Deirdre McCloskey has a 55-page review essay on Piketty

You will find it here (pdf), forthcoming in the Erasmus Journal of Philosophy and Economics.

For the pointer I thank Ray Lopez, who in turn drew upon Patrick R. Sullivan, a commentator at The Money Illusion.

Comments

Just in time for the Harvard v. Yale game Saturday!

Jolly good. What are they playing? Lacrosse?

From overpopulation, to global warming, to wealth inequality and financial instruments, the left is always looking for the latest crisis that can only be solved with big government.

Yeah, man, let's just ignore it.

I always like it when people talk about what legacy we leave for future generations but ignore addressing these problems today.

Ummm, don't forget that the problems you identified involve externalities and/or coordination problems, which suggests that government may be the way you tackle some problems, unless you choose to ignore them.

So, please be more honest. Either say you choose to ignore these problems or propose how you address a coordination problem or an externality problem. And, don't bother calling it left either. Many Congresses of Democrats and Republicans voted for government programs and policies that address these problems.

The obscene cancer of our Federal government is the largest externality of all.

I always like it when people talk about what legacy we leave for future generations but ignore addressing these problems today.

Because we've been around long enough to recognize the eschatological impulse at work, to recognize self-promoting academic cranks at work, and to spot a government-funded megaphone as well.

Neither of you have denied the existence of these problems nor denied that they are either externality or coordination problems.

If that's all that's required...I deny the existence of an overpopulation problem, a global warming problem, an inequality problem and a financial instruments (huh?) problem. Problems solved.

What he said.

What they said.

My general belief is that many markets have non-insignificant market failures, be they externalities, asymmetric information, adverse selection, coordination problems or whatever. To deny that is crazy.

We also know that, in theory, there are market interventions that can improve the outcome. To do so, you may have to do something that would otherwise not be optimal if there wasn't a failure (Theory of the Second Best). To deny that is also crazy.

The only legitimate "libertarian" argument (IMHO) is one that says, "yes, markets fail. Yes, in theory the government can make them better. But in practice, it'll likely just mess it up even more such that the "market failure" outcome, while bad, is preferable to the even worse "failed intervention" outcome.

To me, that's reasonable, but it would have to be judged on a case-by-case basis, an analysis of the mechanism design, details of the intervention, etc.

But those that make arguments that essentially amount to "the market is always awesome and never fails," are best ignored. It's kind of like saying that you can throw a baseball to the moon. Sure, in theory, you can, as long as your theory assumes away those nuisances like gravity and friction. Point being, it's easy to create a simple model that assumes away all the problems. For certain applications, it may even be a quick and dirty way to gain some intuition on how things work. It gets various dangerous though when people start pretending that it's an actual description of reality.

The interesting thing is that inequality (and monopoly btw) is not market failure. So I just dont see how relevant market failure is to this discussion.

I'll list market failures by magnitude. The Soviet market system failed to the extent that it was unable to produce food and basic necessities for its population, in spot of having at its disposal among the best farmland and abundant natural resources. The New Deal market mechanisms took a financial collapse and turned it into a decade long depression, ended only by the revoking of its provisions leading to a period of unparalleled prosperity. The Maoist recounting failed to such an extent that they caused the starvation of millions. The housing market dominated by gse' controlling 40% of the market and having its multiple financial innovations gaining wide usage ended in a collapse needing billions of dollars of taxpayer money and a half decade long Federal Reserve action. The euro, a huge continent wide market has stagnated and collapsed in some areas with extreme unemployment and political unrest, and it goes on. Japan's lost decade is going on to a quarter of a century where politically connected banks and industries have been supported by government, as well as multiple central bank and treasury actions.

What market failures were you referring to? Microsoft?

Hi,

I think you are right, and these are the arguments I make (as a classical liberal). Generally I would say that in addition to the solving the problem in practice problem, there are other things to consider as well. Even if we belive that in some special case, government can do it, and is likly to do it, sometimes I would still be against it.

The reason have to do with principles such as the rule of law. These principles have value, and if we have a small problem and government could solve it but would break one of these principles, I would be against it.

Overall I agree, it is a case by case bases but my baseline what I would consider is lower then yours probebly is.

Take the example of regulating the sizes of soft drink cups. This is something government could do, they might even do it, it has not real negative economic impact, it might slightly (ever so slightly) improve health but im still against it. The extremly small health benefits are just not worth breaking the principles of responsabilty and the presedence of government having the power and infrastructure to enforce cup sizes.

