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Capital in the Twenty First Century
December 2018: Geek Reads
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Capital in the Twenty-First Century - Thomas Piketty - 5 stars
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I recently saw a comment someone had written on here about trying to avoid making their reviews sound like book reports, and that’s a mistake I could easily make here because it was a hugely informative read and I found myself taking copious notes in an attempt to capture what I learned while reading it. But reproducing those here would be pretty dull and – let’s be honest – I’ll probably forget most of it anyway. So although I will attempt to summarise a few key points later on, for now I’ll try to focus on the reading experience.
If I had more time, I’d be tempted to do some kind of tongue in cheek parody of the book at this point, with extensive data series and graphs plotting my enjoyment of the various sections of the book against my expectations going into them and how many surprisingly entertaining cultural references they contained, concluding with an elegant formula tying it all together. This would show how I fell in love with the book near the beginning – I picked it up out of a vague sense that I “should” try to understand it (as I aspire to be the sort of person who has an informed opinion on such subjects), and was surprised to find that the writing is very clear and even contains some witty one-liners, and the material (which I expected to find rather dry) is fleshed out with illuminating cultural references, with especially detailed sections on Austen & Balzac. Then there would be a slight dip when I returned to the book after a few days off, this time expecting to carry on loving it, and was hit by the sobering realisation that while all of the above is true, it remains a dense treatise on economic theory, complete with graphs, statistical tables & formulae that require close attention. My graph would pick up near the end after I took another break and returned with lower expectations, just in time for the book itself to get past the more technical and data-driven middle sections and move on to the last few chapters where the author draws conclusions about the political implications of his findings, which I found more readable. So my overall conclusions are that I loved the book despite finding it a little challenging in places, and that I’ve never been so aware of how much expectations shape a reading experience! Since the clarity of the writing was a big factor in my enjoyment, I also kept wondering how much of the credit should go to the translator, a topic that has intrigued me since reading Le Ton beau de Marot: In Praise of the Music of Language several years ago.
Finally, here’s my brief summary, mainly to remind me if I ever look back at this: The main argument of the book is that when the rate of return on capital is greater than the rate of growth of income and output, wealth automatically becomes concentrated in the hands of a tiny minority, leading to massive and increasing inequality, especially since the return on capital tends to increase even further for the holders of large fortunes. Piketty sets out to show, with reference to copious data, that the commonly held belief that growth is “a rising tide that lifts all boats” (based on Kuznets’ influential work showing a sharp reduction in income inequality in the US between 1913 and 1948) has historically only been true in the exceptional circumstances based on the shocks of two World Wars and the Great Depression. Piketty's preferred option for dealing with this problem would be a progressive global tax on capital, implemented alongside greater international financial transparency - so I didn't come away feeling very optimistic about our economic future! What I did take from this book was a renewed appreciation of how easy it is to fall into the trap of assuming that the social and economic context you grew up in is the normal, natural order of things; and also a new perspective on US history, particularly on how different American attitudes to inequality and redistribution were when they pioneered the idea of a confiscatory tax on “excessive” incomes at the end of WWI.