Thomas Piketty on Thomas Piketty

Crooked Timber's fascinating seminar on Thomas Piketty ran all through December, presenting arguments from economists, social scientists and political theorists from around the world on Piketty's seminal Capital in the 21st Century.

Today, Crooked Timber published Piketty's own response, a long, detailed (and sometimes esoteric) clarification of Piketty's beliefs about whether wealth inequality and hereditary dynasties of the super-rich are an inevitable feature of capitalism, and, if so, how taxation and other tools can be used to ensure social mobility and "meritocratic" distribution of a society's wealth to the people who are doing the most to improve that society right now, as opposed to having been born lucky.

Finally, let me conclude by making clear that the historical and political approach to inequality, property relations and institutions that I develop in my book should be viewed as exploratory and incomplete. In particular, I suspect that new social movements and political mobilizations will give rise to institutional change in the future, but I do not pursue this analysis much further. As I look back at my discussion of future policy proposals in the book, I may have devoted too much attention to progressive capital taxation and too little attention to a number of institutional evolutions that could prove equally important. Because capital is multidimensional and markets are imperfect, capital taxation needs to be supplemented with other asset-specific policies and regulations, including for instance land use and housing policies and intellectual property right laws. In particular, as rightly argued by Elizabeth Anderson in this symposium, monopoly power and the regulation of intellectual property rights play an important role in the dynamics of private wealth accumulation. Given the central role played by changing real estate values and rent levels in the aggregate evolution of capital-income ratios and capital shares in recent decades, it is clear that land use and housing policies have potentially a critical role to play, in particular to regulate and expend access to property. On the other hand, it is equally clear that such policies are sometime difficult to implement (e.g. public construction policies or housing subsidies have not always been very successful in the past), so they should certainly be viewed as complementary rather than substitute to progressive taxation.

Also, in my book I do not pay sufficient attention to the development of other alternative forms of property arrangements and participatory governance. One central reason why progressive capital taxation is important is because it can also bring increased transparency about company assets and accounts. In turn, increased financial transparency can help to develop new forms of governance; for instance, it can facilitate more worker involvement in company boards. In other words, “social-democratic” institutions such as progressive taxation (see Miriam Ronzoni in this symposium) can foster institutions that question in a more radical manner the very functioning of private property (note that progressive capital taxation transforms large private property as a temporary attribute rather than a permanent one – already a significant change). However these other institutions – whose aim should be to redefine and regulate property rights and power relations – must also be analyzed as such – a step that I do not fully follow in this book.

Capital, Predistribution and Redistribution
[Thomas Piketty/Crooked Timber]

(Image: Piketty in Cambridge, Sue Gardner, CC-BY-SA)