We know how burocracy and govenrment burocracy works, it has been studied, so even if we get the right combination of regulation to improve a health slightly, they will not stop there. They will try to get more and more responsablity. Of course we can have institution that counteract that but still, its just not worth it.

It is telling that you misconstrue the importance of the Theory of the Second Best. It is not a rationale for correcting externalities. Rather, it is a warning that correcting a market imperfection may make things worse, since the presence of other, uncorrected imperfections might have been partly cancelled out by the one the intervention "fixed." Textbook example: Applying costly pollution controls to a monopolist who is already producing fewer units than the Pareto optimum. The pollution overproduction error and the monopoly underproduction error partly cancel, so it's possible to make overall welfare worse by attempting to fix these things piecemeal.

Nylund, such arguments are being made by (serious) libertarians. See for example Mark Pennington's excellent book 'Robust Political Economy' (2011), and the work of "Virginia school" public choice theorists. I agree, too often libertarians bury their heads in the sand with regard to the likely less-than-perfect outcomes of unfettered markets. As if admitting less-than-perfection would entail an endorsement of government. Conversely, critics too often assume that many present failings have nothing to do with prior government interferences, or would be costlessly rectified by further government interferences, or both. With regard to the climate change issue specifically, I find it particularly frustrating when libertarians deny aspects of it that they have no need to deny - namely, the fairly uncontroversial claim that there has been a discernible warming trend over the last 150 years or so, and that a significant proportion is attributable to CO2 emissions. The morally important and too often neglected questions (the answers to which, as I see it, are consistent with a commitment to libertarianism), are the following: (i) whether the future costs in terms of economic and social harms will be outweighed by future economic and social benefits from projected global warming and (ii) even granting that the costs will be greater than the benefits, whether the proposed emissions cuts required in the present to pre-empt future global warming will have lower economic and social costs than the projected costs in the future.

Compromise is the path to solutions. Most issues aren't black and white, like Americans only seem to be able to currently consider them: dems/gops, us/them, poor/wealthy, big govt/big business, violence/apathy, right/wrong, educated/ignorant, the list is incredibly long. It's pronouncing the divisions we have in the US, and it's how people with agendas, like our president, divide and conquer, just as he's studied.

It's a great review. McCloskey appears to have read everything that matters.

I regularly marvel at how much free time college professors really have. To have read the original, plus assorted secondary sources, and then written 55 pages about that? For no other benefit but peer recognition?

Or Prof. Cowen reads like this -

'Tyler Cowen sits with a cranberry juice and a pile of books he no longer intends to read. He's at Harry's Tap Room, near the Air France ticket counter in the main terminal of Dulles International Airport, on his way to São Paulo. Two days ago he e-mailed me his reading list for the trip—27 books—and I vowed to keep up with it. Already, before he boards, he has assembled a pile of discards. "Unger. I'd say I browsed it. I looked at every page," he says. "There's nothing wrong with the book. It's a good book to stir up leftists." Roberto Mangabeira Unger's The Left Alternative falls with a thud to the table.

Cowen, 49, has round features, a hesitant posture, and an unconcerned haircut. He handles each book as he ticks it off his list. "This I discarded. It appeared to get a good review, but there's no framework, just scattered vignettes. I looked at 20, 30 pages." Sarah Vowell's Unfamiliar Fishes, thud. Cowen's first rule of reading is as follows: You need not finish. He takes up books with great hope and no mercy, and when he is done—sometimes after five minutes—he abandons them in public, an act he calls a "liberation."'

http://www.businessweek.com/magazine/content/11_23/b4231066695798.htm

"there’s no framework, just scattered vignettes."

Wait, is he talking about Average is Over?

I doubt whether more than 5 people have really read all of Pikkety's book

I read it. I liked it. A friend of mine read it and liked it. Neither of us needed to read it for work. So I'm guessing you're wrong.

Don't you see the problem? As Picketty deepens his theories, his future books will have to be even longer. As each subsequent book is published, fewer and fewer readers will finish the whole thing, until 100 years from now, Eric and his friend will be the only remaining readers, essentially hoarding all of Picketty's wisdom for themselves.

Clearly, the only solution is to rip Picketty's books into small excerpts and distribute them equitably.

We will have to wait and see how things go in order to decide whether we also need to lobotomize Eric and his friend in order to remove the memory of pages 27 through 696, of which they appear to have near monopolistic possession.

