The rate of profit is profit divided by the sum of the costs of labor, materials, and depreciated plant and equipment. Where Piketty specifically engages Marx is on Marx’s theory of the tendency of the rate of profit to fall. Marx, of course, is much more explicit on this last subject than Piketty, but readers who get through the book will recognize this echo and other echoes of Marx in Piketty’s formulations and approach. (Marx would add “centralization.”) And fourth, he sees that contradiction as possibly leading eventually to some kind of crisis or requiring a “radical shock” to overcome. Second, he does see capitalism as beset with internal contradictions and describes his formula, r>g (the rate of return on assets exceeding the rate of economic growth) as “the central contradiction of capitalism.” Third, he sees his central contradiction, as Marx did his, as a result of the accumulation and concentration of capital. His book is at once theory and history in the same way as Capital. First, like Marx, Piketty approaches capitalism historically. Capital, in Marx, is a social as well as economic category in Piketty, it is only the latter.īut Marx’s influence does intrude in Capital in the Twenty-First Century.
Marx also wanted to understand capitalism’s particular “laws of motion.” Piketty is concerned only with the latter part of economic history. Marx analyzed capitalism as a system of social relations-relations of production-that had to be created politically by transforming the old Feudal classes of serf and lord.
Marx, Piketty writes, “devoted little thought to the question of how a society in which private capital had been totally abolished would be organized politically and economically-a complex issue if ever there was one, as shown by the tragic totalitarian experiments undertaken in states where private capital was abolished.” On a deeper level, Piketty’s approach to economic history more closely resembles that of Adam Smith or David Ricardo than Marx. Why is it wrong to describe Piketty as a Marxist? Piketty rejects Marx’s “dark prophecy” of the end of capitalism and his rudimentary view of socialism.
When I asked him, Rajan wrote back that he had read Capital and considered Marx “a great economist.”) (I once discovered several telltale formulations in the work of Raghuram Rajan, former IMF economist and University of Chicago professor and now head of the Bank of India. Perhaps, Piketty was on the defensive because of the pathetic review on National Review’s blog by James Pethokoukis from the American Enterprise Institute that was titled “ The New Marxism.” Piketty is not a Marxist, but, like other European economists and some older American economists (the late Lawrence Klein, among others), he appears to have been engaged and influenced by Marx’s theories. Piketty writes that he prefers to describe his own work as “political economy” rather than “economic science.” Marx’s work, Piketty knows, was about the history of capital: The last half of the book, parts four through eight, were a history of capital and capitalism.ĭoes Piketty really believe that Marx, whose colleague Engels had written The Condition of the Working Class in England, did not rely on data? Here’s what Piketty writes: “Marx was also an assiduous reader of British parliamentary reports from the period 1820-1860 … He also used statistics derived from taxes imposed on profits from different sources.” And he cites Marx’s use of “account books of industrial firms.” Piketty thinks Marx ignored some sources, but he clearly recognizes that Marx used data. Moreover, Marx’s Capital is the climax in a tradition, beginning with Adam Smith, and dubbed “political economy,” that factored in the historic role of the state in explaining the evolution and workings of capitalism. He acknowledges to Chotiner that he read The Communist Manifesto, but in his books he cites passages and arguments from the first book of Capital and from book three, which Frederich Engels put together posthumously from Marx’s notes, and which is only read and discussed these days by aficionados. He discusses Marx’s ideas more than those of John Maynard Keynes or any contemporary economist.
In Capital in the Twenty-First Century, whose title is an allusion to Marx’s work, Piketty discusses Marx’s ideas more than those of any economist except, perhaps, Simon Kuznets, who in the 1950s pioneered the econometric techniques that Piketty has refined. Bush Could Learn from Theodore Roosevelt and Woodrow Wilson. As a visiting scholar at Carnegie, Judis wrote The Folly of Empire: What George W.
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