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Saturday, April 19, 2014


Following the advice of those wiser than I, I undertook to upload a video to YouTube.  It seems I already have an account on YouTube.  Who knew?  I chose an eight minute video, taken with my IPhone, of a big male lion eating a male Kudu.  It took well over two hours to upload!!!  For those of a carnivorous turn of mind, you can watch it here.

Now, I mean, two hours and more?  Suppose I had wanted to post a Haydn quartet!  It would have taken two days.  Surely there has to be a better way.  I tried converting the file to a zip file, but YouTube does not accept that format.  [This file is a .mov file.]  Does anyone have any suggestions?  I've got a lot of videos, but at my age, it might take most of the rest of my life to post them.


As I had hoped, my lengthy review of Piketty has sparked a vigorous and interesting series of comments on this blog.  I am going to spend a good deal of today expanding on my discussion and responding to some of the comments [since it is pouring here, so no early morning walk today.]  Let me start with Chris's reaction to my plaintive comment about one of Piketty's footnotes.  Here, in part, is what Chris said:


"In regards to:   "Page 600 -- note 33 Why is Piketty always so careful to speak disparagingly of Marx?"
What is your assessment of this claim in regards to ALL economists and (many) philosophers? Nearly ALL economists go out of their way to refute Marx and yet it's always clear that those same thinkers simply haven't bothered to read him at even a cursory level. For instance, the NYTimes had an op-ed series a few weeks back on Marx, and it was crystal clear all but one author had [not?] actually read Marx. Along with Kenneth Rogoff's recent article in Project Syndicate. I mean these are people with degrees from Ivy League schools, so it's not as if Marx is beyond their reading comprehension, but for some reason people in general feel totally comfortable with speaking about something they haven't done the slightest investigation into. Yet you'd never see an op-ed piece on: "was Einstein right to worry about quantum mechanics", covered by people who had no knowledge of the subject...."


This is a large and [at least to me] very interesting question.  The cheap and easy response is that all these folks are bought and paid for flacks for capitalism and feel no need to take seriously anyone who calls that commitment into question.  And of course, cheap and easy responses are very often right [as are superficial conspiracy theories -- bad people really do get together in back rooms and plot bad things.]  So let us agree that some of the professional economists who dismiss Marx without ever having studied what he had to say are really just mouthpieces for capitalism.  But I honestly do not think that is true in any simple way of a great many quite intellectually brilliant economists, a number of whom have rather progressive politics.  So what more is going on?

Let us start where it all began, in the decade after Das Kapital was published.  The 1870's saw a transformation in mainstream economic theory, led by the work, more or less simultaneously, of Carl Menger in Austria [born in Germany], Léon Walras in France, and William Stanley Jevons in England.  Their so-called Triple Revolution quickly replaced the classical political economy of Adam Smith and David Ricardo [and Karl Marx] with the marginalist analysis that dominates academic economics to the present day.  There are two important things to understand about this Triple Revolution:  First, it was mathematically much more sophisticated than anything that had been done before in the field, and its sheer intellectual beauty and fecundity [spinning off new research questions and possibilities for further sophistication] was mesmerizing to professional economists.  Second, it completely changed the questions that economists asked.  The old Political Economy had been concerned first and foremost with growth and distribution -- what were the factors that promoted or stymied economic growth? and How did the annual social product get divided among the three great classes of society -- entrepreneurs, workers, and landowners?  The new economic theories gave beautiful, elegant answers to an entirely different set of questions:  How are prices determined in a free market?  How does the market guide the allocation of scarce resources with alternative uses?  The questions of the old Political Economy were dangerous questions, because even if one had never heard of the obscure German Karl Marx, it was clear that the well-known and widely read David Ricardo was teaching that the interests of the entrepreneurial class are strictly opposed to the interests of the working class.  Even without any real mathematics at all, Ricardo's conceptual framework made this opposition transparently obvious.  Marx [in my view -- one must always add that caveat when writing about Marx] brought the classical school to completion and transcended it by asking a new set of questions built on his answers to the old ones.  But Marx's questions were, if anything, even more dangerous than Ricardo's.

