Reviewed by Hans G. Despain in Marx & Philosophy Review of Books
Capital in the Twenty-First Century
The Belknap Press of Harvard University Press, Cambridge MA, 2014. 696pp., $39.95 / £29.95 hb
About the reviewer
Hans G Despain
Hans G Despain is Professor of Economics and Department Chair at Nichols College, Massachusetts. He encourages your correspondence: firstname.lastname@example.org
Capital in the Twenty-First Century is a most impressive book that deserves great attention. Piketty insists that social scientists generally, and economists in particular, must confront and examine “facts” (574-5). This is what he sets out to do in his momentous nearly 700 page text.
The title suggests the book may be offering homage to Marx’s nineteenth-century Capital. Let us be clear from the beginning it is not. Nonetheless, this book will be appreciated by Marxian political economists, while at the same time a frustratingly theoretical disappointment.
Piketty’s book is nothing short of revolutionary in establishing flows of income over time. He establishes that there is a tendency toward the hyperconcentration of wealth, and the rise of a new “supermanagerial” class (315-21). Piketty leaves no doubt that it is class that matters and structural “class warfare” predominates in twenty-first century capitalism (246). Crucial to Piketty’s studies of capitalism is that there exist no economic laws determining distribution of income and wealth (274, 292-4, 361-4). This is an enormously important point, and a return to classical political economy with a vengeance, especially to Marx whereby distribution is a function of series of institutional power relations, rooted in production relations. These summaries will surely, and should, excite Marxian social theorists. However, Piketty’s definition of capital as a financial measure of physical equipment, money, financial assets, land, and other valuables will discourage Marxian social theorists. I will come back to these crucial points.
The primary problem with the book is an underdeveloped social theory and normative philosophy. Consequently, Piketty’s policy recommendations are impressively anemic and aimed at perpetuating exploitation of the economically vulnerable populations. In the end Piketty wants to take the ‘hyper’ out of hyperexploitation and reestablish good old-fashion exploitation with higher minimum wages, taxes on capital, progressive income tax, and limits on inheritance.
With emphasis, Piketty defends the strengthening of the “social state” or the historical development of public education, healthcare, social security, unemployment compensation, and income support for the poor (471-92). Moreover, he maintains that deficits are not bad in-and-of-themselves, but must be spent wisely and should not be paid for with fiscal “austerity” but by means of central-bank-generated-inflation and/or a tax on capital (540-70). This defense of the “social state” and federal deficit pushs Piketty into the area of (political) philosophy, social ethics, and morality. Piketty is well-aware of this (479-81). He recognizes that the so-called “science of economics” is more accurately political economy that generates enormous normative philosophical implications (574).
This gets well ahead of our story and the details of Piketty’s book. The essence of the book is remarkably straight forward and is intended for a popular audience. Piketty brilliantly succeeds on this account and should be duly praised. The essential argument is that capitalistic economic growth inevitably slows. As the rate of economic growth diminishes, the past accumulated “capital”/wealth gains in importance (233), and indeed allows past wealth “to devour the future” (378). Piketty calls this a “fundamental law of capitalism” (166).
This fundamental law of capitalism means that the “return on capital” (r) is greater than the economic growth (g): r > g. As a prosperous and industrialized capitalist economy begins to stagnate, past wealth becomes more important and powerful and inequality begins to increase rapidly (572). Thus, one of Piketty’s main goals “is to understand the conditions under which such concentrated wealth can emerge, persist, vanish, and perhaps reappear” (262).
According to Piketty, the primary mechanism (25) causing inequality is the fact that the rate of return on capital is 3 to 5 times greater than the rate of growth (233). Thus, the structural tendency of capitalism toward stagnation and 4-5% rate of return on capital means that markets and competition do not reduce inequality (370). It is in this sense that there is a “logic of accumulation,” based on the divergence between the rate of return on capital and economic growth (22-7), that accounts for the very high concentration of wealth throughout capitalist history (377).
