Andrew Fulford Archive Authors Nota Bene

John Médaille on Thomas Piketty

Distributist economist John Médaille discusses Thomas Piketty’s Capital at Front Porch Republic. He concludes his review, which at points agrees and disagrees with the book, with these words:

It is beyond the scope of this review the means by which capital can be made once again to be the servant of production rather than its master. Suffice it to say that as long as r > g holds, we have a past that devours our future: it squeezes out the small entrepreneur and leaves spaces only for corporate collectives and government control. It turns us all into dependents of these public and private collectives. Thomas Piketty has done us a great service by documenting the history and extent of this basic inequality, but more work needs to be done to ensure that the growth of the wealthy does not exceed the growth of wealth itself, and further that the growth is fairly allocated to those who actually produce the growth, and not to those whose financial power allows them merely to appropriate it.

Conservatives, or more specifically neo-conservatives, have attacked this work, usually on very specious grounds. But what the work demands is not attack but engagement. If it is true that his solutions do not hold, it is equally true that Kuznets’ fairy tale no longer holds: Things are not better, they are getting worse. And it is good to remind ourselves just how economically unstable the Gilded Age was. In the period 1870 to 1933, the economy was in recession an astounding 40% of the time. By comparison, the post-war economy has been in recession only 15% of the time, and moreover the recessions were half as deep, half as long, and half as frequent as the pre-war variety. Further, we do well to remember the corrosive effects that the extreme division of wealth and poverty had on family life, social life, and moral life. We cannot go back to that future without destroying everything that we love.

Finally, we can note that Piketty’s Challenge is not new; it is precisely the same challenge issued by Adam Smith. That is to say, it is a question woven into the very heart of capitalism and which arises at the very moment of its foundation. Smith’s concern was that social and economic progress would not be equitably shared, but appropriated by one class to the detriment of all others. It was Smith’s great fear, and it should be ours as well.