BBS Book Thingie: "Capital in the 21st Century" Discussion Week 1 - Introduction

Does capitalism aim to?

Doesn’t capitalism require inequality?


Piketty doesn’t advocate ditching capitalism as such, in fact he credits it with creating a great deal of wealth, IIRC.

He hangs epic quantities of shit on his fellow economists for their mindless dogmatic groupthink post Friedman; rather than doing their actual job, they’ve just been unthinking tools of the elite. Naturally, the elite weren’t exactly passive observers in this…

And he points out that the post-war levelling of the playing field wasn’t down to the destruction of wealth but due to many active efforts to achieve greater opportunity for all, which were enabled by the political climate of the time. I can’t recall the reasons he identified for that climate to have come about, though.

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That’s the question, though - Is the sort of extreme inequality we’re talking about a feature or merely a bug? I lean towards it being a feature, but some people argue that capitalism just has been deployed properly.

It seems obvious to me that a system based on profit requires heavy regulation and systemic wealth redistribution to be halfway equitable; heavy taxes on extreme wealth and inheritance, for instance.

We’re probably going to have to settle for that before we can get around to replacing money with kudos points or whatever…


Exactly. Also, with greater wealth comes greater responsibility. Capitalism, when corralled by strong regulation to keep human greed in check and an ethical framework, isn’t inherently a bad economic system. Besides, it’s the system we’ve got. We don’t have to throw the baby out with the bathwater: we need to figure out how to best take care of the baby we’ve got.

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Are we discussing Chapter 1 or Part 1 (chapters 1 & 2?) next?

Poverty isn’t an absolute state; what poverty means varies historically. It’s a relative status, of being denied what’s socially defined as necessary. You can’t eliminate poverty in a class system, because poverty is the status of being in the lowest class in the hierarchy.

So no, you can’t eliminate poverty within the class system of capitalism.


Yes and no… if we can make ‘poverty’ mean only having the bare necessities (that includes broadband these days), then its definition will have fundamentally altered.


The lowest income deciles of the city I work in have families who live in cold, damp, mould infested housing with no/poor heating; with low income resulting in children being sent to school hungry. As a result of hunger and poor living conditions they experience poor health and poor education outcomes, which help perpetuate the situation for the next generation. Those families would still be relatively poor no matter where or when you place them.

But if we

… then those families wouldn’t be “poor” any more because they don’t starve and do have the bare essentials for life. But it’s not a good life.

As education is an effective way of improving one’s lot in life (by opening up access to better paid careers) couldn’t poverty be better defined as ‘living conditions that negatively impact physical and/or mental health or reduce the ability to access education’?

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You can define poverty however you want. What is it you’re actually trying to solve? If you want to assure that there’s class mobility, that’s one thing. If you want to make sure that people aren’t miserable, that’s another. If you’ve got a class system, there’s going to be a lot of people at the bottom, and they’ll be miserable, and all that wonderful “competition” is about struggling against the fear of sliding down.

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I think we’re going chapter by chapter, so chapter 1 next…?

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Well, I may have a biased viewpoint as I work in a public healthcare system. But it would be nice not to be just a sticking plaster over society’s failings.

Taking random examples from my workplace, those babies in the ICU probably wouldn’t have brochiolitis if they had warm, dry homes to live in. That row of abused kids in the Paeds ward would have had a better start in life if their parents didn’t feel the need to get drunk to ease the pain. The young guy in the orthopaedic ward with the broken ribs and messed up legs might not have had a tree fall on him if the forestry industry paid a decent living wage instead of giving its lowliest workers a piecework rate to maximise its profit … the list could go on.

We could make a start on reducing poverty by seeing what the things are that make people sick, and redistributing resources to reduce those effects as much as possible. Why do the people “at the bottom” have to be miserable?


I’m sure we all agree well enough on an intuitive description of what poverty is like that we don’t need to belabor that point. And I certainly wouldn’t argue against the redistribution of resources – quite the contrary.

I believe the real question is, is poverty an accident, or is it deliberate? Is it a misalignment of the social machinery, or is it intrinsic to the operation of the machinery?

IMO it’s intrinsic to the mentality of the ruling class, and also to unfettered capitalism, but not to anything we have the ambition to call civilised.


I’d argue that it’s a misalignment. The combination of capitalism with a decent social safety net that existed in the UK of my youth got my family out of poverty —the opportunity for my parents to start a business and grant assisted degrees for me and my sister. It was left-leaning post-war governments in the UK that set us up for our current relative affluence.