Marx was not ignored.  Quite to the contrary.  His works were studied and commented on extensively, and of course several world-historical political revolutions were carried out in his name [if not in accord with his teachings.]  But Marx's writings were mathematically unsophisticated [at least superficially -- I will get to that in a moment] -- which made it easy for mainstream academic Professors of Economics to ignore them.  Mind you, they pretty much ignored Smith and Ricardo as well, save in low status optional "History of Economic Thought" courses.  The academic rewards and status more and more went to mathematically sophisticated economists who developed ever more elegant and arcane elaborations of the ideas introduced by Menger, Walras, and Jevons.

A word about the mathematical sophistication of economists.  Modern society suffers from what C. P. Snow, in a famous lecture, called The Two Cultures.  Even most superbly educated people these days are dead ignorant of anything remotely mathematical, and many of the most  raffiné intellectuals are utterly unashamed of their Stone Age grasp of anything formal.  The remainder of the glitterati have, in the immortal words of W. S. Gilbert, "learned up the germs of the transcendental terms" and can actually read a mathematical equation without heart palpitations.  Now, Economics, as an academic discipline, resides in the Faculty of Social and Behavioral Sciences, cheek by jowl with the Humanities and far from the Natural Sciences.  Even though the mathematics used by economists is for the most part undergraduate math [calculus, linear algebra, statistics], in the land of the blind, the one-eyed man is king, and so economists get to lord it over literary critics and historians and even philosophers.

These days, scientists are clearly the academic upper classes.  They do arcane things, use lots of math, get big grants, teach fewer courses, reside in more modern buildings, and have hordes of grant funded grad students to do their bidding [and much of their work.]   The rest of the campus longs to introduce the same sort of mathematical rigor into their disciplines, hoping thereby to pull in grants, cut their teaching loads, and gain some measure of the high status accorded to the natural scientists.  Indeed, if I were given to phrase mongering [which of course I am not], I might suggest that the non-sciences suffer from an advanced case of rigor mortification.

So it is that philosophers splash backwards E's throughout their manuscripts and get a cheap thrill from writing "for all x," while sociologists have stopped reading Weber and Mannheim and Durkheim [all three of them conservatives, by the way], and hand out endless questionnaires to study the contours of surface appearance instead of probing the structures of underlying social reality.

In the period after World War II, three things happened more or less at the same time.  First, in the United States [but not in France, if Piketty is to be believed], academic economists moved into positions of great influence and important as government advisers [the Council of Economic Advisers was established in the U.S. 1946].  Their increased prominence brought with it [in my opinion] enormous pressure to support the dominant interests of capital, which had long exercised powerful influence in the halls of government.  Second, a global struggle developed between the two most powerful empires to emerge from the war, the Soviet Union and the United States.  One of those empires was nominally committed in a quasi-religious way to the memory, if not the teachings, of Karl Marx, with the result that taking Marx seriously in America was tantamount to treason.  The third development, quite surprisingly, is that a number of mathematically sophisticated economic theorists took another look at the classical tradition of Political Economy, including Karl Marx, and very quickly demonstrated that it was capable of being represented by mathematical models as sophisticated, as elegant, and as elaborate as those spawned by the Triple Revolution.   Starting with the publication in 1960 of Piero Sraffa's exquisite little monograph, Production of Commodities by Means of Commodities, a flood of books appeared by mathematical economists around the world -- Michio Morishima in Japan, Andras Brody in Hungary, Luigi Pasinetti in Italy, Abraham-Frois and Berrebi in France.

I began to study Marx seriously in the 1970's, just as this global rediscovery of Marx was taking place.  I swatted up linear algebra, brushed up my calculus, and began plowing through every one of these new interpretations of the classical tradition as they appeared, starting with Sraffa.  In my naiveté, I honestly thought I was getting in on the ground floor of an intellectual revolution that would bring Marx back into the mainstream.  It seemed obvious to me that what was needed was an Introductory Economics textbook that would translate this intellectual ferment into a teachable series of diagrams and models in just the way that Paul Samuelson's magisterial text had done for the neo-classical synthesis.  I knew I did not have what it would take to produce such a work, but I thought my colleagues at UMass, Sam Bowls and Herb Gintis, would do it.  Then, I thought [I really was a child], the panjandrums of academic Economics would have to sit up and take notice, and Marx would enter the curriculum where it mattered, at the Freshman level.

Well, it did not work out that way.  But who knows, Chris?  Maybe CAPITAL in the Twenty -First Century is the Trojan Horse that will be dragged into the walled city and issue from its belly in the stealth of night warriors who will slay the defenders.  I am too old to play Odysseus in this fable, but perhaps there are younger and abler men and women who will carry out the destruction of the walled city of capitalism.

