Ó American Sociological Association 2014 DOI: 10.1177/0094306114553213 http://cs.sagepub.com

EDITOR’S REMARKS ‘‘THE TRUE UNIVERSITY OF THESE DAYS IS A COLLECTION OF BOOKS’’

The Library of Congress thought well and be thy guide, In thy most need to go by enough of this claim to display it in stone, thy side’’—the knowing slogan J.M. Dent as did the San Francisco Library (now the chose in 1908 to appear on the first page of Asian Art Museum). Yet fifteen years ago his many subsequent Everyman volumes. a noted statistician, an expert on the AIDS The original was composed anonymously epidemic, glanced up at these words embla- around 1485 wherein ‘‘Goode dedes’’ informs zoned at the entrance to a large university ‘‘Every man’’ that she cannot defend him at library, and smirked, mocking its earnest the Final Judgement, but offers solace: ‘‘I sentiment. ‘‘‘The True University is a Collec- haue a syster that shall with you also / Called tion of Books’? Obsolete technology!’’ the knowlege whiche shall with you abyde / To expert said with a smile, recalling long stu- helpe you to make that dredfull rekenynge / dent days spent in just such a monumental Every man I wyll go with thee and be thy building. ‘‘Obsolete’’ indeed, at least in gyde / In thy moost nede to go by thy part, for such a researcher, tied for life to syde.’’ To which noble gesture ‘‘Every man’’ the computer, alienated from the baronial replies: ‘‘In good condycyon I am now in chambers and overstuffed stacks of the con- euery thynge / And am hole content with ventional academic library. this good thynge / Thanked by god my When Thomas Carlyle (1795-1881) gave the creature.’’ lecture that concluded with this famous There was a time not long ago, stretching, phrase on Tuesday, May 19, 1840 (‘‘The say, from the period of Carlyle and Marx, Hero as Man of Letters: Johnson, Rousseau, both zealous devotees of libraries, when Burns’’), he also smirked. Carlyle rejected Knowledge gave sustenance and inspiration the medieval notion that formal education to scholars, and the Knowledge they sought occurred only in a classroom, where the did indeed live within ‘‘a Collection of robed professor spoke in Latin to obliging, Books.’’ There are many readers today, espe- silent students, most of whom could not cially those eager minds dwelling hundreds afford to buy the canonical books from which or thousands of miles from a great library, the professor lifted his lecture material. who believe that digitized books—30 million Instead, Carlyle urged his readers to indulge so far we are told—remain ‘‘books’’ even if on in the Google of their era: ‘‘If we think of it, all a screen, and even if in many cases not whol- that a University, or final highest School can ly readable due to copyright restrictions. do for us, is still but what the first School Viewpoints of this type struggle hopefully began doing,—teach us to read’’ (Carlyle at making a virtue of technological necessity, 1908: 390). Books were becoming plentiful but the ultimate outcome for scholarship of and cheaper, public libraries were beginning digitization remains to be understood— to open, so Carlyle urged his middle-class whether a Good Dede for Every man, or audience to edify themselves, by reading. nothing of the sort. And they did. Huge numbers of books Every scholar has by now been faced with were printed in the nineteenth century, and the inscrutable workings of electronic periodicals thrived as well, many of them ‘‘books’’ in a research library’s ‘‘holdings.’’ bound by subscribers at the end of each The library buys a ‘‘book’’ in electronic form year for ongoing reference in the ‘‘perma- from a publisher, which charges considerably nent’’ family library. more for the ‘‘book’’ than it does for the Without electronic diversions, the printed printed version, arguing that since more word became every civilized person’s best readers are in theory capable of using the friend: ‘‘EVERYMAN, I will go with thee, screenal version, it is only fair to charge,

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 778 Editor’s Remarks say, $250 for the same title that in paper form say. The ancillary claim surely will be that is merely $125. (Never mind that the actual ‘‘Libraries are unnecessary now; we have production costs of the printed version hov- electronic ‘books’.’’ A few institutions of er around $5.00, and that authors’ royalties higher learning have already dispensed are negligible.) The scholar summons the with their ‘‘bricks and mortar’’ libraries— electronic manifestation to whatever screen a symptom of cultural thoughtlessness that is handy and capable, and provided all sys- appeals only to servants of the ‘‘bottom tems are working properly (not guaranteed line’’ who would be lost in a university by any means), is informed that out of 400 library. pages or so of monographic text, 50 printed When Robert K. Merton wrote about pages and never more will be granted to the role of ‘‘serendipity’’ in scholarly said scholar should a copy be needed for discovery—which in part at least concerns annotation or as a sentimental keepsake. the luck of ‘‘stumbling upon’’ the deciding Should the scholar need more than this sor- book or journal article ‘‘buried in the stacks,’’ ry limit, there is always Interlibrary Loan, an experience most college students now will which can be called upon to find a printed never know—he did not regard the phenom- copy at some other library that chose not to enon as trivial or incidental to the growth of buy the electronic ghost of the desired title. knowledge. We are tactile creatures, and Should all libraries elect, as they are being holding books ‘‘in the flesh’’ carries more vigorously pushed to do, to buy only the elec- weight and inspires more ideas than hoping tronic version, then the scholar might apply to find something meaningful as one scans for a ‘‘book grant’’ in order to buy the printed screenal representations. Flipping through version, or perhaps could join with friend- bound journals or the random monograph colleagues, and share a collectively pur- has been the great privilege and inspiration chased copy, the way poor undergraduates to untold scholarship ever since stacks were do when confronted by a $300 chemistry text- opened to researchers in the 19th century. book. Springer, the German firm which Recall George Gissing’s sentiments along prides itself on being a ‘‘leading scientific these lines: ‘‘I know every book of mine by publisher,’’ just offered Models of God and its scent, and I have but to put my nose Alternative Ultimate Realities (2013) in between the pages to be reminded of all sorts e-book form at the bargain price of $109.50, of things. My Gibbon, for example, my well- half the usual cost. The printed version can bound eight-volume Milman edition, which be had for $279 (free shipping). It is a large I have read and read and read again for more edited work, assembled by an emeritus pro- than thirty years—never do I open it but the fessor in Israel and an assistant professor in scent of noble pages restores to me all the Toledo, Ohio. Its Amazon book sales ranking exultant happiness of that moment when I is at 1,266,259 at this writing. Sad to say, the received it as a prize. Or my Shakespeare, reduced price is available only until Septem- the great Cambridge Shakespeare.’’ (Giss- ber 8, 2014, two weeks after the initial offer. ing 1914: 5-6). Perhaps you feel just this Perhaps the ultimate ‘‘ultimate reality’’ lies way when you return to your copy of Capital in the publisher’s realization that prices or Suicide or The Protestant Ethic, covered in such as these attract remarkably few buyers. your youthful annotations. Why are academic libraries ‘‘electing’’ elec- ************************************ tronic versus printed monographs in ever growing numbers? In part because librarians, One pertinent book which no-one is able to particularly administrators who must worry print from Google Books (though there is about budgets and buildings, seem to love another source, happy to report, which this technological innovation: no space con- makes it available: archive.org) appeared in cerns, no maintenance, no replacement costs 1923, self-published by Upton Sinclair. He when lost or damaged, and no reference is known, of course, for the novel The Jungle librarians to pay since everybody becomes (1906), which he dedicated ‘‘To the Working- their own source of wisdom. ‘‘Expertise is men of America,’’ and therewith prompted unnecessary now; we have Google and the U.S. government to begin monitoring Wiki,’’ as one young scholar was heard to meat production. Recently his novel Oil!

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(1926) was converted into a very fine film, presidents and chancellors and deans and There Will be Blood, though it bears a weak regents and trustees and governors and cura- relation to the novel as written. In Oil! Sin- tors and fellows and overseers and founders, clair composed a Fathers and Sons type of and donors and whatever else they call them- work, pitting an idealistic son against his selves’’ (Sinclair 1923: ix). hard-bitten capitalist father, with lots of Nobody else did that before and no-one pro-union sentiment thrown in, little of has done it since. Veblen’s far more famous which appeared in the film (brilliantly acted book on the same subject, The Higher Learning by Daniel Day-Lewis as a demented tycoon). in America: A Memorandum on the Conduct of Sinclair also ran for governor in California, Universities by Business Men (1918), brilliant and tried to sustain a utopian community as it is, rests on a thin empirical base com- when not writing muck-raking expose´s and pared with Sinclair’s. Veblen wrote it around novels. 1906 using as data his own experiences at His less famous book first appeared under Carleton College, Johns Hopkins, Stanford, the author’s own imprint as The Goose-Step: Chicago, and Missouri (for background, see A Study of American Education (Sinclair Diggins 1999: 170-183). Sinclair appreciative- 1923). The publishing entrepreneur Emanuel ly quotes and cites Veblen in seven different Haldeman-Julius in Girard, Kansas (famous parts of his book, and they arrive at the same for printing 300 million copies of ‘‘Little Blue destination. (The Goose-Step was also the sub- Books’’), reissued a revised version in four ject of at least one dissertation: Blinderman, pamplets a year later. It was reissued again 1963.) (this time with a good index) in 1970 by Sinclair, indifferent to academic politics AMS Press, a reprint house which sold most- and unafraid of the people who ran the ly to libraries. Even though Google Books ‘‘higher learning,’’ reported exactly what he scanned copies of the work, none of them discovered without the hedges and hesita- is available for downloading from this tions that dull the edge of ordinary academic source. (For interesting details, see the Wiki writing. Mrs. Leland Stanford fired E. A. Ross article, ‘‘The Goose-Step (book)’’.) The best in 1898 because she did not want his opinions way to acquire the book as printed, then, is broadcast from the campus she and her hus- through the vast used-book market if one band had recently founded to honor their wishes a full text on paper. young, deceased son, and which she con- Why care? Because the book has been trolled as a fiefdom. Ross, then identified as called an ‘‘honest effort to find out the truth’’ an economist, wrote and spoke in favor of (Clarence W. Alvord, 1923), ‘‘indispensable to Free Silver, a fiscal change that would have any student of present American life’’ (Robert halved the value of Mrs. Stanford’s stock. Morss Lovett, 1923), and ‘‘muckraking at its His pamphlet, Honest Dollars, was published best’’ (Granville Hicks, 1943). It constituted by Charles H. Kerr (also Marx’s American one-sixth of the ‘‘Dead Hand Series’’ in which publisher) in 1896 when Ross was only Sinclair analyzed major American social 30, in which the Robber Barons are por- institutions: journalism, art, and education. trayed as enemies of the people’s welfare. He reported that ‘‘For the past year I have More importantly, Ross also opposed the been studying American Education. I have exploitation of Chinese laborers as railroad read on the subject—books, pamphlets, workers, the root of the Stanfords’ huge reports, speeches, letters, newspaper and riches. Her expulsion of Ross from the uni- magazine articles—not less than five or six versity became a lasting national scandal, millions words. I have traveled over America seriously damaged Stanford’s reputation, from coast to coast and back again, for the and inspired formation of the American sole purpose of talking with educators and Association of University Professors. those interested in education. I have stopped Sinclair analyzed these events, which had in 25 American cities and have questioned become a nationally known scandal, in detail not less than a thousand people—school (‘‘The Story of Stanford,’’ and ‘‘The Stanford teachers and principals, superintendents Skeleton,’’ pp. 152-168), using as data letters and board members, pupils and parents, col- from many participants, e.g., the great intel- lege professors and students and alumni, lectual historian, Arthur O. Lovejoy, who