But the UK has less social mobility now than then, what with successive right-wing governments, austerity programmes and making higher education a business that has to pay its way. In the same financial position now as I had at 18, I’m not sure I would take the risk of a 6 year degree. I cheerfully vote to be taxed at a higher rate for the return of a decent social contract that gives others the same opportunities, but voting patterns in the UK and here in NZ suggest I’m in a minority … :disappointed:


Chapter Two’s Discussion Thread is up!

Happy Friday, everyone!

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And I think there’s strong evidence it’s deliberate.

This idea is sometimes made quite overt. So when Alan Greenspan was testifying before Congress in 1997 on the marvels of the economy he was running, he said straight out that one of the bases for its economic success was imposing what he called “greater worker insecurity.” If workers are more insecure, that’s very “healthy” for the society, because if workers are insecure they won’t ask for wages, they won’t go on strike, they won’t call for benefits; they’ll serve the masters gladly and passively. And that’s optimal for corporations’ economic health. At the time, everyone regarded Greenspan’s comment as very reasonable, judging by the lack of reaction and the great acclaim he enjoyed.


So, I’m catching up with all a y’all guys and will do this in a stream-of-consciousness type of a way until I do.

Nevertheless, the magical Kuznets curve theory was formulated in large part for the wrong reasons, and its empirical underpinnings were extremely fragile. The sharp reduction in income inequality that we observe in almost all the rich countries between 1914 and 1945 was due above all to the world wars and the violent economic and political shocks they entailed (especially for people with large fortunes). It had little to do with the tranquil process of intersectional mobility described by Kuznets.

…especially for people with large fortunes…

Inequality is not necessarily bad in itself: they key question is to decide whether it is justified, whether there are reasons for it.

This strikes me as a rather banal and confusing formulation of two conflated questions. Which I’m imagining is either purposeful to an important linking argument, as yet be furthered, or a deliberate misstep to again pacify and enchant a portion of his readership. Perhaps both.

The second conclusion, which is at the heart of the book, is that the dynamics of wealth distribution reveal powerful mechanisms pushing alternately toward convergence and divergence. Furthermore, there is no natural, spontaneous process to prevent destabilizing, inegalitarian forces from prevailing permanently.

‘mechanisms’, ‘forces’, ‘prevailing permanently’ :smile:

ok ok, I like the cut of his jib but it’s a dry humour.

The French Revolution did not create a just or ideal society, but it did make it possible to observe the structure of wealth in unprecedented detail. The system established in the 1790s for recording wealth in land, buildings and financial assets was astonishingly modern and comprehensive for its time. The Revolution is the reason why French estate records are probably the richest in the world over the long run.

Revolutions. A record keepers dream come true. It strikes me that this means ‘records available to the public’ and perhaps hints at the possibility of studies performed internal to dynastic, perseverant wealth.

It also strikes me that two competing forces for the furtherance of specific forms of divergence exist. Or, perhaps more properly put, competing ‘mechanisms’ for the acquisition of a comprehensive and complicit divergence.

I have no interest in denouncing inequality or capitalism per se - especially since social inequalities are not in themselves a problem as long as they are justified, that is, “founded only upon common utility,” as article 1 of the 1789 Declaration of the Rights of Man and the Citizen proclaims. (Although this definition of social justice is imprecise but seductive, it is rooted in history. Let us accept it for now. I will return to this point later on.)

My suspicions not really confirmed but he has my attention.


I’m still catching up.

One thing that really astonished me is that Piketty says that Marx makes an implicit but strict assumption that in the long run, there is 0 change in productivity. My understanding is that productivity is essentially labor multiplied by capital investment, so of course productivity increases over time.

I have to assume that this isn’t a blunder on Piketty’s part. It’s possible I’m misunderstanding Marx. But I’m guessing that this is actually about different definitions of productivity. And given how often I’m seeing references to “education”, I’m guessing that the difference is that Marx treats improvements in technical knowledge and training as capital improvements, whereas Piketty treats those as improvements to the quality of labor.

Intuitively, it makes sense to me to assume that there’s a limit to the productivity of an individual worker, exclusive of capital investments, that is approached asymptotically. I’m reminded of the military historian John Keegan pointing out that several general rules about the capacities of soldiers were worked out at the beginning of recorded history and remain true in modern times: that trained infantry can carry about fifty pounds of gear and travel a maximum of thirty miles per day on foot; without modern technology, modern soldiers are as good as the best ancient soldiers, but no better. Similarly, a modern metalworker has better materials, tools, and the knowledge to use them, but those are all the result of the application of capital.

There’s a tendency among liberals to insist on the importance of education, but I think there’s a limit to how much improvements in access to education can mitigate inequality. It’s long since ceased to be a joke, let alone a funny one, that many Starbucks baristas are college graduates. Improvements in access to education, while a good thing in terms of humanistic values, does not by itself undermine the class system.


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