Friday, April 18, 2014


Jason Palma made the following comment on my post-safari musings about Piketty:  "Another thought - I have to wonder if Professor Piketty - like Jean-Jacques Rousseau did in his Discourse On Inequality - buried any explosive suggestions in his footnotes......."  I was forced to confess that I had not in fact read the footnotes.  Well, now I have -- seventy-six pages of small print!  I would not go so far as to say there is anything explosive in the notes, but there are some tasty bits.  Herewith a list of notes I found worth mentioning, for those actually reading Piketty.

Page 600 -- note 33   Why is Piketty always so careful to speak disparagingly of Marx?

page 601 -- note 11

Page 601 -- note 20 

Page 606 -- note 30  for one of Piketty's many delicious digs at the American economic profession

Page 608 -- note 3   A technical dig at Gary Becker, whom Piketty admirably does not like.

Page 614 -- note 29 Another of P's delightful allusions to popular culture.  

Page 616 -- note 7   Contra Becker yet again.  Boy, P really does not think much of him.

Page 619 -- note 36  Nice merging of statistical data and literary allusions

Page 620 -- note 46  Very interesting historical contrast between 19th century France and America

Page 621 -- note 52  Good grief.  P even watches Desperate Housewives.  Where does he find the time?

Page 621 -- note 57 and the text  Good example of Piketty's sardonic style.  Quite lovely.

Page 627 -- note 46  One of many passages that could have been written by Marx.  Why does P work so hard to distance himself from someone with whom he has such obvious filiations?

Page 630 -- note 17 A quietly devastating footnote about America's incarceration of Black men.

Page 636 -- note 20  Another pointed dig at the ideological rationalizations of ostensibly objective journals.  P is really a pleasure to read.

Page 640 -- note 49  "Contrary to an idea that is often taught but rarely verified .."  P really does a number on the [American] economics profession.  They are going to find it hard to swallow this book or ignore it.

Page 640 -- note 55  This is a note to the following passage on page 514 of the text:  "The experience of France in the Belle Ḗpoque proves, if proof were needed, that no hypocrisy is too great when economic and financial elites are obliged to defend their interests -- and that includes economists, who currently occupy an enviable position in the US income hierarchy.  Some economists have an unfortunate tendency to defend their private interest while implausibly claiming to champion the general interest."

Page 650 -- note 33  So much for Google!

Page 653 -- note 49  P is no kinder to his own countrymen.

Page 655 -- note 2 [The last note of the book]  The note reads:  "When one reads philosophers such as Jean-Paul Sartre, Louis Althusser, and Alain Badiou on their Marxist and/or communist commitments, one sometimes has the impression that questions of capital and class inequality are of only moderate interest to them and serve mainly as a pretext for jousts of a different nature entirely."  I do think that  we must excuse Piketty for his negative feelings about Mar x, considering the collection of supposed Marxists among whom he grew up.  


After uploading my safari pictures and videos from my IPhone to my  computer, I discovered that I could not find the videos on my computer.  I was pretty sure they had been uploaded, because the process took so long.  After much fumbling about, I gave up and went to the Apple Store where I had bought the IPhone.  I was assigned a technical counselor -- a middle-aged blind man with a guide dog [this is serious!] -- who proceeded to explain to me how to find my videos.  I went home and found them where he said they would be.  But now, having found them, I cannot upload them into my blog.  Blogger says it is uploading them, but after a very long wait [ten minutes or longer] there is no uploading. 

I would really like to share some of my videos with the waiting world.  Does anyone have any advice?


Seth posted a very interesting and suggestive comment on my post-safari musings about Piketty, and rather than reply in the comments section, I would like to attempt a lengthy response.  Here is what he said:


"The obstacle to socialism has never been the theory, always the practice. How do you manage socialized capital for the benefit of the broad citizenry without losing control of it to the leaders? This is sometimes called the "agency problem" -- how do you ensure (positively) the selection of trust-worthy agents and (negatively) the removal of badly behaved agents?
Democratic socialism is the glib answer to this question, but it begs the question. How do you sustain active participation by a broad enough population when specialized knowledge and focused attention is required to manage any particular part of the socially owned enterprises?
The Polanyi brothers are a neat pair of bookends on this subject: Karl stating the social and political problem elegantly ("The Great Transformation") in its historical context, and Michael expressing the difficulty of solving it ("Personal Knowledge") given the need for specialization and reliance on others' expertise even in epistemological/scientific matters, without even getting into the sort of decision-making required of business managers.
Piketty is perhaps feeding some oxygen to the dying embers of political economy as an academic subject, but we need something more than theory. You have expressed frustration at the prospect of leaving this world before real progress can be made in these matters. I'm a good three decades younger, yet worry that my *grandchildren* will not see this resolved either."


