Can you believe this? Two great books on economics are making headlines.
By Tuesday, Naomi Klein’s new book will be in stores. This Changes Everything: Capitalism vs. the Climate argues that capitalism is at the root of the climate crisis that threatens us all. What Klein calls the “growth imperative” stifles creativity and blocks attempts to make the changes that are necessary to reduce use of carbon-based energy. I’ll read her book as soon as I can get my hands on a copy.
Over the summer, I read the other book that has garnered a lot of attention: Thomas Piketty’s Capital in the Twenty-First Century. The French economist provides more than 600 pages of data to support the Occupy Movement’s call to pay a whole lot more attention to what the wealthiest one-per-cent among us do with the power that accrues along with their money.
Why am I excited by a couple of hefty tomes? Because both, in very different ways, point to the causes of the some of the critical problems that face our peoples today: inequality, climate change, corporate greed and the failure of political will.
Yes, other authors address some of the same themes: Noam Chomsky, Greg Grandin, Linda McQuaig and Tariq Ali, among many others. But Piketty and Klein have carried the debates well into the mainstream. I hope some politicians are paying attention.
Measures to limit the concentration of wealth
Using a wide variety of historical sources (including novels), Piketty looks at inequality from the late 18th century through the early 21st century. His central thesis is that the small gap between the return on capital investments (stock increases, dividends, income from real estate, interest earned etc.) and a country’s rate of growth can in the long run have powerful and destabilizing effects on the structure and dynamics of inequality. Income derived from capital tends to increase slightly faster than the rate of growth, and great wealth provides greater opportunities to augment that wealth.
The consequence is that wealth tends to flow “up” to the rich, a process only interrupted by the two world wars, the Great Depression, and higher taxes after World War II.
The post-war period saw greater social equity and great advances for the social state in its protection for the most vulnerable people. But in the 1980s, a more conservative brand of politicians (Margaret Thatcher, Ronald Reagan, Helmut Kohl, Brian Mulroney and others) began to implement classic liberal (or “neoliberal”) economic policies that have rolled back the triumphs of earlier generations.
Piketty proposes some measures that would limit the concentration of wealth at the top. Among them:
- a one-time or permanent tax on capital
- much higher taxes on the highest incomes
- enforced transparency for all bank transactions
- and (less desirable) use of inflation to redistribute wealth downwards
I expect that Naomi Klein’s work will prove to be less optimistic than Piketty about possible solutions within the framework of capitalism. But both books provide new ideas and a burst of energy into what had become very sterile argument over austerity and limits on the role of the state.
In days and weeks ahead, I will look more at inequality in different places and share some more ideas that emerge in the ongoing debate.
- October 2018
- August 2018
- May 2018
- October 2017
- March 2016
- January 2016
- December 2015
- November 2015
- September 2015
- August 2015
- June 2015
- May 2015
- April 2015
- February 2015
- January 2015
- October 2014
- September 2014
- July 2014
- November 2012
- March 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011