Piketty’s “Capital,” and the Rest of the World

Video: Thomas Piketty Discusses, “Capital In The 21st Century” with Ryan Grim and Alexis Goldstein

The book by the French economist Thomas Piketty’s Capital in the Twenty-First Century has already become part of everyday discussions and is being referenced among academics. The research by Piketty has come in the perfect time and there are plenty of reasons why. Piketty’s book discussion brings some light to the study of income quintiles and deciles into a new debate of the “the skyrocketing incomes of the 1% — and the mind-boggling gains of the 0.1% and 0.01%  — by gathering and publishing income tax data that nobody had bothered with before. Piketty was behind similar projects in France, Britain, Japan, and other countries.” (via Justin Fox at the Harvard Business Review)

I finished reading the book this weekend and it was eye-opening. The book presents great challenges to the study of capital and inequalities in the developed economies as well as in the rest of the world. The book also opens the doors for a wider discussion on the effects European Capital has had in the global economy. Further, the book invites globalists to challenge our understanding of European-centric terms that over longer periods of time become, perhaps, insufficient to comprehend global economic processes over the passing of centuries and how these processes have changed and transformed themselves by a complex evolution and redefinition.

It can’t be denied that capital during all of the 19th Century and in the beginning of the 20th Century was centered in the main European metropolises and extracted most of the goods from the periphery. Few Capital remained in colonies and protectorates. Wealth belonged to the Empires and Poverty remained in colonial territories. Even the poorest of the European was considered Rich by comparison to the inhabitants of Colonies.

Today, European Empires are gone for a while, U.S. Capital increased and gained from the fall of the European Empires and new economies started developing in former Colonies. Giant Economies like China and Russia woke up after decades of isolation from global trade and today reconfigured our understanding of Capital. Piketty’s book somehow fails to explore this Global political changes and its economic effects.

Piketty’s central argument has a gigantic weakness since it is tied to nation-states and cannot be compared or understood in reference to Global Capital flows in today’s multinational economy. Very few references are made to the role played by Multinational Companies and foreign national investments and savings by State Companies in the world.  And less is mentioned of global inequalities and the North-South divide that has been increased by the investments done by Developed and Developing Economies in the rest of the world.  Piketty argues that Capital has tended over time to grow faster than the overall economy (he focuses on European and US economies); and that income from capital is invariably much less evenly distributed than labor income (again he focuses on European and US economies). Thus failing to acknowledge how Labor income stopped been localized during the 20th Century and it involved multiple polities far away from the metropolis.  Piketty argues that together (Capital growth and its uneven distribution) amount to a powerful force for increasing inequality.

Piketty doesn’t take things as far as Marx and this is a pitty. Marx’s methodology involved the State but it also referenced to its effects both and from the peripheries through the pass of longer periods of time. This is one of the most important contributions of Marx: his global understand of the economy.

Piketty shows how over the two-plus centuries for which good records exist, the only major decline in capital’s economic share and in economic inequality was the result of World Wars I and II, which destroyed lots of capital and brought much higher taxes in the U.S. and Europe. However, he again fails to acknowledge how Capital grew in the Global South after these wars as a result of increased inequalities in the Colonies and Agriculture-centered States in South America and Asia. During the wars Capital destruction was followed by a spectacular run of economic growth that involved the entire globe and not only Europe and the U.S.  The Cold War is a good reference for finding how Capital flows went from Europe to Asia, America and Africa.  As well, the run of economic growth started involving non-State actors in which Capital continue increasing at a higher and faster rate than the one he references and studies. Failing to study this shows in Piketty’s book that after decades of peace, slowing growth, and declining tax rates, capital and inequality are on the rise all over the developed world only, and it’s not clear what if anything will alter that trajectory in the decades to come.  However, the declining tax rates, capital and inequality are on the rise at a faster pace in the developing economies and in the “puppet states” (Nigeria, Chile, the Middle East countries) which have emerged around them as sources of petrol, minerals and rare earths.

Piketty’s main worry as points out Justin Fox is that “growing wealth in Europe will bring a return to 19th century circumstances in which most affluent people get that way through inheritance.” Plus, “U.S. median income will continue lossing ground relative to other nations in the following years”. But this are not the only worries that we should identify.  The BRICS countries are probably a good source of comparison to see how the growing wealth of the 20th Century remains on the hands of the few rich and is currently been passed through inheritance. Further, developing economies in South America and Africa are an extreme case of the last.

Piketty’s solution to Europe’s and U.S. problems is that a progressive global wealth tax be established. But this tax will fail to be the best response to the current dynamics of inequality if Capital continues flowing outside of Europe into multinational capital investments overseas and into State companies overseas. 