:-)

As each subsequent book is published, fewer and fewer readers will finish the whole thing, until 100 years from now, Eric and his friend will be the only remaining readers, essentially hoarding all of Picketty’s wisdom for themselves.

I'll bet that you are correct. And I bet that even if only two people read the entire thing, there will still be millions of leftists who will claim to have scoured every page and absorbed every philosophical nuance. They'll use this claim to create even more class division and envy and violence. Piketty is akin to Woodstock...many claim to have read him, while millions claim to have been present at Woodstock. Neither is of any real consequence, in the grand scheme.

+1 A very Austrian roundabout explanation!

ISWYDT.

Upvote

I think that's probably true for a lot of books. It's not uncommon to have your reading experience limited to specific excerpts you had to read in class.

Here's a short list of books that people probably claim to have read, and refer to, despite not having read the whole thing:

de Tocqueville, "Democracy in America"
The Bible
The Federalist Papers (all of them)
Smith, "The Wealth of Nations"
Keynes, "The General Theory of Employment, Interest and Money"
Mises, "The Theory of Money and Credit"
Hobbes, "Leviathan"
Joyce, "Ulysses"

And so on and so forth. You could add things by Locke, Hume, Tolstoy, Dostoevsky, Shakespeare, etc. Heck, you could probably add the US Constitution too.

History has already sorted of weeded through it to let us know what are the key chapters, sections, essays, and so forth. For the rest, we get the CliffsNotes / SparkNotes version.

As a recovering academic, I can chime in on this. Remember professors are paid to "research" which, outside of STEM, often means reading what your friends, colleagues, peers, and competitors have written about each other. Disciplined scholars who have a passion and interest in a specific issue will look to uncover the truth and disregard who wrote it (this is why blind peer review is so important), but the less disciplined will just use it for social maneuvering.

Sadly, peer recognition is increasingly a crucial part of the job in academia. It's how more people are getting hired. Just yesterday I met a head of department who doesn't have a Ph.d. and whose M.A. was in a different field. But she used to head a lobby group that gave the college a lot of money...

"Just yesterday I met a head of department who doesn’t have a Ph.d. and whose M.A. was in a different field. But she used to head a lobby group that gave the college a lot of money"

Missing is what the quality of her research in the field is.

dan1111, she's published nothing.

Then, the quality of her research must be above 50th percentile!

I think you mean 'discretionary' time. He's an elite research-university academic of a sort that usually have light teaching schedules (2-2 loads common). Producing this sort of written matter is his job and what he is supposed to be doing.

Oh, really.

And the comment section is peer review.

Your complaint is what?

Art Deco, Deirdre is a female name, not a male one.

Just FYI.

Donald McCloskey elected to go by "Deirdre" when he had mutilating surgery and hormone treatments. He can play act all he cares to; I'm not part of his act, however.

I bet you say "Cassius Clay" too. And Archibald Alexander Leach instead of Cary Grant. Such a maverick you are!

I never talk about boxing and seldom talk about films, so, no. Grant/Leach was never a public figure under his birth-name and Clay/Ali has not been since I was in a crib. And, of course, neither pretended to be female.

You realize that this is a professors primary job, right? Staying up to date with the latest research and producing new research. And, having been inside of academia, I can tell you that many work much longer hours than the general public... especially highly productive people like Deirdre.

The remarkable thing is that McCloskey is 72 years old, and every precious hour spent on scholarship is an hour unavailable for thinking about her gender. Good for her, I say.

It's not "free time." It's her job. Just because she doesn't get paid by the piece (like some of us) doesn't mean it isn't what she's paid to do.

This essay repeatedly asserts ad nauseum that, "the system is enriching the poor better than those other systems that have been tried from time to time" and that "the real income of the poor has risen." Following this premise, the argument (again repeatedly made) is that any advancement by the rich is irrelevant. Here we step into an ethical debate which Piketty attempts to forestall by mostly focusing his attention on measuring the degree to which inequality of wealth has increased and leaving conclusions as to the ethical implications to the reader.

This essay repeatedly attacks Piketty for being male: "he joins the boys in their sandboxes," and then scornfully dismisses his careful explanation with data of how large fortunes obtain high returns by carping that, "one wonders what he does with historically low interest rates right now." Did the author of the essay bother to read chapter 12 of the book which discusses observed rates of return on capital in detail? Repetition and restatement do not make an argument.