First of all, Seth is of course quite correct.  Uttering the words "Democratic Socialism" is no answer to the question, "How are you going to make it work?"  My first thought is Oscar Wilde's wonderful quip about socialism:  "It  will never work.  Too many meetings."  Nor is it useful, in my opinion, to invoke images of the Soviet Union and play them off against stories about Scandinavia.  The questions Seth raises are actually quite complex, as we would expect, and I can only make preliminary remarks here.

It is always useful to start this sort of exploration with some concrete cases rather than abstract principles.  Are there any examples of the American government running large, complex bureaucratically organized operations, and if there are, has it run them well or badly?

Well, as it happens, there are a number of examples.  Let me start with what is far and away the largest, most  complex, most expensive, most labor intensive operation in the entire U. S. economy, public or private:  The United States Military.  The official budget of the Defense Department is seven hundred billion, give or take the odd twenty billion.  The Armed Forces employ [so to speak] one and a half million men and women, roughly two hundred thousand more than Walmart, the biggest private employer in the country.

Now, you may not like the Armed Forces.  You may not approve of the Armed Forces.  But if you are clear-eyed and objective, you will recognize that the Armed Forces of the United States is an astonishingly efficient and well-run organization.  It trains its employees superbly and it manages them efficiently  With the signal and truly awful exception of sexual harassment, the military is the very model of a modern corporation.   The U. S. military never attempts to interfere in the political life of the country, it carries out the missions it is assigned with great courage and effectiveness, even when those missions are unwise in the extreme, it is almost never touched by financial scandals, and it looks after its employees much better than most private corporations.

How is the military run?  By  its senior officer corps.  And what do these men and women get paid?  Well, a four star general is paid roughly $235,000 a year, plus some perks.  In other words, a general who commands enough fire power to wipe out half a dozen medium sized countries is paid roughly as much as a senior professor at an elite Ivy League university who is probably in charge of a secretary and four teaching assistants.  No one has ever suggested that the Army will fall apart unless its senior managers are paid seventy million dollars a year.  Nor is there a disastrous flight from the ranks of the officer corps to private industry.

You say you don't like anything having to do with the military and don't even want to hear about it.  O.K.  Try Medicare, Medicaid, and Social Security.  The Federal Government spends 586 billion, 265 billion, and 680 billion for those three programs [in 2013].  They are run efficiently, honestly, and without scandal.  The Tennessee Valley Authority, the National Institutes of Health, the Post Office, The Air and Space Museum, Yellowstone National Park?  We are surrounded with efficient, honest, well-run government bureaucracies, large and small.

Will the selection, training, and oversight of the corps of government managers always be a problem, a task, a matter of the greatest public important?  Of course.  How could it be otherwise?  Is there reason to suppose that a democratic socialist government could do the job at least as well as is now being done by the boards of directors of private corporations?  Well, considering the disasters visited on all of us by the captains of industry in the private sector, I think we have reason to be optimistic about the prospects for democratic socialism.

But that is not even the most interesting question, and one of the great values of Piketty's book is that it recalls us to a really urgent question confronting modern economies, which, to use the jargon of the economics trade, is the proper choice of a social rate of savings.  Let me explain.

Each year, the economy reproduces itself.  Some of what is produced is consumed as subsistence by the working class [and also as luxury consumption by the owners of capital, but rich though they are, their annual luxury consumption is a small share of the total output because there are not many of them, and one can only buy so many McMansions and Lamborghinis.]  A good deal more is set aside as inputs required in the next round of production.  And some of it goes to replace worn-out capital stock -- i.e., depreciation.  The remainder is divided between the owners of capital in the form of profits and the workers in the form of wages over and above whatever is considered as subsistence at that time and in that society.

In a capitalist economy, the owners of capital are constantly trying to drive wages down to subsistence, and the workers are doing their best [which is often not much] to push wages above subsistence.   The outcome of this push and pull determines how much output is set aside as additional capital for future investment.  In short, the struggle between capital and labor determines the social rate of savings.

