Thursday, February 12, 2015

Yanis Varoufakis — Egalitarianism’s latest foe: a critical review of Thomas Piketty’s Capital in the Twenty First Century


Now that Yanis is in the news, here's his thinking on Piketty and his approach, if you didn't read it when it came out.

Real World Economics Review, issue no. 69
Egalitarianism’s latest foe: a critical review of Thomas Piketty’s Capital in the Twenty First Century
Yanis Varoufakis

7 comments:

Anonymous said...

I read that a few days ago, and I thought it was a bit of a mess and based on second-hand ideas that have gained currency in heterodox circles about Piketty's so-called theory of growth. Piketty responded to some of these misconceptions in a recent piece.

Anonymous said...

What I conclude from this: Greece picked the right finance minister

Tom Hickey said...

Whether he got PIketty right or not, the views expressed in the paper give some insight into his thinking about these issues and how it is likely to affect his present position as finance minister.

I think this is also true of just about all the PIketty criticism. It says more about the authors of the criticism than Piketty. "Will the real Thomas Piketty please stand up."

Anonymous said...

The thing is, Piketty has no "theory of growth". There is really hardly anything in the book that deals with the question of what causes growth. There is certainly nothing that is committed to either a "supply side" or "demand side" account about what primarily drives growth. As Piketty states at the beginning of the book, his book is an essay on distributional economics, and is thus very much outside the dominant obsession with issues of growth, employment, money and the business cycle.

The confusion is all due to Chapter 6, where Piketty provisionally deploys the Solow growth model to hoist defenders of that model - who have claimed the capital share declines automatically as wealth increases - on their own petards. That's pretty much it. He says in the notes that he regards that model as pretty simple-minded.

Piketty is in the French democratic socialist tradition and therefore rubs some other left traditions the wrong way, specifically, (i) Marxists, who think capitalism inevitably destroys its own profits and destroys itself, so instead of fixing an economy to make it work better, one should just sit back and wait for the workers' revolution, and (ii) Keynesians, who think you can use a combination of fiscal and monetary demand management to rub the roughest edges off of capitalism. Piketty's view is that the problem of growing economic inequality can only be addressed by the direct ongoing redistribution of wealth via a wealth tax, and by increased democratic control over capital.

Tom Hickey said...

Piketty's view is that the problem of growing economic inequality can only be addressed by the direct ongoing redistribution of wealth via a wealth tax, and by increased democratic control over capital.

While that may be the thrust of this book, he does say that there is much more to say about it. I would say that in addition to "redistribution of wealth via a wealth tax, and by increased democratic control over capital," he envisions more thorough-going social, political and economic reform.

http://www.dissentmagazine.org/article/piketty-in-paris

Anonymous said...

Well, Tom, I think that's what democratic control over capital means - increasing democratic political control over the means of production amounts to radical change.

Tom Hickey said...

Jus' sayin' that Piketty has spelled it out in more detail than in Capital, where that was not his purpose.