Following Michael Gove’s bizarre article in the Mail, attacking ‘Blackadder’ and ‘Oh What A Lovely War’ (and then fellow Tory Max Hastings’ equally fatuous follow-up), I thought it might be an idea to check up on what a proper historian has to say about the First World War. Here’s the late James Joll (Emeritus Professor of the University of London and a Fellow of the British Academy), in his 1973 book Europe Since 1870:
Any single explanation for the outbreak of war is likely to be too simple. While in the final crisis of July 1914 the German government acted in a way that made war more likely, the enthusiasm with which war was greeted by large sections of opinion in all the belligerent countries and the assumption by each of the governments concerned that their vital national interests were at stake were the result of an accumulation of factors — intellectual, social, economic, and even psychological, as well as political and diplomatic — which all contributed to the situation in 1914 and which can be illustrated in the events of the last weeks before the outbreak of war.
While some people have argued — and it was a popular view in the period between the wars — that the war was the result of the ‘old diplomacy’ and of an alliance system based on secret agreements, others, and especially some of the leading German historians since the Second World War, have seen in the war a half-conscious or in some cases deliberate attempt by governments to distract attention from insoluble domestic problems by means of an active foreign policy and an appeal to national solidarity at a time of war. For Marxists the war was inherent in the nature of capitalism; the forces which drove states to expand overseas were in this view leading inevitably to a clash in which the great international cartels would no longer be able to agree on a peaceful division of the under-developed world and would force governments into war for their own economic interests. Other writers have concentrated attention on the implications of strategic decisions and on the influence of for example the naval rivalry between Germany and Britain in creating international tension, or on the effects of the German decision finally taken in 1907 that, in order to defeat the French army before turning to fight the Russians on the Eastern Front, it would be necessary to violate the neutrality of Belgium, and thus run the risk of bringing Britain into the war as a guarantor of Belgian neutrality under the treaty of 1839
If we try to account for the widespread optimism and enthusiasm with which the war was initially greeted by many people in all the belligerent countries, we have to look at many of the factors described in the preceding chapters — the belief that the doctrine of the survival of the fittest could be applied to international relations, so that war seemed to be the supreme test of a nation’s right to survive; the belief, stemming from Nietzsche, that only by a supreme shock and effort could the limitations of bourgeois life be transcended and its essence transmuted into something nobler. Or again, even if the governments of Europe did not deliberately envisage war as a way out of their internal political difficulties, the fact remains that war briefly produced a sense of national solidarity in which bitter political quarrels were forgotten: Irish Catholics and Ulster Protestants could agree to shelve their differences ‘for the duration’, as the phrase went; right-wing Catholics and socialist free-thinkers who had not spoken for years shook hands with each other in the French Chamber of Deputies, and the Kaiser gave a warm greeting to a gentleman whom he mistakenly supposed to be the Social Democratic leader Scheidemann. In Germany in particular the war seemed to create a new sense of solidarity, of belonging to a Volsgemeinschaft such as a generation of social critics had been longing for, a national community in which class antagonisms were transcended and in which the Germans felt rightly or wrongly a sense of mission and of purpose which had been lacking since the 1860s and early 1870s.
But perhaps in addition to the illusion that the war would be a short one, the illusion which received the most bitter blow, even though it was to be revived hopefully by President Wilson in 1918, was the belief that international relations could be conducted on a rational basis in which the interests of the various nations could be made to harmonise with each other without the need for armed conflict. It was this illusion that had governed Grey’s diplomacy and his attempt to mediate between the continental powers in the last days of July 1914; and it was a similar belief that inspired the leaders of the Second International when they came to Brussels in the hope of finding a way to demonstrate that the international solidarity of the European working class was stronger than the division between their capitalist rulers. The ideological assumptions on which European liberalism had rested were already breaking down before 1914. The war was going to hasten this process in the field of practical politics and everyday social and economic life. The war destroyed the political, economic, social and territorial structure of the old Europe and neither conservatism nor liberalism nor even socialism were ever going to be the same again. From the standpoint of sixty years later there is all too much truth in the prophesy made by Jean Jaures in 1905: ‘From a European war a revolution may spring up and the ruling classes would do well to think of this. But it may also result, over a long period, in crises of counter-revolution, of furious reaction, of exasperated nationalism, of stifling dictatorships, of monstrous militarism, a long chain of retrograde violence.’