In a capitalist economy, it is extremely difficult for the society as a whole to make collective rational choices about the desirable social rate of savings.  Should the society consume most of what it produces and grow very slowly, or should it tighten its collective belt and save as much as it can so as to expand future production dramatically?  In a capitalist economy, this question cannot be raised directly, because the social rate of savings is not directly the object of political deliberation.  It is of course possible in a democratic capitalist society for the electorate, through its representatives, to seize a portion of the profit as taxes and distribute what has been seized as a supplement to wages.  The struggle over such redistribution is very much the story of electoral politics in America in the twentieth and twenty-first centuries.

In a democratic socialist society -- a society in which the great capital accumulations are collectively owned and managed -- the question of the desirable social rate of savings could for the first time become the object of collective democratic deliberation.  In a sense, the question could be put quite simply:  Shall we raise wages now and produce in the future at the same level we are producing now, or shall we hold wages steady and expand production by investing the social surplus in new plants, roads, high speed trains, and electronic innovations?

Readers of this blog know that I have had issues, personal and philosophical, with Jack Rawls.  I think, therefore, that I ought to take a moment to acknowledge that Rawls is, to my knowledge, the only major social and political philosopher in the entire history of the subject to talk about this question and recognize its important.

There is a great deal more to be said about this subject, and I will be happy to continue if anyone is interested, but 1500 words is enough as a response to a comment on a blog, so I will post this and go get a cup of decaf while the world reads what I have written [I wish!]




A faithful reader who prefers to remain publicly anonymous sent me a bery thoughtful response to a line in my post-safari musings.  I thought it would be well worth sharing.  Here it is:

"“I am very conscious of the enormously powerful, and in my view admirable, desire of parents to make some provision for their children. Such a desire ought to be compatible with any defensible economic system. It is not that impulse that produces the inequalities and exploitation of capitalism.”
This subject is a sticky wicket that I find very interesting. Of course it is a driving force in parents to make their children’s lives “better” and “easier” than their own have been. In many Western cultures this was ever so. It has about the same force – measurable in units of nurturtrons – as making your kids eat a lot. And it is about as healthy. Mind you, I certainly do not advocate eliminating that urge, even if we could. But it takes some serious considering and planning.
In the normal course of events, with life expectancy being what it is today, it is actually more likely the grandchildren who will be in a position to benefit from a little help from the departing elders, as the children will have established themselves by that time. Now consider that, unlike the direct offspring, the grandkids will have had various influences, often rather alien to one’s own imprimatur, and might have drastically different ideas on what to do with such an inheritance. While we cannot, nor do we want to “rule from the grave” we do want to have a say in what is to happen to wealth that has been amassed, regardless of size, by the real or figurative sweat of one’s brow.
{In well-to-do families there is also the danger that the young darlings will decide early on that they need not work nor strive as they are guaranteed a comfortable life thanks to dear old grandpa.] By and large (and this is based on much personal experience) it is easier to inculcate values in the young when life is less cushy.
It is also a valuable and important life lesson to include the next generation(s) in one’s thoughts and considerations all along as regards one’s feelings toward donating to worthwhile causes in serious amounts.(by way of example I have always invited the grandchildren to research causes they believe in, defend them well enough that I will donate a decent sum to each of their causes if their defenses withstood questioning - I have maintained final veto power as it was my money but have never yet had to use that). Thus, in my opinion, bequeathing serious portions of one’s estate to causes that speak to one’s conscience is a life lesson that is as precious for the young as funds for their own use.
Needless to say, all of that very much depends on circumstances, states of health and emotional well being of the potential heirs.

Thursday, April 17, 2014


During the five days that I was writing my review of Piketty, I was very much buried in the minutiae of the book, struggling to render it for my readers in a fashion that was comprehensible.  Since that time, I have taken a holiday in Africa that included two very lengthy plane trips.  This has given me some time to step back from the rich detail of Piketty's account and think more generally about the significance of his discoveries.  In this post, I begin a discussion that I hope will provoke some of you to thoughtful reactions.

To my way of thinking, there are two large facts that stand out from Piketty's exposition.  The first is that the bottom half of the population in modern capitalist societies has a net worth of zero.  The second is that the historically very high concentration of inherited wealth in the hands of the richest 1% or 0.1% or even 0.01% of the population, a concentration that diminished markedly between the two world wars and the boom years of the post-war period [les trente glorieuses], has now been reestablished and threatens to become even more markedly unequal in the remainder of the twenty-first century.

