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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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.

Discourse: Nationalization, Private Companies and Crony Capitalism

The neoliberal (a.k.a. crony capitalism) ruling of the world during the last 50 years is usually generalized as a “big fish eats small fish” relationship. The story continues, with the big fish in Washington, Brussels and Moscow fed themselves with the riches of the world and profited from globalization.  Meanwhile, the small fish continued breeding and feeding the always hungry lords.  This general discourse is repeated in most if not all the academic papers dealing with postcoloniality and globalization.

The impact of the ideas of these intellectuals is widespread and not easily observable for the ignorant masses.  As such, when you read the newspapers in Latin America or Africa in regard to the “new” nationalizations being undertaken by the “new” socialist/anti-neoliberal governments in Argentina, Bolivia, Brazil, Greece, Lithuania, and Sri Lanka since 2011 people usually ignores that there is nothing “new” in these actions.

These nationalizations of privately owned assets have been in many of the cases actual renationalizations of companies that were not owned by the principles of free market ideas, but that had been privatized by corrupt social democratic governments 50, 40 or 10 years before and who created new privately owned privileged companies.  As a result of these social democrat and socialist governments many privately owned companies emerged as the bastions of crony capitalism, inefficiency and corruption.  The previous, generally increased as closer the national industries were owned by crony private companies that owned single-crop cultive exports and resource rich regions.

To mention short examples of the previous, recently in Argentina Yacimientos Petrolíferos Fiscales (YPF; English: “Treasury Petroleum Fields”) was renationalized (not nationalized) by the government under claims of corruption, inefficiency and negative benefits to their national interests.  In Bolivia, Transportadora de Electricidad (TDE) was nationalized by Evo Morales government.  However, TDE was also a fruit of the neoliberal and crony capitalist deals established in 1952 after a coup d’état that established a military socialist democracy with the party  Revolutionary Nationalist Movement (MNR) which allied into a military-nationalist clique that lasted for 50 years.

Privately owned companies produce always more efficient and better products than state-owned companies.  However, privately owned companies that have benefited from government granted privileges for decades not necessarily will produce more and better services and products than state-owned companies.  The previous is something that few of us dare to identify and explain with a non-contradictory historical and philosophical background.  Meanwhile, the great majority of academics influenced by collectivist philosophies will start writing articles and books applauding the “successful” renationalizations and condemning those free-market authors who will write back and fight.

Indeed, there is a difficult road in defending private property and privately owned businesses in the context of countries and regions that lack respect for individual rights and the rule of law.  As such, to defend the private vs collective in those circles it is necessary that first we identify how the societies are currently organized around the collective inefficient systems of social and economic organization.  In the case of Bolivia and Argentina it is necessary for us to identify how these business and societies are not structured and organized around the principles of free market and individual rights.  By understanding and explaining this clearly there will be a chance to change the discourse of discussion from “why is renationalization good?” to “why laissez faire capitalism is better than the privately owned business of crony capitalism?”

Journal Reco: Globalization and Global History in Toynbee

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Image by cesarharada.com via Flickr

Abstract

This article traces the intellectual history of Arnold J. Toynbee. It centers on early twentieth-century British social thought and its synthesis of idealism and evolution. Toynbee used this framework to interpret imperial and international affairs, and, like his mentors, he focused especially on the unprecedented, progressive possibilities of global integration. With the failure of the Paris Peace Conference, however, Toynbee began to regard globalization as a contradiction between social unity and spiritual disjuncture. A Study of History, his endeavor to bring historical writing into its global present, followed from this opposition, which he sought to explain and hoped to resolve. By the mid 1930s, world events finally overwhelmed Toynbee’s commitment to the old conceptual synthesis. He returned to such thinking after World War II, but his brief declaration of methodological limitations illuminated for historical study the antinomy of the global scale.

Universal history must be construed and denied.

To many world historians today, Arnold J. Toynbee is regarded like an embarrassing uncle at a house party. He gets a requisite introduction by virtue of his place on the family tree, but he is quickly passed over for other friends and relatives. For much of the twentieth century though, Toynbee was perhaps the world’s most read, translated, and discussed living scholar. His output was enormous, hundreds of books, pamphlets, and articles. Of these, scores were translated into thirty different languages. In 1947, Time magazine considered his historical significance to be on par with Marx.2 Among intellectuals, response to his work was de rigueur. Indeed, the critical reaction to Toynbee constitutes a veritable intellectual history of the midcentury: we find, for example, Aron, Frye, Huxley, Kennan, Kracauer, Kroeber, Morgenthau, Mumford, Niebuhr, Ortega y Gasset, Popper, Ricouer, [End Page 747] and Sweezy, as well as a long list of the period’s most important historians, Beard, Braudel, Collingwood, and so on.