I have little doubt that I shall be returning to James Joll from time to time throughout the coming year: in the meanwhile I recommend Europe Since 1870 (from which the excerpts quoted above were taken) and his The Origins of the First World War (1984, with Gordon Martel). I doubt that Michael Gove will want to read anything so objective, scholarly and challenging.
Comrade Coatesy: ‘Daily Mail Attacks My Granddad.’
Ordinarily, we don’t republish articles from the bourgeois press, as you can read them for yourself. But this one, from John Palmer (a leading IS member in the early 1970’s) in the Graun, is so good and so important that we’re making an exception. The idiot-left such as the the Morning Star and Bob Crow, who intends to squander RMT members’ dues on a useless, reactionary campaign, should take note:
Above: John Palmer
The rise of far right parties across Europe is a chilling echo of the 1930s
Since the global banking crisis in 2007, commentators across the political spectrum have confidently predicted not only the imminent collapse of the euro, but sooner or later an unavoidable implosion of the European Union itself. None of this has come to pass. But the European project, launched after the devastation of the second world war, faces the most serious threat in its history. That threat was chillingly prefigured this week by the launch of a pan-European alliance of far-right parties, led by the French National Front and the Dutch Freedom party headed by Geert Wilders, vowing to slay “the monster in Brussels”.
Of course, the growth in support for far-right, anti-European, anti-immigrant parties has been fed by the worst world recession since at least the 1930s – mass unemployment and falling living standards, made worse by the self-defeating austerity obsession of European leaders. Parties that skulked in the shadows, playingdown their sympathies with fascism and Nazism are re-emerging, having given themselves a PR facelift. Marine Le Pen, leader of the French NF, plays down the antisemitic record of her party. The Dutch far-right leader has ploughed a slightly different furrow, mobilising fear and hostility not against Jews but Muslim immigrants. Like Le Pen, Wilders focuses on the alleged cosmopolitan threat to national identity from the European Union. It is a chorus echoed in other countries by the Danish People’s party, the Finns party and the Flemish Vlaams Belang, among others.
For now, the French and Dutch populists are carefully keeping their distance from openly neo-Nazi parties such as Golden Dawn, whose paramilitary Sturmabteilung has terrorised refugees and immigrants in Greece, and the swaggering Hungarian Jobbik, which targets the Roma minority.
According to some pollsters, the far right might win as many as a third of European parliament seats in elections next May. That would still leave the centre parties – Christian Democrats, Social Democrats and Liberals – with many more members. But for the European parliament to form a credible majority, all of these parties might well be forced much closer together than is good for democracy.
Such a situation would be unsettlingly reminiscent of 1936, when the centre and the left – notably in France – temporarily halted the swing to fascism but formed an unprincipled and ineffective coalition. Its collapse on the eve of the second world war accelerated the advent of Phillippe Petain’s Nazi-collaborating regime. History does not normally repeat itself in an automatic fashion, but it would be foolish to take the risk.
More worrying than the growth of the far right are the temporising gestures to the racists and anti-immigrants now coming from mainstream Conservative and even Liberal Democrat politicians and from some of the new “Blue Labour” ideologues. The warning from the likes of David Blunkett that hostility to Roma immigrants might lead to a popular “explosion” is reminiscent of Enoch Powell’s rhetoric.