For a thought experiment, take the most unequal society possible, in which all wealth (land, property, etc.) were held by one individual, and all others were granted income and charged rent according to the whim of this individual. One could indeed, not unreasonably, decide that it is quite all right provided that the living standards of the people were of an acceptable level and generally being raised. If one subscribes to this standpoint, then Piketty's documentation of the increasing concentration of wealth is indeed irrelevant ethically -- as irrelevant as this essay is to the central thesis of the book that inequality is rising, which is of interest at least in terms of economic reality.

Sniff, sniff.

1) What is your answer to the "ad nauseum" claim? If the current system has produced the best outcomes for the poor out of any in history, is that not relevant to the current system and a debate about whether it should be changed?

2) The contention that Piketty is "leaving conclusions as to ethical implications to the reader" is laughable given that he argues that the inequality must be reversed and proposes specific mechanism to do so.

3) As for your thought experiment, such a society would be better than a more equal society where many people did not have acceptable living standards, would it not? I contend that it is absolute outcomes that matter, not "inequality" per se. The reason the reductio ad absurdum fails is that we know that a society where all wealth and power are concentrated in one person has bad outcomes for everyone. We can easily point to examples of other arrangements that work better. For the status quo, however, we can't point to anything else that is proven to work better in terms of absolute outcomes. Previous attempts to reduce wealth inequality have had terrible track records in terms of helping the poor (and everyone else).

1. Technological advances have improved living standards. Why should we not consider means whereby we can elevate them further?

2. He does propose mechanisms that might be used to reverse inequality. Surely, given your statement that a society with a single individual controlling all wealth is unacceptably unequal, at some point you would accept that inequality should be reduced and turn to Piketty's suggestions or develop your own. Where do you think he draws this ethical line and where do you?

3. Did you read chapter 14? "All told, over the period 1932– 1980, nearly half a century, the top federal income tax rate in the United States averaged 81 percent" -- a period where life-expectancy for the poor rose hugely. Why do you think this attempt to reduce inequality has a terrible track record?

Re #3 "the top federal income tax rate in the United States averaged 81 percent " Quite a dishonest characterization.
No one paid nearly that. 81 % came with a mountain of deductions so that the effective rate was half that.

Did Piketty say #3? If so he is a dishonest charlatan. 1932 to 1945 were not years of prosperity; they were years of depression and massive numbers of deaths. 1964 saw the Kennedy tax reduction decreasing the top rate to 70% and were followed by decreasing rates in further years in response to a slowing economy. 1945-63 would be best described as a time when either the US had almost the only working industrial capacity in the world, or a time when Europeans were going from the extreme poverty due to the destruction caused by war into the modern prosperous industrialized nations we see today. Same with Japan and other non communist nations of Asia.

So what would you be looking for with a high tax rate like that? 1933 depression, 1941 world war, 1970's stagflation?

@John

1) The problem is considering the status quo self-evidently bad, when it actually has produced good outcomes. More caution is needed when proposing alternatives.

2) The point was that Piketty does, in fact, make conclusions as to the ethics of the situation. As for me, I don't believe that "inequality" is the correct target. A free society with good institutions would not result in one individual controlling all wealth.

3) Others have some good responses on this. But I was thinking more specifically of attempts to transfer wealth (as Piketty proposes).

McCloskey fails to see that Piketty is fundamentally dishonest:

http://www.ifrap.org/Les-Echos-Fiscalite-l-erreur-de-M-Piketty,12136.html
http://www.contrepoints.org/2011/06/16/30364-comment-thomas-piketty-a-manipule-ses-chiffres

A strange pleasure to read McCloskey, reminds me some Chesterton essays. I forgot for a while the topic was economics.

"For the pointer I thank Ray Lopez..." said the Great Man. I like that.

My take on the two recent reviews of Piketty cited here, by McCloskey and Potter: the former is more entertaining, the latter more factual, but both are deficient. Instead of simply saying: 'so what that there tends to be inequality? the poor will always be with us', the authors attempt to deny a problem exists or attack the messenger.