I enjoyed this political economy analysis and will continue learning a lot from it. Piketty’s solution is a challenge for the study of global political economy and the reconfiguration of the global economy in the 21st Century. Perhaps if a new book is published studying the shareholders who own the most stock in almost every Fortune 500 company and the Capital of any major global company instead of only the economies of France, Germany or the United States more accurate insights will be found.

 

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82nd & Fifth. “My First Time” from The Metropolitan Museum of Art

One of my favourite museums is The Met and one of my favourite paintings is also there.  I was just impressed and happy to see that a new video cured by the art historian and curator George Goldner depicted and explained that painting.

The painting is titled” View of Toledo” by El Greco (Domenikos Theotokopoulos).

View of Toledo

In this painting, El Greco, “portrays the city he lived and worked in for most of his life. The painting belongs to the tradition of emblematic city views, rather than a faithful documentary description. The view of the eastern section of Toledo from the north would have excluded the cathedral, which the artist therefore imaginatively moved to the left of the Alcázar (the royal palace). Other buildings represented in the painting include the ancient Alcántara Bridge, and on the other side of the river Tagus, the Castle of San Servando.”

I invite you to watch the video interview behind this painting and Goldner’s commentary.  I am sure you will love it.

Why is Copernicus relevant to our understanding of Globalization?

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We are constantly bombarded with media reports on globalization in terms of its increasing process and potential effects on our lives. What is meant by this concept and why should we be concerned with its impact? The developing countries of sub-Saharan Africa, Latin America and Asia should be interested in it because of the opportunities and threats offered by globalization (also known as globalisation).

The mother of this globalization is Science and the activator is her daughter Technology (both affectionately called science and technology). The most visible manifestations of “globalization” are in the economic and communications spheres. And one of the fathers of Science is our friend Copernicus.

In two sentences his contribution to Science and Globalization is:

  • Copernicus broke open the medieval idea of an enclosed, Earth-centered universe.
  • He set the stage for all of modern astronomy.

And why does this matter?

He lived at a time when people believed Earth lay enclosed within crystal spheres at the center of the universe. Can you picture the leap of imagination required for him to conceive of a sun-centered universe? The publication of Copernicus’ book – De revolutionibus orbium coelestium (On the Revolutions of the Celestial Spheres) – just before his death in 1543, set the stage for all of modern astronomy. Today, people speak of his work as the Copernican Revolution.

Post-data: Copernicus wasn’t the first to conceive of a sun-centered universe. Early Greek philosophers also spoke of it. It was the Greek philosopher Aristotle, however, who proposed that the heavens were literally composed of 55 concentric, crystalline spheres to which the celestial objects were attached. In Aristole’s model, Earth lay at the center of these spheres. Thus Earth lay – fixed and enclosed – until Copernicus published his version of a heliocentric universe.

Remembering the wise Talleyrand

Political Cartoon of Napoleon I and TalleyrandNapoleon I, originally Napolean Bonaparte, was the emperor of France. He seized power in 1799 in a coup d'etat, crowned himself emperor in 1804, and attempted to conquer Europe. He abdicated in 1815 after several military defeats.
Political Cartoon of Napoleon I and Talleyrand
Napoleon I, originally Napolean Bonaparte, was the emperor of France. He seized power in 1799 in a coup d’etat, crowned himself emperor in 1804, and attempted to conquer Europe. He abdicated in 1815 after several military defeats.

Je connais quelqu’un qui a plus d’esprit que Napoléon, que Voltaire, que tous les ministres présents et futurs: c’est l’opinion.

I know where there is more wisdom than is found in Napoleon, Voltaire, or all the ministers present and to come — in public opinion.

Charles Maurice de Talleyrand was born a day like today on February 13, 1754.  He is one of the smartest and more prolific politicians and diplomats of  modern times (and one of my favourites).  Born and well educated in the arts, letters and ideas into an aristocratic family in Paris he quickly became a wise men by a young age.  He worked, survived and taught successfully for and against the regimes of Louis XVI, participated actively through the French Revolution and then under Napoleon ILouis XVIIICharles X, and Louis-Philippe.

The Dutch historian, Pieter Geyl, said once that, “in the purely political arena” the only figure to have held on to his rank in history during the Napoleonic era, apart from Napoleon himself of course, was Charles-Maurice de Talleyrand-Périgord and he intended to include a chapter on the prince in his famous work Napoleon For and Against (Harmondsworth, 1949).(1)

Talleyrand was, without a doubt, one of the most remarkable figures in the history of the late eighteenth and early nineteenth century, and certainly one of the most controversial. He was one of a rare breed capable of occupying a wide range of positions in politics and society, both in his public and private life. To a certain extent, he was representative of his era, whether taking on the mantel of the Ancien Régime, as an aristocrat working for the Revolution, or as lord of the Château de Valençay during the Restoration. However, it is the most important of these roles, Minister of Foreign Affairs during the Directoire, the Consulate, the Empire and the Restoration, for which he is of course remembered.