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 780 Editor’s Remarks resigned from Stanford rather than be ‘‘The Twilight Zone,’’ ‘‘The Empire of Dull- coerced into supporting Ross’ firing. The act- ness,’’ ‘‘The Academic Department Store,’’ ing president of Stanford at the time referred ‘‘The University of Lee-Higginson’’ (Har- to the need for ‘‘shaking off the loose plaster’’: vard), ‘‘Free Speech But—,’’ ‘‘The Laski Lam- firing all faculty who sided with Ross and poon,’’ ‘‘The University of U.G.I.’’ (Penn), and academic freedom (p. 157) against the higher ‘‘Stealing a Trust Fund.’’ Fearlessly, Sinclair administrators, who served Mrs. Stanford writes ‘‘A well known American scientist and the party line. What Sinclair could not made to me the statement that there has not have known was that Mrs. Stanford was mur- been a man of distinction called to Columbia dered with strychnine in 1905, and did not in ten years, nor has one arisen there. To attri- die from an alleged heart-attack, a cover-up bute so much to Butler and his interlocking orchestrated by the president of her Univer- trustees might seem to credit them with sity which lasted until the 1980s. In itself superhuman maleficence; but the scientist this is historical trivia, but it indicates how explained the phenomenon. . . Exactly how far administrators will go to ‘‘protect the does the plutocratic regime operate to elimi- brand.’’ Somehow the image of Mrs. Stan- nate originality and power?’’ (pp. 49, 52). Sin- ford agonizing under the ‘‘tetanic contrac- clair bitterly refers to ‘‘my old teacher, James tions’’ produced by strychnine in its Harvey Robinson’’ (p. 56) who was fired by victims, and the very notion that a close Nicholas Butler along with many others associate tried to murder her twice, once whose left-leaning politics disturbed the in Stanford, and again in Hawaii, did not president’s sense of reality. The famous square with the image the administrators psychologist James McKeen Cattell, in of Stanford wanted to convey. a furious battle with Butler, ‘‘referred to Sinclair’s The Goose-Step is nearly 500 thetrusteesas‘menwhosehorizonis pages long, therefore defying capsulization. bounded by the two sides of Wall Street Due to his heroic fieldwork and reading, he withTrinityChurchattheend...[Butler] is able to position the educational system has run the university like a department in relation to everyone with a vested interest store, playing the part of both proprietor in it. This mattered to him because at the and floor walker to the faculty, while an time, as has since become well known, rich errand boy to the trustees’’’ (p. 56). people founded colleges and universities to Chapter 58 (pp. 306-313) is called ‘‘Intellec- gratify their egos and for various religious tual Dry-Rot,’’ which begins by referring to purposes, such that these institutions were Cornell as operating under ‘‘as choice an out- wholly owned by the founders, and run by fit of trustees as a plutocratic imagination the trustees they chose. Everyone from the could invent’’ (p. 306). It included George F. presidents to the visiting lecturers owed Baker (richest man in America after Rockefel- their sustenance to the donor(s), and took ler), Charles F. Schwab (Bethlehem Steel, and orders from them in unambiguous terms. the man for whom a fine auditorium on the A few skillful presidents outmaneuvered Penn State campus is named), H. H. Westing- the founders and their minions with person- house, plus many others of similar wealth al charm and a certain high-minded duplic- and power. Sinclair tells the story of Veblen ity, protecting their faculty from the various being appointed to teach at Cornell, but the prejudices of the donors as much as they trustees firing him before he arrived on the could. But most simply followed orders in basis of his published work (p. 308). Over terms of what to teach, whom to hire, what the next few pages Sinclair airs the extremely to build, and so on. Not until the 1920s dirty laundry (including at Cornell a manure when competition for good faculty warmed spreader, p. 309) at Brown and Wesleyan. His up did some measure of faculty autonomy detailed argument, which names many par- surface, aided by the deaths of the donors. ticipants, holds that institutions, formerly The chapter titles in the first hundred the site of excellent scholarship and teaching, pages of Sinclair’s book tell the tale: ‘‘Inter- once they fall under the control of the pluto- locking Directorates,’’ ‘‘The University of the crats, uniformly degenerate ‘‘to the intellectu- House of Morgan’’ (Columbia), ‘‘Nicholas al level of the Garrett Bible Institute of Miraculous’’ (President Butler at Columbia), Evanston, Illinois!’’ (p. 313). When one

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 Editor’s Remarks 781 reflects on recent events at the University of education or institutional fructification. In Virginia, where the sociologist and president most large complex organizations this is tak- Terry Sullivan was temporarily deposed by en as ‘‘progress’’ toward some unnamed goal, a trustee whose expertise lies in beach real but within the university setting, there are estate transactions, the continuing relevance plenty of analysts who notice this, seeing it of Sinclair’s work ninety years ago becomes as a pathological excrescence. Ginsberg con- apparent. An enterprising publisher, reprint- cludes with ‘‘What is To Be Done’’ (pp. 202- ing The Goose-Step today, would not lose 219), and one suggestion—that faculty money. become members of Boards of Trustees— The contemporary version of Sinclair’s sounds particularly useful today. book, though wrung from a much thinner ************************************ empirical base, and without systematic inter- viewing across the country, is Ben Ginsberg’s Thus concludes my plea for the continuing The Fall of the Faculty. His story is heavily significance of printed books, for the unend- anchored in his long experiences at Cornell ing charm and scholarly necessity of large, and Johns Hopkins, where he has been airy buildings filled with paper and print, a political scientist. He also followed current for the ‘‘Life of the Mind’’ (Hannah Arendt’s research norms by making frequent use of modestly titled final work) as it has devel- The Chronicle of Higher Education, insidehigher- oped over the last three centuries, ever since ed.com, mindingthecampus.com, plus the usual Vico wrote The New Science. Beginning in Jan- monographs and scholarly journal articles. uary, 2009, CS has included 33 ‘‘Editor’s He also cites Sinclair once (p. 233, n. 23). Remarks,’’ which began with brief observa- Ginsberg’s important book points out with tions and lately have grown to somewhat hard data what everyone who works in longer meditations. Creating CS every two higher education has known for the last 20 months is a privilege and a duty to books years or so: as tenured faculty lines have dis- and their authors, and my staff has carried appeared and been replaced by temporary their responsibilities to both with undimin- laborers, the ranks of administrators have ished vigor and enthusiasm over our six- exploded, as have their salaries. Administra- year term. We are leaving a large backlog tion, once the begrudged, short-term duty of of material ready for use in the able hands all senior faculty, has become the favored of our successors, and trust that the journal career path of those academics who decide and the books for which it exists continue to cut down significantly on their teaching, to flourish. research, and student-contact hours, and There are few sensations so stimulating as instead attend meetings to decide how their the smell of a new book. former colleagues should carry out their duties in some improved mode. References Ginsberg finds this situation repellant on Blinderman, Abraham. 1963. ‘‘Upton Sinclair’s many levels, and goes into extraordinary Criticism of Higher Education in America: A detail explaining how this has happened at Study of The Goose-Step, Its Sources, Critical dozens of colleges and universities (all of History, and Relationship to Criticisms of which he names). If Sinclair’s book is essen- Higher Education.’’ A Ph.D. dissertation in tial for understanding the academic sphere the History of Education, New York Universi- ty. Dissertation Abstracts International, 25, no. a century ago, Ginsberg’s plays a similar 04, (1963): 2334. Accession No: AAG6406547. role in today’s university environment. It Carlyle, Thomas. 1908. Sartor Resartus / On Heroes goes without saying that both Sinclair and and Hero Worship. London: J.M. Dent and Sons Ginsberg are polemicists, and that even they (Everyman’s Library). admit that honorable, altruistic, and hard- Diggins, John Patrick. 1999. Thorstein Veblen: Theo- working administrators do exist. But both rist of the Leisure Class. Princeton, NJ: Princeton University Press. (First published in 1978 as books unintentionally document Max Web- The Bard of Savagery.) er’s theory of bureaucratization: once offices Ginsberg, Ben. 2011. The Fall of the Faculty: The Rise are founded for this or that function, they of the All-Administrative University and Why It grow ‘‘naturally’’ in size, scope, and budget, Matters. New York, NY: Oxford University whether or not they can be shown to improve Press.

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Gissing, George. 1914. Books and the Quiet Life: Sinclair, Upton. 1923. The Goose-Step: A Study of Being Some Pages from The Private Papers of Hen- American Education. Pasadena, CA: Upton Sinclair. ry Ryecroft by George Gissing. Chosen by W.R.B. Veblen, Thorstein. 1918. The Higher Learning in Portland, ME: Thomas B. Mosher. America: A Memorandum on the Conduct of Uni- Ross, Edward Alsworth. 1896. Honest Dollars. Chi- versities by Business Men. New York, NY: B.W. cago, IL: Charles H. Kerr. Huebsch.