Neither author attempts to rebut two key points by Piketty (who admittedly has bad data, like Potter says, but remember Piketty is predicting stuff about the future not the present, based on long term historical trends so saying his data is bad for the last few decades, or cherry picked, is not dispositive on the issues Piketty raises):

Key point #1 (and this was news to me): it is UNDISPUTED that r > g. It is (as Potter says) almost axiomatic that the rate of return on capital and investments is greater than economic growth. This is a huge problem that cannot be assumed away. Potter tries to say that since r > g only 66% of the time, it's not always true, but that's ignoring the majority of times (especially, as Piketty says, times of peace) where it is true. McCloskey says that anyway most wealth is going to be dissipated by spendthrift heirs, but, that's ignoring the issue. For every spendthrift like the Seagram 20-something Ms Bronfman, there's a savvy heir like Sam Walton's heirs. Shirtsleeves-to-shirtsleeves is a maxim, not a law. Second, both critics try and say there's undercounting of income via government transfers and implied rent (Potter), or, there's "human capital" (McCloskey). But implied rent won't move the needle when 1% owns 50% of the wealth (a worldwide extreme but historically that's how it turns out), and actually government transfers is exactly what Piketty is proposing (via his "tax the rich" scheme) so that's hardly a valid criticism of Piketty. As for "human capital", it's a vague term that's easily dismissed: ask yourself, white-collar or blue-collar professional: do you think you are irreplaceable? Does your knowledge make you so indispensable to your employer, that you can go anywhere, and have a job for life? Doubtful, unless you are a superstar in your field. The graveyards are full of indispensable men, as a Frenchman once said (DeGaul). Human capital depreciates to zero once the people move away from the institution that employes them (the capital).

Key Point #2: Further, neither Potter nor McCloskey address a point that Piketty realizes: wealth is not absolute, but relative. It matter not that due to capitalism that the worldwide poor living on less than $1 a day have decreased over the last generation. The only thing that matters to anybody is that their neighbor is richer than them. This is a universal truth. A corollary of this is that people don't think logically when it comes to income, they think in terms of 'fairness'. Give one person $100000 as a gift, and give his neighbor $10, and the neighbor will hate both you and the $100k recipient. He will not thank you for the trickle-down economics gift of $10 that he otherwise would not have had. Most Piketty critics ignore this (or don't bring it up at all).

In short, if it's true that r > g, which it is, and if it's true that during times of peace the rich get richer (as they do, in the extreme 1% ends up owning 50% of wealth or income), and if it's true that wealth is not absolute but relative, then I see class warfare increasing, if this economic stagnation continues, and I see high concrete fences with broken bottles or razor wire on top, with armed guards, as they have in Latin America and even here, to keep out the riff-raff.

Me? I could care less, I'm in the 1% already, but don't flaunt my wealth. Even my 20-something Filipino gf, half my age, when I told her my family net worth is easily north of $10M (dollars not pesos) just laughed as she thought I was joking, which is just as well. Anyway, it's all locked away and hard to access anyway. Enjoy your poverty, most of you...

Maybe, but Piketty's claim seems much more applicable to inequality within developed nations that either globally or in the less-developed countries. There are a lot of under-utilized resources trapped among the global poor. And capitalism has proven to be the best system to employ those resources. In the developing world, there is still a lot of low-hanging fruit.

In the developed world, we may be in much worse shape, where inequality is concerned at least, and the ranks of the poor may be overwhelmingly filled with ZMP workers and the increasing amount of assortative mating will only make matters worse. This certainly a problem, but I remain unconvinced that any of the proposed progressive interventions would do much to help. In fact, they would likely make things worse.

In general, I think that progressives like Piketty, because he gives a veneer of social scientific respectability to the inequality issue (which otherwise is mostly about the merely wealthy complaining that they are being outbid for new condos, nice meals and homes in good school districts by the very rich). I have yet to see progressives truly deal with the implications of Piketty being correct.

Also, the future story of inequality is going to be a story of the cognitive elite. So the idea that we can change this story by taking more money from individuals and firms and directing it through the government is willfully ignorant of the myriad of ways that the government is complicit in the very mechanisms that allow the cognitive elite to capture more and more of the returns to capital.

Regarding the second point: I understand quite well that most people have a comparative attitude to wealth, and that this is labelled 'fairness'. I just don't accept that I have to give that mass of opinion any moral weight - or at least moral weight unweighted by any other factors.

If the real problem reduces to envy, then the solution is probably not whatever the envious are clamouring for. Putting another season of Teen Brides on the box may have just as much impact on envy as taking a few percent off of top earners' incomes, and it's almost certainly much cheaper.

r>g does not imply that the rich get richer over generations.

The rich families cited by many as evidence of scions getting richer have in fact profited from very risky investment strategies.

