Capital in the Twenty-First Century

Nonfiction | Book | Adult | Published in 2013

A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.

Download PDF

Summary

Chapter Summaries & Analyses

Introduction

Part 1, Chapters 1-2

Part 2, Chapters 3-4

Part 2, Chapters 5-6

Part 3, Chapters 7-8

Part 3, Chapters 9-10

Part 3, Chapters 11-12

Part 4, Chapters 13-14

Part 4, Chapters 15-16

Key Figures

Themes

Index of Terms

Important Quotes

Essay Topics

Tools

Beta

Discussion Questions

Themes

Statistics

As Piketty highlights, it has become fashionable in the academy and the even the broader culture to suppose “that every statistic is a social construct” (751). Data and statistics, in this view, do not reveal objective or neutral truths about reality. Rather, they reflect underlying power structures, re-enforcing the perspectives of certain dominant groups and interests. Yet, this perspective is severely limiting. While it is true that statistics, or at least the way they are presented, are often bound up with ideologies and agendas, we cannot do without them if we want a full understanding of a topic. This is especially the case with inequality. For as Piketty says, “without precisely defined sources, methods, and concepts, it is possible to see everything and its opposite” (3).

This is very much what we observe in contemporary US and UK political discourse. One side says inequality is increasing. Another side says it is falling. Another says that it does not matter either way because all boats are rising. Without consensus on some sociological and economic facts, meaningful negotiation between or verification of these positions will be impossible. Discussion will become merely the assertion or reassertion of intuition and prejudice. Moreover, since there is no agreement about what any of the problems even are, attempts at finding democratic solutions through debate will be dead on arrival.

One of the key reasons why systematic collection of data is important is that wealth, as opposed to income, is both abstract and inconspicuous. While income is at least measured via income tax data and understood as connected to various jobs, the sources and distribution of wealth are obscure. Indeed, since most people have little or no wealth (most often their house) it is hard, in the absence of statistics, to get a sense of this issue. This is even worse at an international level. As Piketty says, “we suffer from a serious lack of reliable information about the global dynamics of wealth” (547). The institutions, such as governments or international agencies, which are supposed to collect this data have abdicated responsibility or else they make biased methodological choices to “give an artificially rosy picture of inequality” (335). For example, the OECD statistics measure inequality in term of a ratio between the ninetieth and tenth percentile. This means the concentration of wealth in the top ten or one percent is entirely ignored. Likewise, data on wealth inequality in emerging economies such as China and India are absent. Such decisions show that to counter inequality and the ideological justifications that perpetuate it, more engagement with statistics is needed, not less. For, as Piketty says in the last lines of his conclusion, “refusing to deal with numbers rarely serves the interests of the least well-off” (753).

Economics and Economists in the 21st Century

Ostensibly a work of economic theory, Capital in the Twenty-First Century is also an implicit critique of economics and economists in their conventional forms. Indeed, this opposition runs throughout, and informs, the entire project of the text. Yet what is the reason for this critique? What is it that Piketty opposes? This can be summed up in a passage from his conclusion. For he says there that with mainstream economics, “too much energy has been and still is being wasted on pure theoretical speculation without a clear specification of the economic facts one is trying to explain or the social and political problems one is trying to resolve” (750). In other words, Piketty sees two problems. First, economics is abstracted from concrete facts and phenomena. It is interested only in idealised theoretical models (like that of perfect markets) and purely rational agents that do not exist in the real world. Second, it does not ask what purpose its research serves, how “purely theoretical results” (41) such as long-run market equilibriums or optimal consumer preferences bear on the complex socio-economic issues of 21st century society as it is.

What’s more, economics such as it is hides behind math. As Piketty says, “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” (41). That is, math helps create the illusion that economic theory is objective, yielding certain and definitive results. In truth, though, such results are the product of analysis. They end up bypassing real world data and reaffirming the assumptions and ideological emphases around which the models were constructed. For example, many economic models start with the assumption of rationally acting, self-interested, and atomised, economic agents. They then, after changing some variables, conclude that perfectly free markets, in which such agents are left to buy and sell self-interestedly, are the most efficient way of organising an economy.

Such conclusions are certainly convenient because they support the status-quo of a low tax, low regulation, economy. So, too, then are huge inequalities via the idea that the neo-liberal economy “rewards talent and merit accurately and precisely” (372). This is also advantageous for academic economists who typically earn considerably more than the average income. Still, Piketty suggests, there is another way. Economics can come out of such hermetic theorising and “inform democratic debate and focus attention on the right questions” (3). It can help provide concrete analysis of major social trends and potential problems and assist citizens in positively shaping the future of their societies. To achieve this, however, it must do two things. First, it must engage with other areas of research like history, psychology, and philosophy. Second, it must abandon the notion of itself as a hard “science.” It must abandon the illusion that it is possible to conduct research cut off from the messiness, ambiguity, and political and historical conflict of the real world.

Cultural Perceptions and Presentations of Inequality

“Film and literature, 19th-century novels especially, are full of detailed information about the relative wealth and living standards of different social groups,” Piketty writes (2). These have an “evocative power that no statistical or theoretical analysis can match” (2). That is, film and literature can influence our perceptions of inequality on an immediate and emotional level. This is distinct from, and arguably more powerful than, our rational understanding of these issues through theory. As such, culture has an ability to profoundly affect our possible responses to inequality. It therefore has the potential to shape politics, and the way our societies develop.

How has—and how will—cultural presentations of inequality affect the way the problem is perceived? In Capital in the Twenty-First Century, Piketty gives several examples of texts that have had a potentially positive impact. Balzac’s Pere Goriot (1835) presents “the contrast between two extremes of society” (521). It exposes both the hardship of poverty in 19th century France and the arbitrary and corrupting nature of wealth. This is symbolised in part by the old man, Pere Goriot. He makes do with “the filthiest room” (520) and “the skimpiest of meals” (520) to provide dowries which will gain his daughters access to high society. They pay him back by disowning him and leaving their father to die alone.

The myth of meritocracy is also exposed. In the conversation between Rastignac and Vautrin, analysed by Piketty, the limits to what hard work and talent will yield, in contrast to inheritance, are starkly presented. This is similar to the situation discussed in connection with the novel Ibiscus (1926) by Alexei Tolstoy. There, the murderous Nozorov kills an antique dealer to steal his fortune, and we find again, contrary to myth, that “wealth and merit are totally unrelated” (566).

Of course, the effects of either novel are hard to quantify. But what is true in both cases (as with George Orwell’s 1933 Down and Out in Paris and London and John Steinbeck’s 1939 The Grapes of Wrath) is that they force the reader to focus on the forgotten victims of inequality, and to question the complacent justificatory logic for it. In contrast, much of contemporary mass culture does the opposite. As Piketty highlights, in television shows like House, Bones, The West Wing and Mad Men, the premise is that social and personal success is entirely meritocratic. Indeed, as he says, “It is not unreasonable to interpret any number of such series as offering a hymn to a just inequality, based on merit, education, and the social utility of elites” (531). Successful and wealthy people are valorised, the dominant ideology is perpetuated, and, in most cases, the grubby underbelly of the downtrodden, the poor, and the losers in the meritocracy, are conveniently washed away.