How on earth can half of the population of a country like America own nothing?  Don't they have stuff?  Clothing, dishes, TV sets, cell phones, cars?  Good grief, don't many of them own their own homes?  Of course they do, but they also owe a great deal.  They have mortgages;  They have unpaid credit card balances; they have student loans; they owe on their cars.  And of course, many in the bottom half do not even have mortgaged homes or indentured cars or student loan debts.  They live from paycheck to paycheck, barely making ends meet.  Collectively, on balance, subtracting their debts from their assets, they own nothing.  We are not talking about a relative handful of the very poor.  We are talking about one hundred sixty-five million Americans.

Piketty gives us the figures but does not spend much time at all talking about the significance of this astonishing fact.  In the richest nations on earth, nations whose collective wealth dwarfs that of the grandest kings, emperors, and oligarchs of the past, half of the people are worth nothing at all [measuring worth, as is appropriate in a capitalist society, by net asset value, not by  intangible spiritual or moral possessions of the soul.  These one hundred sixty-five million men, women, and children no doubt have many very fine qualities, but the market value of those admirable traits is zilch.]

The asset-less fifty percent may not own anything, but they work, and their work is essential to the lives of the asset-rich.  Later this morning, I will walk across the street to the local Harris-Teeter supermarket to buy some things for dinner.  The supermarket is stocked with fruits, vegetables, meats, fish, and an endless variety of canned foods.  All of that food was grown, processed, packed, shipped, laid out in the store, and will be sold to me by members of the asset-less fifty percent.  If they do not do their jobs, if they do not soldier on, assetless as they may be, then I starve, unless I can somehow manage to hunt and gather in Chapel Hill in the fashion of my ancestors.  All of us in the asset-rich upper half depend on the work of the assetless to survive.

To be sure, I and my fellow upper fifty-percenters offer invaluable goods and services to the assetless in return.  It may be that without them, I could not eat.  But without me, they could not understand Immanuel Kant.  One might wonder:  in a post-Apocalyptic America of the sort so beloved by film makers, would one rather come upon someone who knew how to grow corn or someone who could explicate the Critique of Pure Reason?  Judging from the reward structure of American society, it would seem that the consensus gentium finds for the Kant scholar.  I was paid, during my long career, vastly more than those who grew my food, made my clothes, built my home, delivered my mail, or even gave me flu shots and performed MRI's on me as needed.

Income inequality is not so lopsidedly severe as wealth inequality, of course.   Those in the bottom half must have some income, for they must eat and wear clothes and live somewhere or they will not be able to look after the needs of the asset-rich.  But as Piketty and many others have noted, even income inequality is getting worse at an astonishing rate.

The concentration of wealth at the very top of American society [and French, German, Italian, Japanese, and Chinese society, of course] is truly hard to grasp.  The richest 1% of America is some 3,300,000 men, women, and children.  They own roughly 30% of all the wealth in the country.  But half of all American wealth is in the form of housing, and in the portfolios of the rich, housing does not loom large, even though they may own McMansions.  It is no exaggeration to say that the rich own most of what there is that is not nailed down.

In thinking about this extraordinary inequality in the distribution of wealth, it is very important to distinguish between capital and capitalists.  Does society need capital?  Of course it does.  Capital is simply the accumulated and unconsumed product of previous cycles of production.  Capital is buildings, it is tools, it is raw materials for production, and it is intellectual property -- patents, copyrights, etc.  Life at anything beyond a scavenging subsistence requires capital.  If a farmer did not set aside part of her crop as seed corn, she would be unable to plant the next year's crop.  [At just this point in my writing of this series of reflections, I followed a link to Paul Krugman's review of Piketty for the New York Review of Books and read what he has to say.  I strongly recommend it.  It is an intelligent and very generous review, and is worth reading.  To continue.]  Piketty estimates annual depreciation globally at 10% [rather higher than I would have guessed], so simply replacing what wears out requires setting aside a substantial proportion of each year's annual product, and that quantity of output set aside is capital.  Economic growth, of course, requires even more to be set aside and accumulated as capital.