To learn more about his life, works and ideas I invite you to read the following biography (one of my favourite books too) which I am sure you will all enjoy: Talleyrand by Duff Cooper

Remembering J’accuse

“It is a crime to poison the small and the humble,

to exasperate passions of reaction and intolerance,

while taking shelter behind the odious antisemitism…”

J'accuse

A day like today in February 07 1898 the Émile Zola was brought to trial for libel for publishing J’Accuse in the L’Aurore a literary, liberal, and socialist newspaper published in Paris, France   J’accuse is in my opinion one of the most important historical essays ever written because it brought to public opinion an honest and objective critic against the ruling elite’s injustices.

In his letter, Zola addressed President of France Félix Faure, and accused the government of antisemitism and the unlawful jailing of Alfred Dreyfus, a French Army General Staff officer sentenced to penal servitude for life for espionage.  Further, “Zola pointed out judicial errors and lack of serious evidence. The letter was printed on the front page of the newspaper, and caused a stir in France and abroad. Zola was prosecuted and found guilty of libel on 23 February 1898. To avoid imprisonment, he fled to England, returning home in June 1899.”

Zola’s intention was that he be prosecuted for libel so that the new evidence in support of Dreyfus would be made public (“Correspondence Between Emile Zola and Imprisoned Alfred Dreyfus”. Shapell Manuscript Foundation.) The case divided France deeply between the reactionary army and church and the more liberal commercial society and its ramifications continued for many years. On the 100th anniversary of Zola’s article, France’s Roman Catholic daily paper, La Croix, apologized for its antisemitic editorials during the Dreyfus Affair. As Zola was a leading French thinker, his letter formed a major turning-point in the affair.

Zola’s powerful letter included a direct conversation to the President of France to whom he address as a honorable and rightful man,

And it is to you, Mr. President, that I will proclaim it, this truth, with all the force of the revulsion of an honest man. For your honor, I am convinced that you are unaware of it. And with whom will I thus denounce the criminal foundation of these guilty truths, if not with you, the first magistrate of the country?

And by doing this, he requested the President to be truthful to Justice.

Lets have this letter as a memory of which is our truthful right and obligation as citizens of our States.  Let us remember that We MUST always Accuse the wrongdoers and Demand justice to prevail.

Audio (French) – J’Accuse – Lettre ouverte d’Emile Zola

Access to the French Original version available here via Archive.org

Here you can find the English translation of the letter: “I Accuse…!” By Émile Zola

Today January 27 is International Holocaust Memorial Day

Let us never forget,

“Selektion” on the Judenrampe, Auschwitz, May/June 1944. To be sent to the right meant slave labor; to the left, the gas chamber. This image shows the arrival of Hungarian Jews from Carpatho-Ruthenia, many of them from the Berehov ghetto. The photographer was Ernst Hofmann or Bernhard Walter of the SS. Image by Yad Vashem.

Holocaust Memorial Day Documentary

Tribute to holocaust victims – We shall never forget!

Two historical references for a discussion on the right to keep and bear arms

Battle  of Courcelette
Battle of Courcelette
Like the observer in the tree in the right foreground, painter Louis Weirter witnessed this Somme battle as a soldier. His painting depicts the chaos and complexity of fighting on the Western Front, and the use of combined arms tactics. The capture of the ruined town of Courcelette, France on 15 September 1916 was a significant Canadian victory. It was also the first time tanks (left foreground) were used in battle.
Painted by Louis Alexander Weirter
Beaverbrook Collection of War Art

One of the most controversial discussions in the last few weeks has been the one around guns, its regulation and controls, its production, on the rights to use guns, on private gun ownership and the arguments of those in favor/against the Right to keep and bear arms in the United States of America.  The right to keep and bear arms in that country has a historical significance rooted in a long standing common law, prior even to the existence of their Constitution.  In England, a similar legal wording can be found in the Bill of Rights 1689 which states “Subjects which are Protestants may have Arms for their Defense”.

The historical significance of this argument is long standing and varies from country to country (specially those with a common law system).  The principle behind this topic is the relation of the private ownership (historically contextualized of course) of the “means of force” versus the monopoly of the use of force by government.  Today I have two recommendations on this topic for those of you looking for essays and books to read:

tilly-diagram

The monopoly of the use of force is claimed to be the reason behind why some kings in Europe succeed in wining wars and enriching their countries; and also the reason why others were subjugated and conquered (see the work of War Making and State Making as Organized Crime by Charles Tilly for a complete picture on this topic (online pdf) a Chapter from Bringing the State Back In (1985), edited by Peter Evans, Dietrich Rueschemeyer, and Theda Skocpol).  But also, in a longer historical perspective it has been the monopoly of the use of force by specific authorities which for other authors built/destroyed entire civilizations (see the work of The Shield of Achilles: War, Peace and the Course of History (2002) by Philip Bobbitt).

Have a happy reading!