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Piketty’s Nightmare Capitalism: The Return of Rentier Society and De-democratization

ROBERT J. ANTONIO University of Kansas [email protected]

The tradition of all the dead generations Capital in the Twenty-First Century,by weighs like a nightmare on the brain of Thomas Piketty. Translated by Arthur the living. Goldhammer. Cambridge, MA: Belknap (Marx 1852) Press of Harvard University Press, 2014. 685pp. $39.95 cloth. ISBN: I am not particularly optimistic about the 9780674430006. future. (Piketty 2014) Though low-keyed and modest in demean- Thomas Piketty contends that the sharp or, media pundits billed him as ‘‘the reduction of economic inequality in rich rock-star economist’’ and compared ‘‘Pike- nations, which culminated in the celebrated ttymania’’ to ‘‘Beatlemania’’; Bloomberg Busi- post-World War II era expanded middle nessweek (May 29, 2014) satirized him on class, is being reversed and hardening into a teenage fan magazine motif cover; The enduring oligarchy. In the wake of the Great Financial Times reported a nine stage ‘‘Piketty Recession, Occupy Movement, and slow job bubble’’ (Shrimsley 2014), and the The Wall and wage growth, it is not surprising that his Street Journal crowned his book the least scenario would resonate with American read, best-seller ever (Ellenberg 2014). fears. Still the U.S. reception of the English Unflappable, he took the attention and criti- language translation of Piketty’s hefty tome cism in stride, with a sense of humor and seems remarkable. Shortly after Capital in proportion.1 the Twenty-First Century’s March 10th Nobel Laureate Paul Krugman (2014) release, it shot to the top of the Amazon.com declared that Piketty’s book ‘‘will change list for all books and of other best-seller lists both the way we think about society and (e.g., The New York Times, The Wall Street Jour- the way we do economics.’’ Former World nal, Washington Post, Chicago Tribune, Los Bank economist, Branko Milanovic (2014: Angeles Times, and NPR). In about one month 17) called it ‘‘a book of huge scope and it outsold all other Harvard University Press breadth of vision.... unabashedly classical books. Piketty interviews, reviews, commen- in its approach, but... based on incompara- taries, critiques, and companion pieces bly better and richer data than ever flooded the media for three months. Science available.’’ Conservative George Mason (May 23, 2014) devoted a special issue to economist and Piketty critic Tyler Cowen inequality, reporting on Piketty’s book and (2014) said that it ‘‘will put wealth back at publishing a coauthored article by Piketty the center of public debate... and revolu- and Emmanuel Saez (2014) on its core tionize how people view the history of themes. Coverage of Piketty’s every move income inequality.’’ Other luminaries criti- (e.g., visits to the U.N., Obama Administra- cized the work from divergent positions tion, and Council of Economic Advisors, (e.g., Summers 2014, Galbraith 2014, Harvey interview with Senator Elizabeth Warren, sold out talks in New York and London, ad 1 See e.g., http://thecolbertreport.cc.com/vid infinitum) accorded him celebrity status. eos/e301vf/thomas-piketty.

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2014), but concurred about its importance they have been attacked before on the The and policy relevance. Apoplectic about Wall Street Journal opinion page (Reynolds Piketty’s proposed ‘‘confiscatory’’ 82 percent 2006), contributed to Occupy Wall Street top marginal rate and progressive wealth atmospherics, and attracted Obama Admin- tax, business media critics denounced the istration attention (Lowrey 2012). Piketty work as retrograde Marxism. Calling it and Saez operate The World Top Incomes Data- a ‘‘bizarre ideological screed,’’ a Wall Street base3 with Facundo Alvaredo and Anthony Journal reviewer (Shuchman 2014) advised Atkinson and they all are part of a larger Piketty to read Orwell and Koestler, while team (Piketty pp. vii-viii, 16) striving to a Forbes reviewer (Weiner 2014) branded it refine methods and datasets to illuminate a twenty-first century ‘‘Communist Manifes- income inequality and take fuller account to’’ and planted a big hammer and sickle of underestimated ultrahigh incomes. The mid-article. Similar themes were often Piketty Circle makes their data available to repeated vociferously in reader comments other researchers, and aims to stir public dis- and on blogs. After The Financial Times’(FT) cussion and political deliberation about eco- Chris Giles (2014) supposedly exposed nomic inequality. Fashioning the book to be Piketty’s carelessness, dishonesty, and cher- accessible to ‘‘professional social scientists’’ ry-picked data, a business media chorus and others who know relatively little about chortled that his defrocking burst his bubble; economics, Piketty (pp. 32-33) employs eco- that is, until his devastating point-by-point nomic theory sparingly, explains and illus- rebuttal.2 Intense, often hyperventilated trates analytical moves carefully and simply, responses appeared across the political spec- and repeats core ideas. He also summarizes trum, piquing curiosity about the book. A pro- his argument and findings in the introduc- posal for a Piketty ASA convention session set tion; appends a detailed topical outline after off weeks of intense exchanges on the Marxist the endnotes; and provides an online appen- Sociology Section listserv. Many desired heady dix to explain the methods and allow access critiques and discussion to locate the work in to the data.4 Arthur Goldhammer’s transla- relation to Marxism, but some declared Piketty tion is lucid and a pleasure to read. Yet this a conventional liberal too uncritical of capital- is a big complex book, very rich in data, ideas, ism to be worthy of attention. Cooler heads and qualifications (76 pages of endnotes) and held sway, suggesting that those dismissing with some key doors left open. It is not the the book out of hand ought to first read it. easy read some reviewers imply, and it is a for- Some commentators call Piketty a new- midable text to summarize and take stock of. comer, but he and his main collaborators Now at the Paris School of Economics, have been well-known in U.S. policy circles Piketty (pp. 31-32; 573-575) first taught for more than a decade. His work with at MIT, but did not feel at home with Emmanuel Saez (e.g., 2003) helped initiate mainstream U.S. economics’ preoccupation a U.S. policy debate over income inequality; with mathematized theory, which he con- siders to be ‘‘purely theoretical and often 2 FT published a brief Piketty response with highly ideological speculation’’ and general- Giles’ critique. However, Piketty held that ly oblivious to historical and institutional Giles neither interviewed him nor provided contexts. He does not reject mathematical him complete materials in advance and that models per se, but objects to immoderate he was given less than 24 hours to respond. reliance on them and their all too often insuf- Giles was reported to have affirmed these ficient connection to facts and public issues points, but held that Piketty did not to use 5 the full time allotted to address the parts of (e.g., distribution). He says that his own the critique he did receive. Giles said that an mathematical theorizing gained professional independent expert vetted his critique and that his paper’s legal team gave him the go 3 ahead before publishing it (Goodman 2014). http://topincomes.parisschoolofeconomics.eu/ About a week later FT published Piketty’s long 4 http://piketty.pse.ens.fr/en/capital21c2 rebuttal, now included in his online technical 5 See Piketty’s (pp. 16, 581, n. 18; 359-361) critical appendix. http://piketty.pse.ens.fr/files/capi comments on ‘‘representative agent models.’’ tal21c/en/Piketty2014TechnicalAppendixResp On the contrasting U.S. and French economics onsetoFT.pdf. traditions, see Fourcade 2009: 61-128; 185-236.

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 Symposium 785 recognition in the United States without his concerns about income distribution and con- knowing anything about global economic centrated wealth, which are ignored by problems. Piketty rejects neoclassical econo- mainstream economists. However, Piketty mists’ claims that they are more scientific (2014b) says he ‘‘never managed to really than other social scientists, and implies that read’’ Marx’s economic works and that Cap- their high professional status accords them ital had little impact on him. He still too much influence on public policy. He criticizes Marx’s crisis theory and some oth- (p. 514) declares that their ‘‘enviable place er facets of his work, but not in depth.7 By in the U.S. income hierarchy’’ fuels an contrast to Marx, he neither focuses on the ‘‘unfortunate tendency’’ of some to conflate labor process and ‘‘exploitation’’ (extraction their ‘‘private interest’’ with the ‘‘general of ‘‘surplus value’’) nor defines capital in interest.’’ Piketty (pp. 20, 35, 573-575) prefers a way to illuminate commodity production the classical term ‘‘political economy,’’ and distinctly capitalist accumulation. because major ‘‘economic’’ problems are Piketty (pp. 45-48, 422-424) frames his con- irreducible to purely economic drivers, espe- ception of capital to distinguish between cially, distributional matters, which are labor income and capital income (based on ‘‘deeply political,’’ shaped by power rela- ownership of nonhuman assets) and to tions, sociocultural forces, state policies, make comparisons across historical epochs and ideals of justice. He sees economics to and divergent socioeconomic systems. For be a reluctant subfield of social science, example, he (p. 164) explains how the and asserts that economics would be Ancien Re´gime’s dominant form of agricul- enhanced by collaboration with sociology, tural capital was later replaced by industrial, anthropology, political science, and related financial, and urban real estate capital and disciplines. Implying that mainstream econ- points to parallel dynamics and structures omists favor top-down policymaking, that reproduce sharp inequalities in capital Piketty (pp. 479-481, 512-513, 562, 569-570) incomes in both eras. Piketty stresses the argues that mathematical certainties are no fundamental importance of the capital/ substitute for democratic deliberation and labor split, treats all capital incomes (e.g., experimentation. The Piketty Circle makes rental property, interest, dividends, profits, their work bear on public issues, stresses royalties) as rent,8 and acknowledges the transparent reportage and, overall, practices importance of the normative question: is it the type of public social science that John Dewey preached and hoped would one day arrive. Other similarities to Dewey’s 7 On Marx, see Piketty pp. 8-11, 31, 52, 131-132, progressivism and ardent belief that justice 227-230; 40-41 online technical appendix; in the economic and social means of partici- 2014a:106-107. Piketty (p. 10) holds that Marx pation is essential for sustaining democracy ignored ‘‘durable technological progress and steadily increasing productivity,’’ but Marx’s are scattered throughout Piketty’s book and 6 core argument about the shift from ‘‘manufac- suffuse its normative chapters (Part Four). ture’’ to ‘‘modern industry’’ portrays science Piketty’s dust-jacket design—its red bor- and technology as the driver of continuous ders and Capital in a big red font with the innovation. rest of the title in a much smaller black 8 Piketty 422-425. Beyond payments made for font—conjures up Marx’s magnum opus. temporary use of an asset, economists employ This likely marketing strategy aside, ‘‘rent’’ to mean a type of market imperfection. ‘‘An excess payment made to or for a factor of Piketty’s book has little to do with Marx’s production over and above the amount ex- classic. He (pp. 10, 15) shares Marxian pected by its owner. Economic rent is the pos- itive difference between the actual payment made for a factor of production (such as land, 6 Piketty’s (pp. 363; 630 n. 19) references to labor or capital) to its owner and the payment Thomas Jefferson’s ‘‘the land belongs to the level expected by the owner, due to its exclu- living’’ and substitution of happiness for the sivity or scarcity. Economic rent... would not Lockean Triad’s property parallel Dewey’s exist if markets were perfect, since competitive moves and argument that property is a social pressures would drive down prices.’’ See right, which can be redistributed to avert http://www.investopedia.com/terms/e/econ extreme inequality. omicrent.asp.