Inequality isn't an economic problem; it's a political one. (Behind it are legitimate economic issues of a lack of opportunity, a dearth of breadwinner-level jobs, the nigh-total divorce of the interests and incentives of American capital from those of the American masses, and the prospect that post-industrial economies are incapable of sustaining a middle class at all over the long term. Those issues, however, are hard, and the elite (both left and right) haven't a clue what to do about them nor much of an inclination to try. Besides, it's so much easier to gin up outrage over the shibboleth/dog whistle of "inequality." But, I digress...)

People envy. It's human nature, and that's not going to change. Moreover, in any system where the masses have political franchise, it's going to have consequences.

The real elephant in the room is that, at bottom, universal suffrage, democracy, and the contemporary Western framework of positive human rights are inherently incompatible with laissez-faire capitalism and concurrent libertarian concepts of freedom.

I find it weird that so many commenters on this site assume the only possible reason to care about inequality is envy or political stability. (The latter, far from being the "elephant in the room", has been the rich man's after-dinner staple for centuries.)
The level of income and wealth inequality shapes all sorts of things: what jobs most people do; what gets invented and built; the layout of cities; what shops are on the high street and whats in them; what kind of books get published and movies filmed; who your children get to play with, what they aspire to in life and what they fear; the structure of civil society organisations from churches to sports clubs; the evolution of manners and social norms; all to say nothing of the impact on politics.
The USA is not like Denmark. Maybe it's better. You can argue that unequal societies are preferable. You can be a hardline libertarian and say none of these effects justify any political action. But to say they don't exist, and it's all just about envy, is dumb.

That may be so, but I don't see the argument that it's the relative distribution of wealth, rather than the absolute wealth enjoyed by the larger part of the population, that creates the effects you mention. Moreover if the real objection to inequality lies in things like urbanization and trends in mass media, there must be much more direct and politically tractable ways of making adjustments to those things than altering a country's entire political economy.

Eh. Maybe, or maybe you've gotten the causality backwards and all sorts of things shape income and wealth inequality.

So why isn't Piketty pilloried like the white supremicists? The ' solutions' that history have come up with for solving inequality are as bloody or arguably more bloody compared to political entities that stemmed from racism. He even talks about the second world war as a salutary event in decreasing inequality. But a hundred million died.

I agree that it is a political problem. So is racism. Maybe an 80% cull on different races to keep the peace.

Keep trollin'

She is very assertive for a woman.

Well her parents raised her as a boy so it makes since.

Must we go through these gender remarks every time that McCloskey writes something. It's been like 20 years.

Well, it is a weird thing, this grotesque sexual role playing. What if he dressed as a tiger and demanded that everyone treat him as one?

As a lay-person, I found the Dropbox link to be a very user-friendly publishing platform.

"In economic history, as in experimental economics and a few other fields, the economists confront the evidence (as
they do not for example in most macroeconomics or industrial organization or international trade theory nowadays)"

That's just being silly.

And there is so much of that silliness in the first two pages that I couldn't read on any further.

For example "Piketty stays close to the facts, and does not, say, wander into the pointless worlds of non-cooperative game theory, long demolished by experimental economics."

As an experimental economist AND a game theorist, I can attest that this quote is plainly false.

I haven't had a chance to read it, but why should I? How hard is it to predict what Diedre McCloskey thinks?

Depends on how conversant you are with his past writings. He's not a political tribalist, so not predictable to the casual reader.

Only because his tribe isn't politcal at all, but surgically produced.

"She"(I don't want to refer to the individual as that, but I don't think "he" is deserved either) has a very punchable face:

https://upload.wikimedia.org/wikipedia/commons/3/31/McCloskey%2C_Deirdre.jpg

TC should do a review of the review.

I'd review that one.

It was uninteresting throughout and self-disrecommending.

Here's a 15 minute summary of the contents of the Piketty book: http://www.pikettyexplained.com

Good work by McCloskey, as usual. A bit repetitive, but we all know the Bourgeois Virtues catechism by now -- a set of ideas that is simultaneously among the most important ideas in the History of Ideas and profoundly uncool.

I found McCloskey's take-down of the woeful state of French economics teaching to be astonishing. Is it accurate? The argument that Piketty doesn't understand how 'entry' works, or the supply curve generally, strikes me as pretty forceful. If the guy is gonna fall down at the first Econ 101 gate he comes up against, I don't see how it's worth slogging through the hundreds of pages.

