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.



Past and present of the globalization of knowledge

Globalization of knowledge is what I define as the process by which actors conceptualize and interconnect ideas in a global scale.  In the past, the globalization of knowledge required initially an extensive research in books, magazines and other print resources of ideas that could be connected in order to create a larger image of the field being studied.  Later, these ideas were linked and related one to another in the creation of conceptual maps that looked very similar to the nets of spiders in whiteboards.  Later, these ideas were interconnected and global conclusions, hypothesis and thesis arised from the evaluation of information.

However, with the advent of technology these complicated and extenuating research process have been shortened and made much more efficient.  Now, these interconnections and global images of our research are almost done automatically by computers.

The following video has a great example on how the past and present of the Globalization of Knowledge looked like.  I hope you will enjoy watching it as much as I did,

Global integration of trade

National Geographic is running a wonderful website on Globalization, the international exchange of goods, services, cultures, ideas, has brought increased wealth for many and transformed forever the way humans interact. But while its roots may be in commerce, globalization‘s effects can be very personal.

Advances in communication and transportation have created a rich, unprecedented mixing of cultures throughout the world. But there is a drawback. As international travel, economic migration, and the global spread of music, films, and literature bring more people than ever into intimate contact, human diversity is vanishing.

A shared language is perhaps the most profound expression of group identity and a critical tool for passing cultural knowledge from one generation to the next. But globalization is about integration. Whether by choice, by circumstance, or under duress, thousands of cultural and linguistic traditions are disappearing as their new generations adopt dominant national and global languages.

Workers, from wealthy consultants to unskilled laborers, are also on the move as never before. Some migrants are encouraged by host countries or regional agreements; others avoid official avenues and often live a shadowy, parallel existence once they arrive. Immigration is high, but it is economic migrants—seeking work more than a new homeland—who define our age.

Read more from them here: EarthPulse by National Geographic

A Plan to Collapse Iran’s Central Bank and its Origins

The foreign policy of the richest countries has always depended in controlling the world’s monetary systems. As a continuation of the postcolonial systems, they continue holding the power to grant credits to poorer countries, to rescue their economies in periods of crisis and in pushing for an increase in world “reserves” and international “liquidity.” The end result of this policies resulted in creating world inflation and enriching those central banks that controlled the dice of this international game (just as it had been done in the previous colonial period).

Colonialism may seem to many an ‘old history’ that was overcome with the modernization of the world and the decolonization processes after World War II.  Nonetheless, in the following postcolonial period many already institutionalized strategies continued working and are still present today.  The IMF, for example, was one of the institutions born as a result of the decolonization process. Its results (far distant from their founding vision) were to keep the postcolonial countries in monetary and economic dependency.

For long the world’s centralized banking and monetary authorities, headed primarily by the International Monetary Fund, collaborated to initiate a period of surveillance, aid, and guarantees for the world’s financial markets as  and  explained in the post “The IMF and Moral Hazard“. However, the long-term results of theses policies fostered the dependency of postcolonial economies and, as such, empowered the populist leaderships in the former colonies that pursued expansive social programs that couldn’t be supported without their foreign aid and long-term indebtment.

Video: The Plan To Collapse Iran’s Central Bank

Today, I saw a video titled “The Plan To Collapse Iran’s Central Bank” in which analysts in the U.S.A. are evaluating the possibilities of collapsing Iran’s economy and disenabling them to continue researching their nuclear programs. Strategies as these may seem as “bogus” to many; however, the long history of international monetary intervention of the economies in postcolonial countries is long and influential (see: Pastor, Manuel (1989). Latin America, the Debt Crisis, and the International Monetary Fund. Latin American Perspectives).  The results of any of these strategies always end up creating inflation and as  mentioned in his essay “End the IMF” in the year 1963 the only solution for and end to inflation (an as such for peace and economic recovery) is to eliminate the IMF and the interventionist international monetary system that has proved, in practice, a gigantic machine for world inflation.

File:50000 IRR obverse.jpg
50,000 Iranian rial

Journal Reco: Globalization and Global History in Toynbee

Image by cesarharada.com via Flickr


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;.

Libyan Strongman Muammar Gaddafi Falls

Free Libya - Saturday Is Always A Day Of Prote...
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Dictatorship nations are outlaws. Any free nation had the right to invade Nazi Germany and, today, has the right to invade Soviet Russia, Cuba or any other slave pen. Whether a free nation chooses to do so or not is a matter of its own self-interest, not of respect for the non-existent “rights” of gang rulers. It is not a free nation’s duty to liberate other nations at the price of self-sacrifice, but a free nation has the right to do it, when and if it so chooses.

This right, however, is conditional. Just as the suppression of crimes does not give a policeman the right to engage in criminal activities, so the invasion and destruction of a dictratorship does not give the invader the right to establish another variant of a slave society in the conquered country.” Ayn RandThe Virtue of Selfishness, 104

Gaddafi came into power as an assassin and terrorist. He started out murdering, continued murdering and had been going out murdering until today.  His death is no panacea but it is surely a victory for the Libyan people and their 2011 Revolution.

Starting in February 15th, 2011 a series of peaceful protests asked for change in the country and they were met with military force by the Gaddafi regime.  Thousands were hurt and killed. Gaddafi proclaimed his despotic discourse that same night and said that the only way he was going to leave Libya was going to be in a cuffing.  Indeed, that’s how he will leave the history of the country.

The fight for Libyans has not finished; loyalists around the Algerian and Nigerian borders are still present and the opposition continues.

I celebrate the capture of this dictator and our attention needs to be focused now in the continues shipping of supplies of medicine, fuel and food were for Libya’s urban centres.  As the philosopher Ayn Rand mentioned in the quote with which I begun this post; it is necessary as well, that we keep a close attention to the outcome of this Libyan revolution in order to avoid that another variant of a slave society in the conquered country with national or international control.