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‘‘useful and just’’ for owners to receive which mushroom across generations with ‘‘marginal product’’ for investment alone? the extent of their inherited capital. However, Piketty (p. 215) asserts that this Piketty (pp. 11-20) followed postwar U.S. ‘‘crucial question’’ is ‘‘not the one I am ask- economist, Simon Kuznets’ pathbreaking ing here.’’ His inquiry addresses long-term use of tax data and estimates of national historical vicissitudes of economic inequali- income to study economic inequality. Kuz- ty, which overlap Marx’s normative and sub- nets’ postwar classic tracked rising and stantive concerns and some of his fears, but then falling U.S. economic inequality from is clearly distinct from the latter’s focus in 1913 – 1948. He speculated that other Capital—an historically determinate analysis nations, taking the U.S. industrial path, and criticism of the capitalist mode of would experience the same bell-shaped production. curve (Kuznets Curve).10 Extending the Piketty (pp. 250-252) says his ‘‘fundamen- U.S. inquiry to 1998, Piketty and Saez tal goal is to compare the structure of (2003) found a U-shaped curve of decreasing inequality in societies remote from each oth- then increasing inequality. Piketty’s book er in space and time.’’ He employs varied carries on this project, but comparatively, temporalities in his many comparisons; with longer time frames and innovative ana- most traverse periods from about one hun- lytical twists. He (pp. 13, 146-150) sees dred to three hundred years and a few the trend toward equality that Kuznets and extend two thousand years. He speaks of other postwar liberal pundits believed the top centile (‘‘dominant class’’), top decile inheres in progressive modernization to (‘‘upper class’’), the middle 40 percent be ‘‘accidental’’ or driven by exceptional (‘‘middle class’’), and bottom fifty percent crises (e.g., a Great Depression and two (‘‘lower class’’) to compare labor income World Wars) demanding unusual political and wealth hierarchies of societies with responses (e.g., confiscatory taxation, capital diverse groups, institutions, and cultures.9 controls, welfare state development), which For example, at the peak of the postwar class destroyed inherited wealth and compressed convergence, he (pp. 249, 263) explains, egal- labor incomes. Piketty’s coup de graˆce her- itarian Sweden’s top decile received about alds a return to the rule of inherited wealth 25 percent of the nation’s total income and rigid hierarchy, paralleling old worlds (from labor and capital) and the bottom fifty described by Jane Austen and Honore´ de percent about 30 percent, while in France, Balzac in which kinship and strategic mar- during the inegalitarian Ancien Re´gime riage trump ‘‘study, talent, and effort’’ and Belle E´ poque (Gilded Age), and the (pp. 238-242, 404-415). Pikietty (pp. 115-6 2010 United States, the top decile received implies that adventure capitalists and 50 percent of total income and top centile entrepreneurs, after beginning as risk-takers, about 20 percent. In 1910 Europe and today’s ‘‘always’’ tend to become rentiers as their United States the lower fifty percent get fortunes grow large. This ‘‘vocation’’ of great about 20 percent of total income. Explaining wealth and rise of rentiers, Piketty insists, that capital ownership and incomes are holds today as it did in Austen’s and Bal- always more concentrated than labor zac’s times. He (pp. 264) argues that, within income, Piketty (pp. 248, 257-258; 602, n. these ‘‘rentier societies,’’ the upper decile 11) reports that, in the Scandinavian nations’ usually owned 90 percent of the wealth peak postwar egalitarian moment, the top and the upper centile half of it. He believes decile owned 50 percent of the wealth and (p. 514) only another ‘‘radical shock’’ could bottom half 10 percent, while the U.S. top stem their reappearance and ‘‘drift into decile today likely owns about 75 percent of the wealth and the lower 50 percent only 2 percent. Piketty stresses the exceptional 10 incomes and power of the top 0.1 and 0.01 Piketty holds that Kuznets’ universalizing his percent of the dominant class or top centile, study’s results helped fuel Cold War ideology. See Piketty’s (pp. 217-220, 384-392) related criticism of the ‘‘Cobb-Douglas production 9 Piketty (p. 250) notes the terms are for ‘‘illus- function’’ and Modigliani’s ‘‘life-cycle theory trative purposes’’ and open to challenge. of wealth.’’

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 Symposium 787 oligarchy.’’ His pessimism echoes Marx of contrast, he (pp. 314-335; 416-419) contends The Eighteenth Brumaire. that CEOs and other top managers receive Piketty contends that the long-term aver- the ‘‘vast majority’’ of ultrahigh (0.1 percent) age rate of return on capital (r) has always incomes. Stratospheric managerial compen- exceeded the rate of growth (g). He says sation, he explains, is mostly limited to the his ‘‘central thesis’’ is that even a ‘‘small United States and Anglo-Saxon countries. gap’’ between the two has enormous long- Holding that their GDP and technology per run impacts on inequality’s structure and capita are similar to other wealthy nations dynamics (pp. 25-27, 77). From antiquity to with much lower managerial incomes, the 1600s, he states, growth did not exceed Piketty sees claims that the exceptional 0.1 to 0.2 percent for long, while the rate of rewards are driven by marginal productivity return on capital averaged 4 to 5 percent. to be a ‘‘pure ideological construct.’’ He In his view, r>g is the decisive force generat- argues that CEOs and other top managers ing divergence and rentier societies.11 He basically set their own salaries; reduced top (pp. 86, 94-96) notes that global growth aver- marginal tax rates, which they help set via aged 0.8 percent from 1700 to 2012 and 1.6 their sociopolitical power, motivate them to percent during the twentieth century, and ‘‘bargain’’ hard with compliant salary has slowed sharply in the United States boards. He adds that the ‘‘conservative revo- and Europe after the postwar boom. He proj- lution’’ increased tolerance for such high sal- ects it to slow to 1.2 percent this century as aries.12 Piketty decries U.S. ‘‘meritocratic population growth declines and newly extremism,’’ which reduces the great diver- industrialized nations catch up technologi- gence to ‘‘winners’’ being ‘‘justly’’ rewarded cally and end their growth spurts. Rejecting for special virtue, merit, and productivity the neoliberal growth imperative, Piketty and ‘‘losers’’ getting their just deserts. He holds that efforts to accelerate growth face (p. 447-455) holds that elite fractions of the technical and ecological limits. He adds top centile or dominant class enjoy very that nations have achieved a lot with only high rates of return on capital due to their 1 percent growth and that expansive growth access to teams of top tax lawyers and advi- does not ensure justice or democracy. He sors, hedge funds, tax shelters, and tax (pp. 567-569) argues that climate change avoidance strategies and opportunities and erosion of natural capital could curtail open only to them. Piketty (465-466) reports growth sharply and are ‘‘clearly the world’s that 10 percent of Global GDP is hidden in principle long-term worry.’’ Piketty seems tax havens and that some analysts estimate unaware of recent science stressing that cli- two to three times more. He believes that mate change is proceeding very rapidly the class divide is even greater than tax fig- and is already generating serious risks, ures reveal and that no force inheres in cap- high costs, and irreversible impacts (e.g., italism to slow ‘‘oligarchic divergence.’’13 AAAS 2014). Triggered by recent vast expan- Piketty (pp. 32, 600, n. 28; 575-577) asserts sion of the global economy relative to the that he admires (more than top economists biosphere, major spikes in resource usage he respects) social historians Lucien Febvre and waste production could produce the and Fernand Braudel, cites Ernest Lab- radical shock of which Piketty speaks. rousse’s quantitative historical work, and Piketty (p. 265) says that ‘‘record level’’ bemoans ‘‘serial history’s’’ demise. These labor income inequality in the United States key figures of the Annales School and their is likely higher than any society ever. He historical method stress the longue dure´e: (302-303, 607, n. 43) rejects claims that the long-term inquiries probing enduring and trend has been driven by a profusion of slow changing social structures and process- ‘‘superstars’’ and ‘‘superentrepreneurs.’’ By es, which impact the present and can drive its contradictions, but are obscured by 11 Piketty’s (pp. 52, 166) r > g depends on his two ‘‘fundamental laws of capitalism’’ (a = rxb 12 See Piketty, Saez, and Stantcheva (2014) on top and b = s/g) and strategies for measuring the labor incomes. capital-income ratio and growth. See Solow 13 See Winters 2006 for complementary analysis 2014. of oligarchy and wealth.

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 788 Symposium quotidian events and conventions. Piketty intersect with class and help provide differ- operates in the tracks of this tradition, its ent socioeconomic hierarchies their distinc- recent carriers, and its cultural atmospher- tive shapes in diverse eras and locales. For ics. The longue dure´e strategy is timely and example, race has enormous salience for arguably on the return, because it provides the constitution of class in the United States critical distance needed to come to terms today, and should be entertained seriously in with nascent crises and forge fresh stand- efforts to come to terms with Piketty’s find- points and new normative bearings.14 ings. Moreover, he sees socioeconomic and Piketty (2014a: 110) says his book is motivat- political power to condition long-term ed by his ‘‘fear that little by little, social reproduction of r>g, but as with shorter his- structures are irremediably changing, with- torical conjunctures, he does not elaborate out us taking account’’ and that, because the topic in this book, which would require the ‘‘dynamics are not readily intelligible,’’ detailed analyses of highly divergent social we might not identify them until our socie- formations. Piketty (p. 571) treats capitalism ties become more unequal than those of the ‘‘as a market economy based on private Belle E´ poque. He (p. 419) holds that rentiers property,’’ but does not analyze or periodize have disappeared in recent U.S. fiction and it as a political economic regime. He calls r>g that extreme meritocratic ideology renders the ‘‘central contradiction of capitalism,’’ yet them invisible. As celebrated in The Wall employs it in comparisons with nonmarket- Street Journal weekly ‘‘Mansion’’ section, centered societies having divergent types of they are transfigured into superstars and property rights and modes of exchange. superentrepreneurs deserving commodious The same point applies to his two ‘‘funda- refuge from high pressure lives and living mental laws of capitalism’’ (a=r x b and large. b = s/g). This ambiguity would be helped The Piketty Circle has employed the types by analysis of how capitalism as an historical of methods and data used in this work for regime bears upon the long-term compari- years and much has been vetted by other sons and central argument.15 specialists, revised, and improved. Howev- Piketty fears that formal democratic insti- er, it will take time to determine how well tutions cannot withstand extreme economic this work withstands the wave of serious inequality (still on the increase) and its con- criticism likely to come and if its status as sequent erosion of substantive equal oppor- a ‘‘watershed’’ book holds up. Piketty often tunity and broader democratic culture. Espe- is criticized for what he did not attempt to cially pessimistic about the United States, he do in this book. He stresses that institutional (p. 514) declares that its ‘‘egalitarian pioneer and sociocultural factors condition and ideal has faded into oblivion’’ and that it is shape ‘‘economic’’ structures and dynamics, well on its way to becoming a twenty-first but as he often states, his inquiry is limited century ‘‘Old Europe.’’ He (p. 424) implies by the data, methods, and foci of this work. that we suffer the consequences of the still His long-term comparative strategy pre- reigning Enlightenment myth that ‘‘demo- cludes detailed analysis of the myriad forces cratic rationality’’ flows from ‘‘economic and events that shape shorter historical con- and technological rationality,’’ asserted often junctures. Leaving the task to other social and resolutely in the postwar U.S. great com- scientists, he provides only a suggestive pression, and more cynically today. He summary of the shocks and politics that argues that ‘‘true democracy and social jus- shaped the twentieth century class conver- tice require specific institutions of their gence. Piketty’s methodology also precludes own,’’ not just the market, parliament, or for- exploration of the many status attributes mally democratic institutions. Piketty (e.g., race, gender, ethnicity, religion) that stresses the urgent need for genuine ‘‘demo- cratic deliberation’’ and ‘‘democratic control 14 See Armitage and Guldi (2014) for in-depth analysis of this approach’s nascent return 15 An example of resultant tensions, see and its resources for engagement of moments Piketty’s (pp. 46, 158-163) points on slaves of perceived crisis. They mention the Piketty and slave societies to qualify his definition Circle. of capital, which precludes human capital.