But although society definitely needs capital, does it also need capitalists?  Does it require that there be an identifiable [small] subset of the population that owns the social capital?  Picketty never asks this question, and despite his European left-wing political self-identification, it seems not to be a question he wishes to raise.  He seems to view this question as having been settled by the disaster that was the Soviet Union, much as militant anti-Catholics consider the Inquisition to have settled for all time the merits of Christianity.  [Side note:  Serious atheists like me do not make the mistake of blaming Jesus for those who acted in His name.  I wish serious religionists would accord Karl Marx the same courtesy.]

There are, I think, three arguments justifying the existence of capitalists.  The first is what we might call the Max Weber or Protestant Ethic argument:  to initiate the explosive economic growth characteristic of the earliest stages of capitalism one needed individuals who were driven essentially by religious motives to engage in endless, obsessive accumulation and re-investment.  These individuals became very rich very fast, along the way expanding the productive capacity of society in ways that benefited everyone and gave us the modern world in which we live.

The second argument is what we may call the Steve Jobs or Creative Genius argument.  The endless expansion of modern economies is driven by creative geniuses whose brilliance, imagination, and unrelenting industry yield new products [the electric light, the automobile, the computer, the cell phone] or new modes of production [the assembly line] without which the world as we know it now would not exist.  These individuals convert their ingenious inventions into the ownership of huge enterprises worth unimaginable amounts of money, along the way providing all of us with the fruits of their creativity.

The third argument is what we may call the Marginal Product or Competitive Advantage argument.  Modern economies are organized into vast productive assemblages of labor and capital that require skillful management by individuals who possess scarce and immensely valuable abilities.  Competition for their indispensable services results in astronomical salaries which they earn by guiding the companies they lead to hitherto unachievable heights of productivity and profitability.  Inevitably, these individuals over time accumulate huge stores of wealth, which wealth they then make available to the world as capital by investing it rather than consuming it.

[I omit a fourth argument, due to free market fundamentalist libertarians of the Ayn Rand stripe, who claim that the rich have acquired what they own by legally free and uncoerced exchanges in a sunlit market, and hence have an absolute and unchallengeable right to everything they own.  Bob Nozick to the contrary notwithstanding, this is a dopey argument, and not worth discussing.]

I am happy to concede the first argument, since it is purely historical, and offers no justification for the continued private ownership of the means of production [a.k.a. capital].  The second argument I am also willing to concede.  Far be it from me to take a single penny from the late Steve Jobs, from Bill Gates, or even from the egregious Mark Zuckerberg.  I happily grant that they deserve every dollar they have.  However, there is no reason that their children or other heirs should share in this wealth.  They did not create it.  So far as I can see, capitalism would function quite efficiently with a 100% inheritance tax after an initial exclusion -- say half a million dollars, or less -- to allow parents to pass something on to their children.

The third argument, as Piketty indicates, and as many have argued, is simply nonsense.  There are no theoretical or empirical grounds for supposing that highly paid "supermanagers," as Piketty calls them, are paid an amount equal to their marginal product.  I am happy to grant that the managers of large enterprises should receive substantial salaries.  If we were to return to the sorts of salaries that were common fifty years ago, when capitalism was doing quite nicely, that would be a great victory indeed.  And of course it goes without saying that these well-compensated executives ought not to be allowed to pass on to their children whatever portion of their large salaries they fail to spend during their lifetimes.

What would be done with the enormous accumulations of capital taxed away on the death of those who had accumulated it?  One natural response is that the income generated by it could be used to improve the level of compensation of that propertyless bottom fifty percent.  And who would own this capital, once it had been taxed away from the estates of the original accumulators?  The obvious answer is, society would own it.  Which is to say, each generation would pass on its accumulated capital to the social fund of capital.  It would still be managed by well-compensated executives, and there would certainly be a pyramidal distribution of wealth and income, but the pyramid would be dramatically flattened and its base would be raised up.

It seems to me that this is the natural direction in which Piketty's arguments lead, once we give up the unexamined assumption that society requires capitalists in addition to capital.  Would talented and driven individuals choose to innovate, like Jobs, or manage, if they could not pass their gains on to their children?  That is a question of fact, not answerable by mere speculation, but there would be many ways in which to investigate it with interim measures designed to reduce, but not eliminate, the transmission of capital assets to children who had not in any sense earned them.

It will be very interesting to see whether Piketty's book, which is having so big an impact in some economic circles, leads some theorists to raise these questions.

Who knows?  Socialism may not be dead yet.