Other reviews of Capital
Having looked into our own review of Capital, and discussed some of the common misconceptions of the book, now is the time to allow a bit more perspective. Here are a bunch of other reviews of Capital in the 21st Century that I have hunted down. There is no way I’m saying I agree with all the reviews here – as if I did, my opinions would constantly contradict! Instead, I just want as broad a range of views here as possible.
There is no particular order, but it appears that the more critical ones are ‘on average’ at the top. This is because they turned up later, and I tended to add things near the top of the list as I was too lazy to scroll down 🙂
List of reviews via the Centre for Economic and Policy Research. Another list by Brad Delong (note there is overlap).
Tyler Cowen and again. And in defence of his 19th century comments.
Joshua Gans. Combined links from MR on how this is really an old debate.
Matt Rognlie comments. Very useful points here!
Noah Smith. Linking it to technology.
Brad Delong. Talking about the different r’s that we need to consider when thinking about these issues. Note: This Delong discussion of critiques is very good. More Delong – I am going to recommend reading all his posts from around this point in time so I don’t have to keep linking him …
Robert Solow. Excellent review by one of the true experts on all of this. Arnold Kling adds good comments here.
Thomas Palley. Interesting argument regarding how economics will use the book. Not sure I agree, but thought provoking.
A discussion by the translator Arthur Goldhammer.
Not a review but related – subsides for the rich?
A critique of the way novels are used.
Related but separate – forecasts for 100 years out.
Also related – mobility wrt the 1%.
Noah Smith reviews Tyler Cowen’s reviews. An interesting point, but I don’t really agree – my view is that Tyler is being critical as he felt Piketty was only given “part” of the argument/results in his book, and as a result the trade-offs were not clear. I may think this because that is my view of the book though.
I stop reading when I see the word Marx unless it is Jon Elster writing.
I’ll be honest, I don’t know why Piketty really needed to make reference to Marx – he read like Keynes to me, uncannily like Keynes tbh!
Good way to market though right 😉
Hi Matt,
Regarding mobility and the 1%, Paul Krugman commented on Greg Mankiw’s post on that…
http://krugman.blogs.nytimes.com/2014/04/22/inequality-1992/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
PK seems to regard GM with universal disapproval, these days.
You point to Robert Solow’s review of “Capital etc”. I had assumed, by the dates of his published works I have studied, that he was dead, so I was surprised to see him as a panellist for a talk by Piketty at EPI:
Tell you what, he’s as bright as a button at 90! Is there something life-extending about economics as a career? There seem to be so many old economists 🙂
Right at the start of his talk Piketty tells us that although we may disagree with Part Four of the book (his policy recommendations, obviously), he thinks the rest of the book should still be interesting. I think this is a telling remark because, in truth, we (and Australia and the US) as a relatively new nation, just don’t have the concentration of old money Europeans suffer from…oops, experience. Also, my main objection to his big new policy – a global tax on capital – elicits from me a …yeah, right… response. The West can’t even agree on a FT tax or a carbon tax, let alone yet another attack on the elites of the financial stratosphere.
But any policy recommendation, which is where the rubber hits the road, so to speak, is open to attack, anyway, for many reasons. More interesting are your questions about his research methods you expound in your review, and your commentary on his policy prescription.
For example, as you say, Piketty uses adult income as proxy for wealth. Not ideal, to be sure. But where can he get comprehensive data on wealth dating so far back? Isn’t this the best we have, as a proxy?
Also, you mention that Piketty channels Keynes more than Marx, and I agree. After all, Keynes was pretty keen on redistribution – to those with a higher MPC, at least in the ‘bust’ – as otherwise capitalism would run out of steam (along the lines of some of David Harvey’s “17 Contradictions of Capitalism”). But you state that a tax on capital would absolutely lower output and wages. Surely this is assuming a utility of zero (or lower) for what a government does with the tax? Essentially, you seem to be taking the view that all tax is negative for output, by definition, which is hard to comprehend when the Western world has been taxing, aggressively at times, for a long, long time. And a recent paper by the IMF drew the conclusion that the supposed deleterious effects of redistribution from upper to lower income earners, are, by and large, non-existent (I hope I’m not overstating their conclusion here).
Which all goes to show what a great service Piketty and reviewers like yourself and other economists have done for us – make us think!
Sorry about the length of this post. I guess it’s just that sort of topic!
Choice, thanks for the PK pointer – will take a look and probably add when I’m in the office tomorrow.