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 Symposium 789 of capital,’’ but he does not expect funda- Piketty and Saez are ‘‘arguably the most mental changes anytime soon. He proposes important public intellectuals in the world progressive policies to extend the social state today’’ and that their ideas unchallenged and defend hard-won social rights (e.g., pen- may ‘‘spread among the clerisy and reshape sions, health care, higher education), insti- the political economic landscape on which tuted by postwar welfare states. Piketty pro- all future policy battles will be waged.’’ We poses raising the top marginal tax rate to its will see if Pethokoukis’ fear is confirmed! New Deal peak to stem class divergence and Piketty’s tome manifests the best thread of instituting a progressive tax on wealth for the modern social theory tradition, advanc- the same purpose and to foster transparency ing a big picture with normative intent and of large fortunes. Although modest in light employing systematically empirical-histori- of the ongoing great reversal’s looming cal data to advance the overall argument de-democratizing threats, he calls his pro- and its political policy aims. The work posals ‘‘utopian’’ and even his friendly should be of special interest to social theo- reviewers treat them as fanciful and impos- rists, socioeconomic inequality scholars, sible. Piketty states that r>g is an historically and economic sociologists, and is necessary contingent process, dependent on politics, reading for them. However, it is provocative, but his contrary, highly pessimistic core the- worthwhile reading for a more general audi- oretical argument, treating oligarchic diver- ence. I find the work compelling and cannot gence as a nearly inevitable process, holds stop thinking about it. sway in the text. He does not detect immi- nent signs of historical forces that can change his grim scenario. References Piketty’s rentier thesis taps public fears that the ‘‘new normal’’ of declining opportu- AAAS. 2014. What We Know. AAAS Climate Sci- ence Panel. Retrieved July 30 2014 (http:// nity, mobility, fairness, and political efficacy whatweknow.aaas.org/wp-content/uploads/ is here to stay. The impressive array of com- 2014/07/whatweknow_website.pdf ). parative data that he deploys to make his Armitage, David and Jo Guldi. 2014. ‘‘The Return case illuminates the enormous scale of eco- of the Longue Dure´e : An Anglo-American Per- nomic inequality, radical rupture from the spective.’’ Forthcoming (in French) in Annales, postwar Trente Glorieuses, and prospect of Histoire, Sciences Social 69 (2014). Retrieved July 24, 2014 (http://scholar.harvard.edu/files/ a much more unequal, undemocratic future 16 armitage/files/rld_annales_revised_0.pdf ). should divergence continue unopposed. Cowen, Tyler. 2014. ‘‘Capital Punishment.’’ For- His dark vision of the nascent return of ren- eign Affairs May/June. Retrieved June 6, 2014. tier society challenges us to see and think (http://www.foreignaffairs.com/articles/141 critically about the disquieting realities 218/tyler-cowen/capital-punishment). already in front of us and consequences of Ellenberg, Jordan. 2014. ‘‘The Summer’s Most ... The Wall Street Journal the widespread sensibility or active belief Unread Book Is ’’ July 3. Retrieved July 7, 2014. (http://onli that ‘‘there is no alternative’’ to the neoliber- ne.wsj.com/articles/the-summers-most-unrea al regime. The Piketty Circle hopes to moti- d-book-is-1404417569). vate efforts to envision a political way Fourcade, Marion. 2009. Economists and Societies. forward. The unexpected sales and media Princeton, NJ: Princeton University Press. reaction to the book’s release, stirred conser- Galbraith, James. 2014. ‘‘Kapital for the Twenty- vative reviewer James Pethokoukis (2014) to first Century? Dissent (Spring). Retrieved July 16. 2014 (http://www.dissentmagazine.org/ warn his readers at National Review that article/kapital-for-the-twenty-first-century. Giles, Chris. 2014. ‘‘Data Problems with Capital in the 21st Century.’’ Financial Times May 23. 16 Lower 90 percent tax units (single and joint fi- Retrieved May 26, 2014 (http://blogs.ft.com/ lers) average market incomes for salary and money-supply/2014/05/23/data-problems-w capital gains (in 2012 dollars) reached its peak ith-capital-in-the-21st-century/ ). of $35,600 in 1973 and by 2012 fell to $31,000. Goodman, Leah McGrath. 2014. ‘‘Thomas Piketty Top one percent incomes for the period rose says He was Ambushed.’’ Newsweek May 27. from $440,150 to $1,264,100 and the top 0.01 Retrieved August 3, 2014 (http://www.news- percent from $4,532,000 to $30,785,700. See week.com/thomas-piketty-says-h-was-ambus http://topincomes.parisschoolofeconomics.eu/. hed-252501).

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Harvey, David. 2014. ‘‘Afterthoughts on Piketty’s 1913-1998.’’ The Quarterly Journal of Economics Capital.’’ Reading Marx’s Capital with David CXVIII (1): 1-38. Harvey May 17. Retrieved July 16, 2014 Piketty, Thomas and Emmanuel Saez. 2014. (http://davidharvey.org/2014/05/after- ‘‘Inequality in the long run.’’ Science 344: 838-843. thoughts-pikettys-capital/). Piketty, Thomas, Emmanuel Saez, and Johannesen, Neils and Gabriel Zuckman. 2014. Stefanie Stantcheva. 2014. ‘‘Optimal Taxation ‘‘The End of Bank Secrecy? An Evaluation of of Top Labor Incomes: A Tale of Three Elastic- the G20 Tax Haven Crackdown.’’ American ities.’’ American Economic Journal: Economic Pol- Economic Journal: Economic Policy. 6(1): 65-91. icy. 6(1): 230-271. Krugman, Paul. 2014. ‘‘Why We’re in a New Gild- Reynolds, Alan. 2006. ‘‘The Top 1%...of What?’’ ed Age.’’ The New York Review of Books. May 8. Wall Street Journal December 14. Retrieved Retrieved August 9, 2014 (http://www.ny August 1, 2014 (http://www.cato.org/publi- books.com/articles/archives/2014/may/08/ cations/commentary/top-1-what ). thomas-piketty-new-gilded-age/ ). Shuchman, Daniel. 2014. ‘‘Thomas Piketty Lowrey, Anne. 2012. ‘‘For Two Economists, the Revives Marx for the 21st Century.’’ The Wall Buffet Rule Is Just a Start. New York Times April Street Journal April 21. Retrieved April 25, 16. Retrieved April 17, 2012 (http://www.ny 2014 (http://online.wsj.com/news/articles/ times.com/2012/04/17/business/for-econom SB10001424052702303825604579515452952131 ists-saez-and-piketty-the-buffett-rule-is-just-a- 592) start.html?pagewanted=all). Shrimsley, Robert. 2014. ‘‘The nine stages of the Milanovic, Branko. 2014. ‘‘The return of ‘patrimo- Piketty bubble.’’ Financial Times April 30. nial capitalism’: review of Thomas Piketty’s Retrieved May 6, 2014. (http://www.ft.com/ Capital in the 21st century.’’ MPRA (Item ID intl/cms/s/0/2d492786-cf90-11e3-bec6-00144 52384) December 21 2013. Retrieved July 13, feabdc0.html#axzz3A1lCoTCR ). 2014 (http://mpra.ub.uni-muenchen.de/ Solow, Robert M. (2014) ‘‘Thomas Piketty is 52384/1/MPRA_paper_52384.pdf ). Right.’’ April 22. Retrieved April 28, 2014. Pethokoukis, James. 2014. ‘‘The New Marxism.’’ (http://www.newrepublic.com/article/117429/ National Review Online March 24. Retrieved capital-twenty-first-century-thomas-piketty-revi July 13, 2014 (http://www.nationalreview. ewed). com/article/374009/new-marxism-james-peth Summers, Lawrence H. 2014. ‘‘The Inequality okoukishttp://www.nationalreview.com/artic Puzzle.’’ Democracy 33. Retrieved August 9, le/374009/new-marxism-james-pethokoukis). 2014 (http://www.democracyjournal.org/33/ Piketty, Thomas. 2014a. ‘‘Dynamics of Inequality’’ the-inequality-puzzle.php? ). (Interview). New Left Review 85: 103-116. Weiner, Keith. 2014. ‘‘Thomas Piketty Pens Com- Piketty, Thomas. 2014b. ‘‘I Don’t Care for Marx’’ munist Manifesto for 21st Century.’’ Forbes (Interview). New Republic May 5. Retrieved May 31. Retrieved June 9, 2014. (http:// July 25, 2014 (http://www.newrepublic.com/ www.forbes.com/sites/keithweiner/2014/05/ article/117655/thomas-piketty-interview-econ 31/thomas-piketty-pens-communist-manifes- omist-discusses-his-distaste-marx). to-for-21st-century/ ). Piketty, Thomas and Emmanuel Saez. 2003. Winters, Jeffrey A. 2011. Oligarchy. New York, NY: ‘‘Income Inequality in the United States, Cambridge University Press.

