Afternoon Must-Read: Martin Wolf: Review of ‘Capital in the Twenty-First Century’, by Thomas Piketty

Martin Wolf: Review of ‘Capital in the Twenty-First Century’, by Thomas Piketty: “Yet the book also has clear weaknesses.

Much the most important is that it does not deal with why soaring inequality… matters. Piketty essentially simply assumes that it does. One argument for inequality is that it is a spur to (or product of) innovation. The contrary evidence is clear: contemporary inequality and, above all, inherited wealth are unnecessary for this purpose. Yet another argument is that the product of just processes must be just. Yet even if the processes driving inequality were themselves just (which is highly doubtful), this is not the only principle of distributive justice. Another–to me more plausible–argument against Piketty’s is that inequality is less important in an economy now 20 times as productive as those of two centuries ago….

To me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality. We should take notice.”