In February, a column in the Economist registered the resentment spilling over San Franciscan streets, erupting outside IT-industry awards nights and in front of the Google buses. The anonymous “Schumpeter” columnist was bemused that glamorous tech companies had joined Wall Street as villains for the Left and become blamed for gentrification.
To some extent, “Schumpeter” assured readers, this was a wacky San Francisco thing. The city “has more than its fair share of professional protesters — including those who think they have the right to live in one of the world’s most desirable places even if they can’t rub two pennies together.”
Meanwhile, “most people outside San Francisco still look on its tech firms with admiration, not disgust.” But those beyond the Bay Area ought to pay attention, “Schumpeter” went on, because this was a harbinger of things to come — namely, the “triumph of meritocracy.” The tech industry exemplified and increased “the relationship between IQ, education and reward.”
But when meritocrats enjoy those just rewards, it must be hard for the rest of us to take. “[T]hey buy up, occupy and gentrify whole urban districts: they are seceding in plain sight. This inevitably creates tensions as the service class sees a parallel world being constructed before their eyes.”
A few weeks later, this already reads like a period piece from another time: the pre-Piketty era.
Thomas Piketty’s book Capital in the Twenty-First Century was published in English translation in March. Its reputation had preceded it into the Anglophone world of economics and general wonkery, thanks in part to reviews from those who had read last year’s French original, or advance copies of the English, and in part to the pieces of the argument and the data that were already available.
Piketty’s empirical work on high incomes and inequality over the long run had already won him and his collaborators respect as hard-working, top-notch data-gatherers and interpreters. Then the news got out that he had written a massive book not only summarizing the research, but making a somewhat incendiary argument based on it. The book was both a contribution to economics and written for a popular audience — written to be reviewed by the Journal of Economic Literature and the New Yorker.
And the news was that it was good — that, according to that Journal of Economic Literature review (or at least the early version floating around online that gave many people their first inkling), “we are in the presence of one of the watershed books in economic thinking.”
Capital in the Twenty-First Century came out, and did not disappoint — least of all its publisher, Harvard’s Belknap Press. By now, reviews are so far past saturation point that the Washington Post wrote a ten-step guide to writing one: “Tour de force it up . . . Mention Alexis de Tocqueville. . . Don’t forget to use the term ‘unified theory’ or some variation of it . . . Talk about the footnotes. . .” Mention his literary references “in a way that shows you’re obviously familiar with them.”
And the book is selling in vast quantities — it has for weeks been the best-selling non-fiction book at Amazon.com — and the retailer ran out of stock for a while. This is astonishing for an economics book with nothing to say about why drug dealers tend to live with their mothers or what online daters lie about.
So by now you have already read a few reviews of Piketty, and chances are you already have the book. What is left to say without running into the cliches? (If I can mention just one literary reference — it is wonderful to finally have some context for the size of Mme de Bonnefamille’s fortune in Disney’s Aristocats and to understand why she spent so much on piano and painting classes for the cats.) Even the meta-review territory has been admirably covered by economic commentator Mike Konczal.
All we hope to do here is consider what Capital might mean for socialists. (Piketty’s Capital, that is.) There are things we can learn from the book, and a few things to be critical of. But there is also the big question of how the event of the book has transformed the ideological landscape. It matters that this book has been so enormously successful — reaching not only a wide general audience, but also becoming the stuff of op-eds and wonkblogs everywhere, and, not least, changing the conversation within economics.
It is too soon to tell how lasting the book’s impact will be. After Piketty, people will still frame inequality in terms of “meritocracy” and still mock the ambition to keep living in your city — or avoid having to commute in to your service job from the San Joaquin Valley — even if you can’t “rub two pennies together.” A predictable backlash is underway.
But just looking at the Economist itself, the book’s impact is clear. It has hosted an online Piketty book club. It has covered the book’s reception multiple times in print and online. Its official review manages to be glowingly mixed (“. . . has many virtues. . . has attracted much criticism. . .”).
But, sure enough, when one of its “Free Exchange” bloggers revisited the San Francisco question a few weeks after “Schumpeter,” there it is: “It’s useful to think about things like this within the context of Thomas Piketty’s Capital. . .”
Our Piketty coverage will be appearing over the next three days. In my own contribution, I explore how Piketty brings capital and labor back to the center of the discussion of inequality. Seth Ackerman looks more deeply into the question of marginal productivity and the capital controversies. Finally, Suresh Naidu asks what Capital means for mainstream economics.