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The Sociology of Picketty’s Capital

NEIL FLIGSTEIN University of California, Berkeley [email protected]

Thomas Picketty’s book swept through the zeitgeist of the United States in the spring Capital in the Twenty-First Century,by of 2014. By mid- July, it reportedly had sold Thomas Picketty. Translated by Arthur over 400,000 copies. It was reviewed by Goldhammer. Cambridge, MA: Belknap every important national publication. Heavy Press of Harvard University Press, hitters in the economics profession like Paul 2014. 685pp. $39.95 cloth. ISBN: Krugman, Joseph Stiglitz, and Larry Sum- 9780674430006. mers have all weighed in. Picketty has per- sonally been attacked for being both a Marx- increase to economic processes. But, when ist and someone jealous of rich people by he turns his attention to the changing nature New York Times columnist David Brooks of inequality, he ends up arguing that the (who although a conservative, usually does political response to organizing capitalism not resort to Fox Network-style name call- is really the determinative factor in whether ing). He has been assaulted by Financial inequality is increasing or decreasing in Times reporters who have created their own a particular society. Governments confiscate dataset that can only make some of his and destroy property, have effects on mini- results go away by drawing very sketchy mum and maximum incomes, produce tax assumptions. By the time this review of the rates, and determine the ability of workers book hits Contemporary Sociology, it will to organize. In democratic societies, the win- have been dissected, analyzed, and passion- ners of elections get to dictate who the eco- ately attacked and defended. As a late nomic winners and losers are. In this way, reviewer and one whose audience is sociolo- while there may be a tendency for inequality gists, it is a daunting task to try and say to increase, the degree to which inequality something interesting about the book. But has changed across time and place is let me try. explained substantially by politics. Here, I will focus on three aspects of the First, let me praise Picketty. I have been book. First, its stunning accomplishment in aware of the work that he and his colleague gathering together data on income and Emmanuel Saenz have been doing for years. wealth inequality across a number of socie- It is simply wonderful. If you teach social ties that stretches back, in some cases, to stratification, political economy, or economic the late eighteenth century. Second, its novel sociology, you should visit their websites. theoretical claim that has been the focus of There are a wide variety of graphs and most of the reviews of the book is that the charts across countries and over time that share of income being converted into wealth you can give to students to ponder. tends to be higher than the share of income The most stunning part of Picketty’s book accruing to labor, resulting in long-run is the work that went into collecting the var- growth in income and wealth inequality. ious data sets that underlay the project. This Third, I want to mostly focus on something book was 15 years in the making. Larry Sum- that has not been mentioned much in the mers has argued that the creation of this data reviews: his explanation of why income alone merits a Noble Prize in economics. and wealth inequality went up in the nine- One is hard pressed to disagree. Picketty teenth century, down from 1930–1980, and has used data from all U.S. tax returns since has risen subsequently. 1913. The task of preparing this data for It is here that Picketty is at his most ambig- analysis is daunting not just because of the uous. On the one hand, he wants to attribute sheer amount of data, but also its complexi- most of the tendency of inequality to ty. For example, the number of people who

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 792 Symposium actually submitted those returns in the first per capita. Because of this, people who 20 years was low because the income thresh- depend on income from work will never be old for doing so was high. This means that able to convert their earnings into wealth at comparing these tax returns to contempo- a fast enough pace to keep up with those rary ones requires that one make reasonable who already possess wealth and who are assumptions about what the rest of the dis- generating relatively high long-term returns tribution looked like. Now multiply this on that wealth. The arguments that support kind of problem over the course of 100 this assertion are quite dense and it is in years of American history, then attempt to this part of the book that Picketty sounds do this in other countries as well, and quite like Karl Marx in Volume One of Capi- work to make the data comparable across tal. Marx noted that if the amount of money countries. When one considers how hard produced every year in an economy was this kind of data is to gather and then divided into the share for labor and capital, when one realizes how hard it is to put capital’s share would accumulate dramati- together consistent times series on income cally over time. This is because the flow of distribution over time, one comes away in this year’s capital would be added to the awe of the accomplishment. stock of last year’s, while labor’s share Now why does all of this matter? The con- would remain relatively constant as they ventional wisdom of the economics profes- would consume most of their income in sion about the direction of inequality and order to live. Thus, even at a constant and economic development for the past 50 years relatively low rate of return, capital’s share has been summed up by the Kuznets curve. of national income would grow relative to Simon Kuznets, writing in the 1950s, argued labor’s because its size was increasing every that at the beginning of capitalist develop- year. These arguments have been dissected ment, one could expect income inequality at great length by people like Paul Krugman to increase as those who made fortunes left and Larry Summers. I suggest interested most of their fellow countrymen behind. readers pursue the critiques of Picketty’s Kuznets thought that as economic develop- position by reading those reviews. ment proceeded, a middle class would The part of the book that has drawn less emerge and income inequality would attention and should be of great interest to decline. Kuznets gathered data on income sociologists, is why income inequality inequality in several advanced industrial decreased between 1929 and 1980 and why countries to buttress his thesis. Picketty has it increased since then. If we take Pick- utterly destroys Kuznets’ argument by etty seriously, his argument about the ten- showing that post-1980, inequality increased dency of capital to earn more than labor dramatically. It is no longer possible for implies that we should not have observed economists and (by implication) conserva- the wide swings in the concentration of tive politicians and their talking heads to income and wealth in the most developed assert that income inequality will take care countries. That economic process should of itself through economic growth. This use mean a steady increase in inequality over of the data demolishes one of the most close- time and not ups and downs. ly-held beliefs of those who support an Picketty’s initial answer to this question in unfettered capitalism. It is for this reason, I the book is that the exogenous shocks of the believe, that conservative economists and Depression and the two World Wars columnists have taken out after Picketty. destroyed a great deal of wealth. By viewing When they cannot attack his actual data, these shocks as exogenous to his argument, they are only left with smearing the man. he could keep his economics driven answer But of course, Picketty’s empirical results of the causes of increasing inequality intact. need explanation. He proposes to use eco- But, Picketty is just too good an empirical nomic theory to understand why economic social scientist (and theorist!) to accept this inequality is ubiquitous and likely to argument. He says ‘‘In fact, the budgetary increase over time: his basic argument is and political shocks of two wars and the that over time, one can expect that the Depression proved far more destructive to returns on capital will exceed GDP growth capital than combat itself’’ (p. 148).

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There are two empirical problems. First, huge decrease was government wage and the patterns of changes in the income distri- price controls during the war and large bution in each country do not entirely match increases in taxes to support the war effort. up with the two World Wars or the Depres- Between 1945 and 1980, the share of national sion (p. 147). Second, there is quite a bit of income going to the top 10 percent stayed in variability across country in changing pat- the range of 30–35 percent. In 1980, the top terns of inequality across time (p. 271). In decile of earners in the United States got 33 Chapter Eight, Picketty takes up the histori- percent, scarcely more than the top earners cal patterns in France and the United States. in France. In France, the share of income going to the But beginning in 1980, that share top 10 percent was 46 percent in 1910, drop- increased dramatically, and it now stands ped to about 40 percent after World War I, at 47–50 percent. The most dramatic part of increased during the 1920s, dropped slightly that increase occurred for the top 1 percent from 1929–32, and actually rose from 1932– of the income distribution whose share dou- 38 when it peaked again at 46 percent bled from 10 percent to 20 percent in that (implying that inequality rose during the period. Picketty’s explanation of what Depression!). happened follows what sociologists would To understand this, Picketty stops being call the ‘‘shareholder value’’ revolution the economist and starts being a sociologist. (pp. 294–96). Beginning in the 1980s, top The basic story he ends up telling is how managers and corporate investors increas- during the Depression, managers and civil ingly directed the fruits of corporate profits service employees and particularly school to themselves. Successive governments low- teachers, benefitted greatly from more ered tax rates, particularly for capital gains, secure employment and higher wages which allowing those who reaped these benefits is why their incomes did not drop and to keep more of their income. inequality did not decrease (pp. 284–86). These two cases illustrate that while But, when the socialist Popular Front came income inequality has changed over time, to power in 1936, they increased taxes and they have done so to a different degree and raised wages for those who were in the bot- at different times. They show the importance tom half of the income distribution. Indeed, of politics in the changes that have occurred. by the end of World War II, the top 10 per- While war and depression mattered, the cent of the income distribution took only way that governments responded to those about 30 percent of national income. While situations had the most profound impact their share increased slowly after that war on inequality. Democratically elected gov- to almost 37 percent in the late 1960s, the ernments that included elements of the orga- political events of 1968 caused the govern- nized working class clearly worked to keep ment to undertake more redistributive poli- inequality down, while governments that cies (p. 289) and by 1980, the share had fallen were more funded by and oriented toward again to about 30 percent. In essence, politics the interests of business (capital) tended to and the actions of government were the undertake actions that made inequality main causes of the changes in income worse. While Picketty might be right in inequality in France. Since 1980, the share some abstract sense that capitalism might in France that goes to the top decile has risen tend to produce increased inequality, the to about 33 percent—a rise, but not any- actual history suggests that the ability of where near that experienced in the United capital to hold onto or increase those gains States. is really about who controls the political The U.S. story is quite different. The 1920s process. increased the share of national income going So what should sociologists take away to the top 10 percent from about 40 percent from all of this? Picketty ends the book to almost 50 percent. During the Depression with a set of policy prescriptions. He propo- it fell to 45 percent, but the real drop ses a worldwide wealth tax rate so that rich occurred during World War II when the people cannot avoid paying their fair share share dropped in the space of five years to of taxes by moving their money to tax about 30 percent. The main cause of that havens or countries that will tax them less.

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Those of us who live in the United States can percent of the income distribution and enter- get behind such things as raising the mini- ing the top 20 percent has decreased dramat- mum wage and indexing it to inflation, ically in the past generation. make it easier to form unions, increasing tax- In the last couple of years, work has begun es on capital gains and large estates, provid- to appear in sociology journals that tries to ing universal healthcare, and have the gov- link the changes in politics, tax rates, share- ernment underwrite higher education to holder value, and what now has come to the level that existed before the past 10 years be called financialization to income inequal- of budget cuts by state governments. The ity. There is also an interesting comparative chance of any of this happening in the next literature that argues that these processes 2 years in the United States is of course, vir- have worked differently in different societies tually zero. as a result of politics. This is a great start. But As researchers, sociologists can do more. we can do more. For example, in the United We have collectively lost our voice in most States we should try to understand better the of these discussions. Part of the reason is mechanisms by which the changes in CEO that sociologists, particularly those interest- pay have affected inequality. Picketty claims ed in stratification, have failed to connect that this is the main cause of the increase in how the underlying changes in the way the income inequality in the United States. But economy has worked have had a profound he does not really present definitive data impact on who gets what and why. During on this. the 1980s, when large corporations were It is my belief that we have not yet offered downsizing and offshoring their production, a good account of the conservative turn in it was economists who mostly documented American politics. Our theory that focuses the decline of blue-collar workers and its on ‘‘neoliberalism’’ is not so much an expla- impact on inequality. Since inequality began nation as a slogan. We have yet to connect to increase in the 1980s as a result of share- the dots between the Civil Rights movement holder value strategies, economists have and the desertion of whites (particularly also more thoroughly debated and analyzed working-class white men) to the Republican the causes of these trends (although to be cause in the South and Midwest to the fair, a substantial portion of the profession Republican Party. This change has brought has accepted the skill-based technological over 30 years of support for policies that explanation and views the huge increases supported business and cut taxes for the in CEO pay as justified by the returns to well off. Picketty’s magnificent book should shareholders). Economists have returned to serve as an inspiration to all of us. There is the question of social mobility and shown much to be done. that the possibility of exiting the bottom 20

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Is the Past in Our Future?