As someone who has not even taken Econ 101, I found that discussion enlightening. But I didn't understand what McCloskey was on about with:

The substitutions along a given demand curve, or one mysteriously moving in, without any supply response “might also take decades, during which landlords and oil well owners might well accumulate claims on the rest of the population” (now he has the demand curve moving out, for some reason faster than the supply curve moves out)

How does the demand curve have to move out for this to happen?

@BD - that part of McCloskey's review was IMO strawman. Even McCloskey states and implies it may be an error in translation, and/or she herself has made similar unintentional mistakes when writing.

Ray, the way I read it, McCloskey went out of her way to read Piketty charitably here and came up short.

I haven't read the book though, and don't intend to, but I am open to you or anyone else rebutting the critique. From what the Professor excerpted, it sure sounded like Piketty's understanding of supply response is pretty naive.

"Indeed, Piketty declares on p. 27 (compare p. 573) that “it is important to note that. . . the main source of divergence [of the incomes of the rich compared with the poor] in my theory has nothing to do with any market imperfection [note: possible governmental imperfections are off the Piketty table]. Quite the contrary: the more perfect the capital market (in the economist’s sense) the more likely [the divergence].” That is, like Ricardo and Marx and Keynes, he thinks he has discovered what the Marxists call a “contradiction” (p. 571), an unhappy consequence of the very perfection of “capitalism.” Yes, the perfection of capitalism, including built-in corrections for excesses, whether excesses in speculation or excesses in inequality, a point I make often but not a point relished by defenders of inequality. Is excessive inequality self-correcting? Seems to be based on historical experience, 2008 being the latest (and, I dare say, not the last). I have come to praise capitalism, not criticize it.

Entertaining, but loopy. Couldn't bear more than ten pages.

I've been a big fan of McCloskey's writing but recently I've had a hard time respecting her or anything she writes after the kerfuffle with Bailey.

@MS - you have a very high hurdle then. If one person makes a mistake in one aspect of their life (arguably, even getting a sex change was a mistake, though this is a psychological decision rather than rational decision), then they are forever banned as credible from your mind? Recall Issac Newton dabbled in numerology in the Bible, and Tycho Brache was an alchemist, to name two examples, but they made real contributions to science. Reminds me that somebody claimed you cannot learn anything anymore from the ancients, such as Aristotle, since science has progressed, but in fact Aristotle pointed out a certain species of octopus mates using a penis on a tentacle, and in the 20th century this was rediscovered after being dismissed as fiction.

Agreed - if we dismissed the work of every scholar, author, etc. whose personal life was a little peculiar, we wouldn't have much knowledge at all.

Isaac Newton made *real contributions to science*? Is that intended to be ironic understatement?

There are some good points in there but it was much more a general polemic against a certain strand of leftist thinking. That's fine and all, McCloskey may be right about that, but some of it wasn't even relevant to Piketty's book and it wasn't a well developed argument with a lot of specific supporting data. I think for the purpose of a review, she would have been better served by further developing some of the specific criticisms she had and spending less time on the general. A lot of the general critique was a little repetitive without adding a lot of value. The simple problem is that ever since this great growth occurred starting around 1800 we've had capitalism, socialism, free market policies, bigger government and smaller government, all in some mix. You can't just point to that growth and claim that your preferred social arrangements are the reason why and that there is no place for worrying about whether the mix that resulted in that growth still obtains today or will obtain in the near future given various trends. That's quite a big argument really. This was more just a statement of a position.

If Piketty's "Capital in the Twenty-First Century" were a stock, and if there were a futures market in it, I'd say its value has been declining since shortly after it was published.

The relevance is that the work is so massive that few will want to make the investment to do a close reading of it unless its value remains high.

So for now it seems to be a book that everyone's talking about yet few have actually read, at least to any depth.

Although the Kindle edition is available at no additional cost to Kindleunlimited subscribers.

@Albigensian - Piketty's stock has been rising since publication; most people don't finish big books they start (empirically, this is tracked by Amazon, as McCloskey points out); and I got Piketty's book for free, in ePub form, from PirateBay when it first came out.

A tour de force by McCloskey in this review!
One of the few broad and deep thinkers that we have left in economics, sadly.

Wonderful article by an inspiring writer. However - didn't anyone notice? - there is an outrageous typo in the TITLE. It's not "Capital in the 20th Century," it's "Capital in the 21st Century."

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