty at least credits Marx’s ambition and profundity. But for Piketty, the main problem with Marx is his unequivocal call for political confrontation. Having described a process of inexorable material polarization—and with it, increasing plutocratic power over the state—Piketty remains distressingly moderate as he sounds out some of the political implications of his analysis. A major reason for his posture of socialist skepticism, he declares, is that he came of age as Soviet-style Communism was falling apart, which left him “vaccinated for life against the conventional but lazy rhetoric of anticapitalism.”