PAUL STARR Princeton University Center for Advanced Study in the Behavioral Sciences, Stanford [email protected]

Every year a few books stir up serious public controversy, and a few have a deep impact Capital in the Twenty-First Century,by on the social sciences. Thomas Piketty’s Cap- Thomas Piketty. Translated by Arthur ital in the Twenty-First Century will be one of Goldhammer. Cambridge, MA: Belknap the rare books to do both, though not exactly Press of Harvard University Press, for the same reasons. In the public arena, the 2014. 685 pp. $39.95 cloth. ISBN: book has set off debate about whether 9780674430006. inequality is rising, but in the social sciences the recent direction of change is no longer in question. The public controversy has also the significance of the distributive changes concerned Piketty’s stark forecast of a return brought about through Social Security and to ‘‘patrimonial capitalism’’—to a society other systems of social provision. Piketty’s where inherited wealth becomes increasing- great contribution is his analysis of wealth ly dominant. Although Piketty shows that and top incomes, mostly based on tax data, forecast to be plausible, his long-run contri- but partly because of his analytical focus bution will not hinge on whether it turns and methods, he does not pay equal atten- out to be correct. tion to changes primarily affecting the mid- The book’s durable value lies elsewhere. dle and lower ranges of the distribution. Capital in the Twenty-First Century brings This is not a book that sprang full-grown together new data and theory into a powerful from a French theorist’s solitary reflection. account of the historical development of cap- It is the culmination of a 15-year, collabora- italism and inequality over the past two cen- tive empirical project that has gathered turies. It sheds new light on economic rela- new data on top incomes and the distribu- tionships, the historical trajectories of tion of wealth in 20 countries over longer nations and regions, and the emergence of periods and with more uniform methods different structures of inequality. Moreover, than any previous effort. Among Piketty’s in its sheer nerve and ambition, Piketty’s collaborators, Anthony Atkinson and Capital is likely to serve as a model for schol- Emmanuel Saez have made particularly arship unrelated to its immediate subject. important contributions to this work, much In some respects, however, the book lends of which has appeared in journal articles itself to misinterpretation. For example, and two previous edited volumes. The orig- Piketty often uses the term ‘‘total income’’ inal data are available online at the World to refer to the sum of labor and capital Top Incomes Database (WTID). Those who income, as he does in a chart (p. 299) that have followed this enterprise will already shows the top decile’s share of ‘‘total be familiar with many of the findings, but income’’ in the United States returning by even for them Piketty’s book will be eye- the 2000s to the peaks of the 1920s, But ‘‘total opening as a comprehensive synthesis. income’’ here is market-generated income, Capital in the Twenty-First Century has two as reported in tax returns, before taxes separate explanations for rising economic and transfers. ‘‘Total income’’ in the sense inequality that may be a source of confusion, many readers may understand it—that is, especially for American readers. The first post-tax-and-transfer income—is more and principal explanation, which grows equally distributed than it was before the out of the book’s core theory, involves New Deal. Piketty is perfectly aware of the changes in income from capital; the second difference, but the book tends to minimize explanation involves changes in income

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 796 Symposium from labor and applies to recent develop- analysis of national and regional economies, ments in the United States. of which his account of recent differences The principal argument of the book is between the United States and Europe is about the long-term tendency of the rate of only one part. If Piketty had stayed at a pure- return on capital, r, to exceed the rate of eco- ly abstract level, the book would not have nomic growth, g, summarized in the now- had the depth, richness, or relevance to con- famous inequality r > g. Piketty calls this pat- temporary politics that his comparative tern ‘‘the central contradiction of capital- analysis gives it. But if he had provided ism,’’ though it is not clear in what sense it only a comparative economic history with- is a contradiction since Piketty, unlike out the theoretical framework, the book Marx, is not predicting capitalism will col- would not have had its power and reach. lapse as a result. Piketty, however, does see The two halves of Piketty’s account bear the excess of r over g as tending to increase somewhat different relationships to the two capital’s share of national income. And he leading approaches to explaining inequality: demonstrates that after the ‘‘shocks’’ from (1) the mainstream, neoclassical explana- war, inflation, and depression during the tions emphasizing marginal productivity; first half of the twentieth century, capital and (2) what may be broadly grouped has returned to the historical levels that it together as more political and sociological had in relation to national income in Europe explanations emphasizing institutions and before World War I. power. The neoclassical arguments suggest But this is not Piketty’s explanation for ris- that inequality is rational and conducive to ing income inequality in the United States growth and that little can be done about it since the 1980s. That development, he except to improve education and training, argues, mainly involves increased inequality while the more political and sociological in income from labor, chiefly due to sharp accounts typically claim that inequality increases in salaries of CEOs and other reflects unequal power in shaping institu- ‘‘supermanagers.’’ While ‘‘capital’s come- tions and policies and that more egalitarian back’’ results from fundamental systemic alternatives are feasible without impairing tendencies evident for centuries, the spectac- growth. ular jump in top incomes in the United In regard to the recent take-off of top States (and to a lesser extent in the other incomes in the United States, Piketty English-speaking countries) is a new phe- unequivocally and convincingly rejects neo- nomenon, which Piketty attributes to poli- classical explanations. Growing inequality, tics, public policy (especially regarding he argues, cannot be explained by differen- taxes), and social norms. With different pol- ces in marginal productivity (due, for exam- icies and norms, the continental European ple, to the failure of education to keep up countries have not witnessed a comparable with skill-biased technological change); spiral of top corporate salaries. rather, the driving forces have been political Whether these two sources of rising and social. inequality will remain separate is an open In developing his first argument about question. Corporations in the rest of the capital, however, Piketty may seem more world may follow American compensation ambiguous because he employs neoclassical practices, and America’s supermanagers logic even as he reaches conclusions about and entrepreneurs (and their children) will tendencies toward concentrated wealth and become tomorrow’s rentiers. In a ‘‘worst of the absence of equilibrating forces that break both worlds’’ scenario, economic inequal- with the mainstream tradition. But, if read ities could increase still further from the carefully, Piketty is clear that capitalism can- combination of a growing capital share and not be understood without reference to insti- the capture of more labor income by top tutional structures that are inherently politi- executives. cal (see, for example, his discussion of the Analytically, however, it is best to keep the ‘‘stakeholder’’ model of German corpora- two arguments separate: on the one hand, tions and its effect on stock-market valua- Piketty’s general analysis of capitalism and, tions [pp. 140 – 46]). Part of the book’s orig- on the other, his comparative historical inality and persuasiveness lies in the deft

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 Symposium 797 way in which it turns neoclassical logic on its Leaving aside ‘‘shocks’’ for the moment, head with the use of historical evidence. what determines the capital/income ratio Piketty’s general analysis of capitalism over the long run? Piketty’s ‘‘second funda- emerges from a combination of theoretical mental law of capitalism’’ describes an propositions and empirical findings. After asymptotic relationship in which the capi- decomposing national income into capital tal/income ratio approaches the ratio of the and labor income, he focuses on what deter- savings rate to the growth rate: b = s/g. Or mines capital’s share of the total. Piketty des- to put it differently, the higher the savings ignates capital’s share as a, and the ratio of rate and the lower the growth rate, the the total capital stock to national income as higher the capital/income ratio. b. The core of the theory consists of two These relationships help explain why the equations that he labels, rather extravagant- capital/income ratio in the advanced econo- ly, ‘‘laws of capitalism.’’ The first is just an mies has risen (and may rise further). The accounting identity, a = r x b, which merely rate of economic growth is the sum of the says that capital’s share of national income is rate of population growth and the growth the product of the rate of return and the cap- rate in per capita output. Both components ital/income ratio. The point of this tautology have slowed—population growth with the is to make clear that capital’s share depends demographic transition, and growth in per on what happens to the rate of return as the capita output with the end of the three capital stock varies in relation to national ‘‘catch-up’’ decades after World War II. income. ‘‘Too much capital’’ should kill the With growth rates falling below savings return, assuming that capital’s marginal pro- rates, the capital/income ratio rises, and as ductivity drops as the capital stock increases. long as r falls proportionately less than b The key question is then how much r drops rises, capital’s share of national income (or rises) as the capital/income ratio b increases. And since capital income is dis- increases (or falls). If r drops proportionately tributed more unequally than labor income, less than b rises, capital’s share will increase, an increase in capital’s share leads almost but if r drops more, capital’s share will fall. inevitably to an increase in inequality. This, in turn, depends on the demand for But this is not to say that capital in France capital, which may be affected by technolog- or elsewhere in Europe is distributed as ical change that allows for substitution of unequally as it was before World War I. capital for labor. For example, if the capi- Piketty uses the terms ‘‘capital’’ and tal/income ratio rises but lucrative new ‘‘wealth’’ interchangeably. Capital, as he uses for capital are available—say, in making defines it, consists of assets that can be machinery to substitute for workers—the owned and exchanged on a market, includ- return on capital can stay high. ing not only financial assets such as stocks For France—which he claims is represen- and bonds, physical assets such as machin- tative of Europe—Piketty calculates that ery, and intangible assets such as patents, the rate of return r has fluctuated around but also real estate, including owner- a central value of 4–5 percent from the eigh- occupied housing. (Piketty refuses, however, teenth to the twenty-first century (though to include ‘‘human capital’’ on the grounds he suggests that it may be declining to 3–4 that education and skill cannot be owned percent). As a result of the ‘‘virtual stabili- and traded and are therefore fundamentally ty’’ of r, capital’s share has depended pri- different from capital in the sense that he is marily on the capital/income ratio, which using the term.) While the capital/income has followed a U-shaped curve. Before ratio has returned to earlier levels, the World War I, the ratio stood at about 600– composition of capital has substantially 700 percent; that is, capital equaled six or changed. During the twentieth century, resi- seven times annual national income. With dential housing increased as a proportion of the devastating shocks of 1914–1945, capital national capital, and a ‘‘patrimonial (or stocks fell to two to three times national propertied) middle class’’ emerged. Sum- income but then rebounded and are now ming up the changes in capital ownership, back up at approximately pre-World War I he writes, ‘‘The poorest half of the popula- levels. tion still owns nothing, but there is now