A survey of these responses consistently reveals odd contradictions between positions. In recent historical work, for example, Reba Soffer aligns 1930s-era Toynbee with Britain’s “radical right,” while Christopher Brewin describes his politics of the same period as “progressive liberal.”3 In Toynbee’s own time, two of the most sustained attacks came from E. H. Carr and Pieter Geyl, each in a certain way the inverse of the other. Carr translated the Marxist critique of bourgeois moralism into his study of international relations; he assailed Toynbee’s “utopian prescriptions” as so many alibis for British national interest. And as in Marxism, spotlight on the furtive particular in turn revealed a sturdier universal, in this case, what Carr called “the nature of politics.” Geyl, on the other hand, read Toynbee’s “impossibly universalist system” not as façade for a specific concern, but as its disintegration; he deemed Toynbee’s world history as an attempt to “escape” the uniqueness of the West. Toynbee’s “passion for unity,” Geyl wrote, was “fundamentally antagonistic to history, the guardian of the particular.”4 So which was it: the camouflage of self-interest or an ecumenical hallucination? And which was the corrective to Toynbee’s grand failure? Naturalism or historicism? Siegfried Kracauer shook his head: “There is something schizophrenic about Toynbee.”5

One approach toward understanding this contradiction can be found in Karl Löwith‘s brief comments on Toynbee in Meaning in History. All modern temporality, according to Löwith, was an “inconsistent compound” of ancient Greek cyclicality and a Christian theology of history. In addition, the latter’s eschatology endowed the historical process with “universality,” evoking above every smaller narrative the single, imagined identity of “mankind.” With this broad phrasing, Löwith fittingly characterized the two-sidedness of Toynbee’s thinking,[End Page 748] but he left unattended Toynbee’s struggle against a categorical universalism.6 Löwith’s high degree of abstraction offers little to the historiographer assessing world history and the varied circumstances that have contributed to its diverse formulations. My own reading stays considerably closer to the text. For in understanding Toynbee, philosophical generalization, like a quick dismissal, misses the struggles and contradictions in his attempt at world history. These break points help elucidate the history of the field, as well as the history of global thought and twentieth-century intellectual currents more generally. Perhaps too, they present to contemporary world-historical thinking an insight of value, even as Toynbee’s system has long stood in ruins.

The basis for Toynbee’s historical logic, and the source of its core difficulty, derived from a set of ideas which are best described as “evolutionary idealism.” One of the dominant trends in early twentieth-century British social thought, evolutionary idealism sought to combine Darwinian naturalism and teleological purpose, two positions hitherto locked in debate. Writers applied this synthesis to questions of imperial affairs, and it underscored much of the era’s thinking on the globe and its history. From this conceptual framework, Toynbee reckoned that the single most significant feature of his age was world integration, a “unification [that] . . . has caught in its meshes the whole living generation of mankind and all the habitable lands and navigable seas on the face of the Planet.”7 Indeed, Toynbee’s entire career as historian and political analyst can be read as a massive reflection on what came to be called globalization. His earliest such writings fully mirrored the evolutionary idealism of his educators. Yet this outlook faced a serious challenge in the immediate aftermath of World War I. The strains of colonial violence and worldwide turmoil fragmented teleology into a multiplicity of beliefs and interests. Toynbee persistently and loudly emphasized this problem of difference. At the same time, and throughout the interwar years, he remained committed to evolutionary idealism and strained to refashion it for the new, polycentric world. Both his rationale and his method for a history of the globe followed from that effort. The contradictions, however, could not be contained, and by the late 1930s, internal adjustments appeared inadequate. With the Italian invasion of Ethiopia and the attendant fiasco at the League of [End Page 749] Nations, Toynbee renounced his previous position. For a brief but significant moment, he neither synthesized nor hybridized the unity of the globe and its diversity of ideals. World integration rendered the universal and the particular into categories at once interdependent and irreconcilable, at once complementary and contradictory. After World War II he returned to the principle of synthesis with ever new and ever unsatisfactory attempts at reconciliation. Across Toynbee’s reception then, as in Carr and Geyl, his key concepts hopelessly chased each other in circles. Yet this indetermination anticipated in a uniquely interrelated way some of the major philosophical and historiographical currents of later years, expressing the irresolvability of postmodernism, the renewed interest in religion, and world history itself.