We are lucky Solow is still around. We are also generally lucky for the economic historians we have given how the discipline has been treated – I am hoping Piketty’s book will be part of the journey towards more economic history.
Hmm, Krugman’s point is fairly empty – I don’t think I will link to it. He just insults Mankiw, and links to a piece from 1992 which just states that the case for mobility is overstated. There are longitudinal studies from the US that show mobility hasn’t changed – which is relevant. But this doesn’t tell us what “optimal” inequality is either.
This is why a look at consumption inequality would be nice – as that captures not only mobility, but also the binding impact of credit constraints and some elements of relative price changes. If only the data existed 😛
Yes, the US has an incredibly sharply defined partisan divide, and PK does take the “Op” in Op-Ed very seriously! His issues with Mankiw date back to the Romney campaign, that I know of, anyway, but he does seem to go a bit overboard. Mankiw’s blog, on the other hand, although not an Op-Ed situation, is a haven of polite calm and some very useful stuff for students.
On a different tack, and PK has highlighted it already, but as a student of economics I found it affirming and encouraging that Piketty has stuck to tools of mainstream economics that I can now recognise and understand – Cobb Douglas and all that – AND arrived at a shock, horror (for some, anyway) conclusion and policy recommendations. For someone like me who is wary of sweeping reinventions, like MMT, for example, that is reassuring.
But at 600 odd pages, a deep reading of Piketty will have to wait – I’m ensconced in Appleyard and Field…
Let me rant a little bit – although hopefully in a structured and clear way 🙂
The difficult thing is that his entire argument relies on the elasticity of substitution being greater than 1 – and empirically that is almost certainly false. In that regard there is a concern about the description.
However, when it comes to policy advice I take issue with the way people are taking Piketty – the policy conclusions only follow from a very specific view of what is ethically appropriate, which means that we should debate that instead of just assuming it holds. To me, the fact that many economists appear to be unwilling/unable to articulate that is actually a big indictment on us.
Piketty’s assumptions are not mild ones, he has very strong principles of justice which he articulates clearly in his book (good on him, this is a compliment). And yet, the only time I’ve seen them mentioned is when Brad Delong (unjustifiably) said that criticising the ethical assumptions is a cop-out. Oww, and my review of course – it would have been hard not to mention them in the process of a 20 page review.
This is the thing, economists either use the “positive-normative” distinction to pretend they aren’t making value judgments when they are, or they state it can’t hold so we can make whatever value judgements we want. This is ethically naive, and why I don’t like going to economists for policy conclusions (even though I love their descriptions of trade-offs).
I’m glad Piketty has forcefully argued that capital deepening, in of itself, isn’t a fundamental “good”. However, he has just gone to the other extreme to term it a fundamental “bad”. An economic historian should be a bit more nuanced than that IMO – but nuance isn’t rewarded 😐
I missed that post by Brad, and I agree that we should start an examination of the work at the first step of the hypothesis. Is the lack of attention to that because it seems self-evident? (I’m not saying that it is, just wondering)
From my point of view, I bemoan the fact that Massey doesn’t do Economic History or Political Economy anymore. It seems to me that this work straddles those areas rather than the relatively narrow current offerings – at undergrad level, anyway.
I felt exactly the same way when I went to uni – I planned to enroll in English and Economic History, but then Economic History was canned so I switched it to Economics in the end.
Economic History is a very important discipline, but where it fits in is a hard question. I would argue that Econometrics accidentally replaced Economic History, which is why it seemed to fade away as a subject. This is a pity, as the two are separate (albeit closely related), and the key point in Economic History is how it ties data and theoretical work together – the question is, does EH come back as a subject, or does Econometrics keep evolving to take that role? How do Applied disciplines (Industrial, Development, Growth Economics) fit into this? It is really really interesting stuff, that is a bit beyond me tbh.
To clarify something on my claims of ethical naivety, I didn’t mean other economists are ethically naive, instead I meant all economists (especially including me) will tend to use ethically naive notions when trying to make conclusions from our descriptive (and even causal) analysis. As you say, Political Economy wasn’t the same discipline as modern economics – it involved a lot more philosophy discussion. I was just reading a paper about Pigou’s ethics which was pushing that point. Post GD we became more mechanistic and moved away from both business and ethics – towards working with policy analysts and in that sort of mangerialist institutional framework. That is fine, but we need to be aware of our shortcomings when discussing policy.
Also as I said, I’m glad this book has been written – and hope it sparks conversation, rather than simple “do this” responses. This is why blogs are neat, look at all these links!
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