[Marxism] Reviewing Piketty (again) by michael roberts

Ralph Johansen mdriscollrj at charter.net
Mon Apr 28 11:14:23 MDT 2014


Reviewing Piketty (again) by michael roberts

I have just submitted a 6000 word review of Thomas Piketty's book, 
Capital in the 21st century, to Historical Materialism journal. Under HM 
rules,I cannot publish this anywhere else (unless they reject it) and so 
it may not see the light of day for a while.  It may not be the most 
perceptive of the now hundreds of reviews that have been published, but 
it is certainly vying to be the longest!

Anyway, here is a flavour of what is in the review from the abstract 

Thomas Piketty's magnum opus on the accumulation and distribution of 
wealth over the last 200 years has been greeted by the biggest noise 
from the great and good in mainstream economics (and by the heterodox ) 
of any economics book, possibly ever. Piketty shows compellingly that 
inequality of wealth and income is inherent in capitalism and it is 
getting worse. Most important, he shows that the reason for the rise in 
the inequality of wealth is a rise of income going to capital in the 
form of profits, rent and interest. Inequality is not due to higher 
skilled labour getting higher income than the lower skilled.  The 
unanswered question for Piketty's thesis is this. Is rising inequality 
the central contradiction of capitalism and thus its grave digger?  Is 
it a tendency for a rising net return on capital (Piketty) or is it the 
tendency for a falling rate of profit (Marx) that is the key 
contradiction of capitalism in the 21st century?

A lot of reviews seem to suggest that Piketty's book is 'updating' 
Marx's Capital in some way.  When you read Piketty's comments on Marx's 
explanations of the contradictions in capitalism, it is clear that this 
is not so.  Here are some from the book: Marx thought that capitalism 
would have an "apocalyptic" end but thanks to "modern economic growth 
and the diffusion of knowledge" that has been avoided. But there is 
still the problem of the "deep structures of capital inequality".  p1

"either the rate of return on capital would steadily diminish (thereby 
killing the engine of accumulation and leading to violent conflict among 
capitalists) or capital's share of national income would increase 
indefinitely until the workers went into revolt." p9

"like his predecessors Marx totally neglected the possibility of durable 
technological progress and steadily increasing productivity, which is a 
force that can to some extent serve as a counterweight to the process of 
accumulation and concentration of capital" p10

"Marx's theory implicitly relies on a strict assumption of zero 
productivity growth over the long run". p27

"the rate of return on capital is a central concept in many economic 
theories. In particular, Marxist analysis emphasises the falling rate of 
profit -- a historical prediction that has turned out to be quite wrong, 
although it does contain an interesting intuition." p52

Marx's r falls because in his model of capitalism, there is "an infinite 
accumulation of capital" and "as ever more increasing quantities of 
capital lead inexorably to a falling rate of profit (i.e. return on 
capital) and eventually to their own downfall, while growth in net 
income (g) falls to zero." p252

This does not look like an updating but more a rejection.

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