Read more: Michael Lang. “Globalization and Global History in Toynbee.” Journal of World History 22.4 (2011): 747-783. Project MUSE. Web. 25 Nov. 2011. <http://muse.jhu.edu/journals/journal_of_world_history/v022/22.4.lang.html&gt;.

NEW PhD in Global Studies, Roskilde University

Roskilde, a detail of the University Library
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I am currently enrolled in the MA in Global Studies 2013 at Roskilde University and I am very happy to share this news with you;  Roskilde University is a very new (founded in 1972) and leading University in a new focus on Education that is hard to find in Europe.  The focus of the courses in the University is not based upon traditional lectures but in group orientated methods and projects. It currently has more than 8,000 students and offers BA, MA and PhD degrees.  Now, they are offering a new PhD scholarship in Global Studies at the Department for Society and Globalisation: http://www.ruc.dk/en/jobs/phd/

The research topic is within Global Studies and the focus of the proposed research projectshould fall within one of the following themes:1. New actors and alliances in North-South relations
2. The Arab Uprisings and the global changes
3. The squeezed middle classes: Europe and Asia compared

All the best,
Kennet Lynggaard
Associate Professor, PhD.
Department of Society and Globalisation
Roskilde University, Bld. 25.1
Universitetsvej 1
P.O. Box 260
DK-4000 Roskilde
Denmark

Academic Article. French Intellectuals and Globalisation: A War of Worlds.

Alien tripod illustration by Alvim Corréa, fro...
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Yesterday I posted the famous audio/story of Orson WellesOctober 30, 1938 broadcast titled “Space invaders” that scared thousands of people who believed that Martians were invading Earth.

Today’s Academic Article recommendation will continue in that tone. This time, it is the turn for French intellectuals to play the role of Martians. 😉 They have leaded the opposition to what they call neo-liberal globalization (a.k.a. Westernization by means of corporate capitalism). Hope you enjoy it and don’t get too scared!

“French intellectuals have been at the forefront of a national and international movement of opposition to neo-liberal globalisation. Drawing on Samuel Huntington’s controversial work, The Clash of Civilisations, I will argue that French intellectuals shared a civilisational perspective of globalisation, seeing it not as a piecemeal market process or economic reform, but as an all-encompassing external threat. This civilisational perspective had contradictory effects on the nature of their opposition. On the one hand, intellectuals were able to produce a radical critique that challenged neo-liberalism and reinscribed the market within a specific political and ideological context. On the other hand, they tended to perpetuate an essentialist view of globalisation that saw this not as an economic process but as an expression of a pre-determined Anglo-Saxontype.”

Waters, Sarah. 2011. “French Intellectuals and Globalisation: A War of Worlds.” French Cultural Studies 22, no. 4: 303-320.  Academic Search Complete, EBSCOhost (accessed October 31, 2011).

Why Globalization Matters?

“It was by making myself a Catholic that I won the war of the Vendee [the war of counter-revolution in western  France], by making myself a Muslim that I established myself in Egypt, in making myself Ultramontane [a devotee of the papacy] that I won men’s hearts in Italy. If I were to govern a Jewish people, I would re-establish Solomon’s Temple.” Napoleon Bonaparte

It is with Napoleon’s astonishing remark that I decided to give you some light of what Globalization refers to and why I choose to write about it as one of the two pillars of my research.

The term Globalization (also referred to as Globalisation) refers to what many different historians considered a process of interrelation (or unification) of the world. It was a process of cultural, political and economic relations that for the first time in history united all mankind.

It has been the aim of historians to identify When does Globalization begun and How it begun.  But also, it has been their aim to question if Globalization as a process has already concluded or if it is an ongoing process in the 21st. Century.  As well, historians are still trying to explain if Globalization should be judged (or not) as the result of only positive (good) results in regard to increasing the wealth, culture and technology of the world; while other historians argue that Globalization has also resulted in poverty, losses, conquest and cannibalization.

Globalization has been studied from different approaches in Social Sciences. Sociologists and Anthropologists have focused on the cultural effects that the transfer of technology, mass migrations, institutions and products has had in different regions of the world. Political Theorists studied how Globalization affects the institutions, norms and hierarchical authorities in specific regions and how changes in other regions may have had altered the status quo. Economists study how globalization increased the commerce and transactions between regions and territories through trade, investments, and flows of capital just to mention a few.

In this blog I’ll aim to discuss Globalization as a process and a result of the interconnectedness of human’s psycho-epistemology in specific contexts and periods of history.  My mission is to study how human behavior is not determined by nature and how human free will (action that results from rational or irrational reasonings chosen between opportunity costs) has shaped the course of history until the present.

Continue reading “Why Globalization Matters?”