Taking On Adam Smith (and Karl Marx) – NYTimes.com

Having read the first part of the book “Capital in the Twenty-First Century” – it seems well founded and thorough.. and in part pointing to some obvious dynamics of concentration of wealth and power..
But an important thing is how he connects economics to other fields like history and social sciences.. something economists often avoid to do..As they prefer numbers and equations and to avoid analyzing or commenting on the bigger forces in society and politics that heavily influence economic developments..
He addresses this dynamic in particular:

“It is long since past the time when we should have put the question of inequality back at the center of economic analysis and begun asking questions first raised in the nineteenth century. For far too long, economists have neglected the distribution of wealth, partly because of Kuznets’s optimistic conclusions and partly because of the profession’s undue enthusiasm for simplistic mathematical models based on so-called representative agents.”

And more directly:

“To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.
Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in. There is one great advantage to being an academic economist in France: here, economists are not highly respected in the academic and intellectual world or by political and financial elites. Hence they must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything.”

His thesis is also simple..
That fortunes tend to grow faster than the general economy.. thus grabbing an ever larger share..
H
e then underpins it with data..

http://mobile.nytimes.com/2014/04/20/business/international/taking-on-adam-smith-and-karl-marx.html

PARIS — Thomas Piketty turned 18 in 1989, when the Berlin Wall fell, so he was spared the tortured, decades-long French intellectual debate about the virtues and vices of communism. Even more telling, he remembers, was a trip he took with a close friend to Romania in early 1990, after the collapse of the Soviet empire.

“This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” he said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.”

But his disenchantment with communism doesn’t mean that Mr. Piketty has turned his back on the intellectual heritage of Karl Marx, who sought to explain the “iron laws” of capitalism. Like Marx, he is fiercely critical of the economic and social inequalities that untrammeled capitalism produces — and, he concludes, will continue to worsen. “I belong to a generation that never had any temptation with the Communist Party; I was too young for that,” Mr. Piketty said, in a long interview in his small, airless office here at the Paris School of Economics. “So it’s easier in a way to reopen these big issues about capitalism and inequality with a fresh eye, because I was too young for that fight. I don’t have to justify myself as being pro-communist or pro-capitalist.”

In his new book “Capital in the Twenty-First Century” (Harvard University Press), Mr. Piketty, 42, has written a blockbuster, at least in the world of economics. His book punctures earlier assumptions about the benevolence of advanced capitalism and forecasts sharply increasing inequality of wealth in industrialized countries, with deep and deleterious impact on democratic values of justice and fairness.

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12 thoughts on “Taking On Adam Smith (and Karl Marx) – NYTimes.com

  1. Economic theorists and observational types continue to view the science only within the perspective of human populations.

    Adam Smith wrote in The Theory of Moral Sentiments (1759) that, “The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining.” This limit to growth is based in natural capital, the only form of capital that we share equally; i.e. an underdeveloped country breathes the same air as the most highly developed.

    Smith continues to write of an “invisible hand” that reflects the “man within the breast” that guides humans to do the right thing. Smith wrote, “They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of society, and afford means to the multiplication of the species.”

    If we gave Smith a fresh look by including all his works, not just The Wealth of Nations, I believe we’d view our economic framework in the context of both invisible hands; the one we know from Wealth, and the one we must know more intimately from Moral Sentiments.

  2. Pingback: Taking On Adam Smith (and Karl Marx) – NYTimes.com | Talk & Politics | The Sustainable Adam Smith

    • Don’t know what that means..

      But the book is the talk on all the msnbc shows – but it’s facts and not ideology.

      Growth doesn’t lift all boats.. it creates oligarchs and poverty. Usually.

  3. Ok….

    I have read the WHOLE NY Times piece……
    The whole thing is rather simple….

    The Rich get Richer historically and that seems to be what’s going on now….

    Being Rich isn’t so bad in itself…
    But the Rich tend to undermine the system of democracy….

    The solution is to do what?

    TAX THE RICH!

    Yea Right…..
    While Obama HAS managed to raise some taxes….

    To raise then to a level that would be almost like the Maxian level and ah, spread the wealth IS indeed naive…..

    The solution in the political sense is what Obama did….
    Get MORE American’s to come out and VOTE….

    In THAT way you turn the system to be more responsive …..
    You make the pol’s listen to keep their jobs….
    You dilute the influence of money….

    You ORGANIZE….

    I creates poverty if you don’t….

    • yeah good point.. what to do about this…
      even if more people vote.. a few people get more power and start shaping policy to their own interests.. congress not representing the people anymore….

      the importance of the book seems more to be the way it debunks some myths…

      as is also plain to see today.. the state of things are in many ways already broken and worse than they used to be… but still pretty good historically speaking…

    • It makes a very good case in point, yep. They have a $100bn now, the Walmart family a lot too (though not that politically active)..

      A worry with the Koch’s is the degree to which they change the system of governance of the country – because who knows who comes after them..

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