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 798 Symposium a patrimonial middle class that owns (pp. 272-73). In contrast, capital losses were between a quarter and a third of total wealth, not as great in the United States as Europe and the wealthiest 10 percent now own only 1914 and 1945; instead, differences in labor two-thirds of what there is to own rather incomes narrowed primarily as a result of than nine-tenths’’ (p. 377). public policy. Beginning in the New Deal Piketty suggests another way, however, in and continuing into the 1950s, the United which capital income is becoming more con- States enacted higher income and estate tax- centrated than capital itself: Those with es than did European countries. greater financial wealth are able on average The second turning point came in the to obtain a higher return on their assets. In 1980s: After having been a pioneer in redis- addition, capital income is underreported tributive taxation, Piketty writes, the United because of exemptions and tax evasion. If States in the Reagan years became a pioneer wealth kept in off-shore tax havens could in the opposite direction, sharply cutting be properly attributed to its owners, capital taxes and unleashing an unprecedented and capital income would be even more con- increase in top incomes. On the basis of com- centrated at the top than tax records show. parative evidence, Piketty sees tax policy as The other half of the story, the growth of crucial; in his account, reduced rates in the labor-income inequality, emerges from 1980s gave CEOs and other top corporate Piketty’s comparative historical analysis. managers an incentive to seek huge pay Although he discusses Great Britain and increases, and their handpicked boards did Germany (and occasionally alludes to Japan not stand in their way. and other countries), Piketty focuses primar- In short, Piketty argues that capitalism can ily on France and the United States in devel- produce extreme inequality in two ways: oping the argument. Economic inequality is through high concentrations of capital as in now greater in American society, but in the ‘‘old’’ Europe and the American South nineteenth century the United States— before the Civil War, and through high con- except for the South—was more egalitarian centrations of labor income as in the United than Europe. Capital/income ratios were States today. The first he calls ‘‘hyperpatri- substantially lower thanks to the low cost monialism,’’ the second ‘‘hypermeritocracy’’ of land and high rates of population growth. (pp. 264-5) even though he says merit has Even with industrialization, the United less to do with it than what he calls ‘‘merito- States still had a more equal distribution of cratic extremism.’’ In some respects, as he wealth and income at the turn of the twenti- acknowledges, this binary story is over- eth century, though inequalities rose to drawn. In the United States, capital income a peak in the 1920s. accounts for one-third of the increase in In Piketty’s comparative account, the crit- income inequality. Tax calculations influence ical turns in distributive patterns came at whether executives are paid in salary or two different points in the twentieth century. stock options. In the finance industry, Between 1914 and 1945, the shocks of war much of the revenue supporting the ‘‘labor and depression reduced inequality in both income’’ of top executives comes from the Europe and the United States, but in entirely capital income of the firm. different ways. In France, inherited wealth Curiously, Piketty downplays the impact suffered devastating losses from the of the growth of the financial industry on ‘‘destruction caused by two world wars, inequality, arguing that although financial bankruptcies caused by the Great Depres- executives are overrepresented at the top, sion, and above all new public policies 80 percent of the top income groups are not enacted in this period (from rent control to in finance. But finance dominates the highest nationalizations and the inflation-induced pay levels. In every year since 2004, the 25 euthanasia of the rentier class that lived on top-earning hedge fund managers have government debt)’’ (p. 275). While wage together received more income than all of inequality in France was stable over the the chief executive officers of the Standard long run, total (market) income became and Poor’s 500 companies combined; the more equally distributed ‘‘due entirely to average pay (in 2010 dollars) for those 25 diminished top incomes from capital’’ top hedge fund managers climbed from

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$134 million in 2002 to $537 million in 2012. idea that the official data do not capture all (Kaplan and Rauh 2013) Financial deregula- the growth from the information economy tion deserves more attention as a causal fac- (see Starr 2014). In Piketty’s analysis, ‘‘the tor than Piketty gives it. return to a historic regime of low growth, Another problem, as I mentioned earlier, and in particular zero or even negative is that Piketty analyzes historical changes demographic growth, leads logically to the in ‘‘total income’’ by using market income return of capital’’ (p. 233). Slow growth before taxes and transfers, a definition that implies that capital accumulated in the past is misleading over periods when public pol- gains in importance. icy radically altered the post-tax-and-trans- Once again using data for France, Piketty fer distribution. Piketty’s U-shaped curve produces another set of U-shaped curves for top (market) incomes in the United States from the nineteenth to the twenty-first cen- between the 1920s and early 2000s does not, turies. Those who own capital have either in fact, mean income inequality has returned inherited it or accumulated it through sav- to the status quo ante. Moreover, market ings. In the nineteenth century, Piketty esti- income cannot be considered independently mates, the annual flow of inheritances was of taxes and transfers. Consider what would equal to 20–25 percent of national income, happen to market income if Social Security and inherited wealth accounted for between were eliminated overnight. More seniors 80 and 90 percent of private capital. But after would go to work and earn wages, and by the shocks of 1914–1945, inheritance flows the definition Piketty uses, inequalities in dwindled to only a tiny proportion of total income would decline. But the elimina- national income, and by the 1970s inherited tion of Social Security would dramatically wealth was down to about 40 percent of pri- increase inequality in total disposable vate capital. Since then, however, inheri- income. tance flows have grown and inherited In addition, because of his reliance on tax wealth has again come to dominate accumu- data (which also do not include tax-free lated savings. Looking ahead under two dif- fringe benefits such as employer contribu- ferent scenarios, Piketty projects inheritan- tions to health insurance) and failure to ces to account for 80–90 percent of private adjust for changes in household size, Pick- wealth by the mid-twenty-first century. etty’s numbers give a more negative picture This is the basis for his forecast of a return than do other analyses of changes in middle- to patrimonial capitalism. class incomes during the past 40 years (see, But, as with the other U-shaped curves, e.g., Congressional Budget Office 2011). things would look different if Piketty took Such analyses also show rising inequality, taxes and transfers directly into account. but not absolute stagnation in the middle. Benefits available during disability or retire- These reservations do not invalidate the ment have an equivalent wealth value. main thrust of Piketty’s argument about ris- Including the capitalized value of social ing inequality since the 1980s, nor do they insurance programs would significantly invalidate (though they do qualify) his claim raise the share of total assets of the least that inherited wealth accounts for a growing wealthy. To be sure, ‘‘Social Security wealth’’ share of total wealth. Here we return to the is not wealth that can be passed on to heirs book’s principal argument about the rate of or accumulate over generations, but it serves return exceeding the rate of economic some of the same functions as wealth during growth. According to Piketty, the advanced a lifetime. societies cannot realistically expect to grow Whether Piketty’s forecast of a return to much faster than they have been since patrimonial capitalism proves accurate 1980; no country ‘‘at the world technological depends on a variety of unknowns. The frontier’’ has ever had a long-term growth rate of return may fall more rapidly in the rate in per capita output exceeding 1.5 per- future than in previous periods of rising cap- cent (p. 93). Assuming a future per capita ital/income ratios; as the investment ads growth rate of 1.2 percent, Piketty puts aside warn, ‘‘Past performance is no guarantee of both the more dire forecasts as well as the future returns.’’ The combined effect of tax- optimistic scenarios based in part on the es, consumption by the wealthy, and

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Downloaded from csx.sagepub.com at ASA - American Sociological Association on November 18, 2014 800 Symposium inflation may cut into or eliminate the sav- quality, and scope, and heartened because ings from capital income and prevent wealth of Piketty’s conception of social science and from compounding. In his projections, the example he sets of both analytical depth Piketty assumes no ‘‘shocks’’ to capital, but and intellectual courage. Among other this century will likely have its own shocks, things, the book is a rebuke to his home dis- and some of those may result from the very cipline of economics and an invitation and processes that Piketty lays out. In a world challenge to social scientists in other fields. with extreme inequalities and falling returns Economics, he writes, ‘‘has yet to get over on investment, both politics and business its childish passion for mathematics and may become more desperate and prone to for purely theoretical and often highly ideo- crisis. logical speculation, at the expense of histor- Regardless of whether inherited wealth ical research and collaboration with the oth- returns to nineteenth-century proportions, er social sciences’’ (p. 32). In the conclusion, there are important lessons here for social he urges the other disciplines ‘‘not [to] leave theory and politics. Piketty’s historical data the study of economic facts to economists’’ help to explain why sociologists in the (p. 575). post-World War II era believed that inherited Capital in the Twenty-First Century is a vali- wealth ceased to be important in modern dation of the enterprise of social science con- societies. They overgeneralized from a ceived of expansively and put to serious temporary circumstance. In fact, much of purposes. After a long era of uneasiness twentieth-century sociology was formulated about ‘‘grand narratives,’’ Piketty has pro- at precisely the moment when Piketty’s duced a new narrative of the origins of our U-shaped curves were at their bottom. Theo- times that we will have to reckon with along- rists looked back and saw downward slopes side the classics. When all the criticism has for inequality and inherited wealth and mis- been tallied, the book will remain an affirma- interpreted them as inevitable features of tion that social inquiry, despite its inevitably modernization. political character, is capable of uncovering Piketty’s work also provides a useful cor- lawful patterns in human history. rective to the recent inequality literature, which has focused mainly on the determi- nants of labor income rather than income References from capital. In stratification, political sociol- Congressional Budget Office. 2011. Trends in the ogy, and other fields, sociologists have been Distribution of Household Income between 1979 more interested in the extended meanings of and 2007, at http://www.cbo.gov/sites/defa capital—social capital, cultural capital— ult/files/cbofiles/attachments/10-25-Househo than in the old-fashioned sort. We have ldIncome.pdf. Kaplan, Steven N. and Joshua Rauh. 2013. ‘‘It’s the been bewitched by our analogies and Market: The Broad-Based Rise in the Return to neglected the rebounding importance of Top Talent’’ Journal of Economic Perspectives 27: capital in its original sense. 35–56. Sociologists should be both humbled and Starr, Paul. 2014. ‘‘The Growth Paradox: If Our heartened by Piketty’s Capital—humbled Technology Is So Smart, Why Aren’t We All because the discipline has not recently pro- Getting Richer?’’ The New Republic (July 14), 37-41. duced a work of comparable ambition,

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