An antidote to the far right requires that the European left articulates and pursues a comprehensive alternative to economic stagnation, an ever-widening income and wealth gap and the degradation of our social standards, civil liberties and democratic rights. But that alternative has to be fought for at European as well as national and local levels, and will require more, not less, European integration.
Time is running out, not only for the European Social Democrats, but also for the wider socialist left and the greens, to show they can create a counterbalance to the rightward drift of the centre. Without that, the new far-right alliance may only have to hold together and wait for its hour to strike.
Clearly, there’s a lot more to be said, from a leftist point of view, about the closure of a defence manufacturing facility. But for now, here’s the GMB’s reaction (from today’s Portsmouth News):
- by Sam Bannister
Union will ‘oppose each and every job loss’ in Portsmouth
The closure of Portsmouth’s shipbuilding yard is a ‘betrayal to the workers and the nation,’ the GMB union has said.
It comes amid the huge political and industrial row which has erupted today over news shipbuilding is to stop in the city.
Gary Cook, the GMB regional organiser with responsibility for shipbuilding, said: ‘GMB will oppose each and every job loss in Portsmouth.
‘The contempt shown to the workers by BAE and the Tory coalition by leaking stories to the media before the affected employees were informed is nothing short of a stab in the back and a national disgrace.
‘Shipbuilding has taken place on the south coast for hundreds of years and the GMB is not prepared to sit idly by and watch design innovation and highly skilled workers thrown on the industrial scrap heap.
‘If the government wants their second aircraft carrier, a large proportion of which still sits in the build facility at Portsmouth, they’re going to need to talk to us about how we preserve jobs and protect the livelihoods of hundreds of people.’
All shipbuilding will stop in the second half of next year, the defence firm announced this morning, with some of the remaining work on the second of its Queen Elizabeth Class aircraft carriers, due to be carried out in Portsmouth, moving to Glasgow.
Workers were told this morning.
‘If closure of the shipbuilding facility is allowed to go ahead it will have a devastating effect, not only on the local economy but on many hundreds of hardworking employees and their families,’ added Gary Cook.
‘The company embarked upon a massive apprentice and graduate recruitment programme during the destroyer and carrier orders.
‘Young people entered into training because they were told that shipbuilding in Portsmouth had a long term future, now all of this would appear to have counted for nothing and the government are prepared to export shipbuilding jobs to Scotland in their pursuit of retaining the union on a devolution vote.
‘We in Portsmouth are the victims of the squalid, underhand political game.
‘GMB are calling for all politicians regardless of persuasion to do everything in their power, and more, to fight for the retention of a shipbuilding capacity in England.
‘This is nothing short of a betrayal to the workers and the nation.’
Following a scathing report on UK housing conditions (and, in particular, the bedroom tax) from UN special rapporteur Raquel Rolnick, Tory Chairman Grant Shapps appeared on the BBC Today programme not to respond to her points, but to rant about her being “a woman from Brazil” and to demand “an apology and investigation into how this came about” from the UN.
Ms Rolnick, a member of the Brazilian Workers Party, had said of the Bedroom Tax, “I was very shocked to hear how people really feel abused in their human rights by this decision and why — being so vulnerable — they should pay the cost of the economic downturn, which was brought about by the financial crisis. People in testimonies were crying, saying ‘I have nowhere to go’, I will commit suicide’.”
Ms Rolnick is a former urban planning minister. Grant Shapps is…what, exactly?
Well, a shyster, liar and charlatan for a start.
The photo above shows him posing as “Michael Green”, a “multi-million dollar web marketer” at an internet conference in Las Vegas in 2004.
Between 2004 and 2009 he ran a website called MichaelGreen-Consulting.com (part of a company he owned called How To Corp) giving get-rich-quick advice until blocked by Google for breaching its rules on copyright infringement. In his early years as an opposition MP, he also charged clients £183 an hour for advice on how to make money from the web and tips on beating the recession. When he unsuccessfully ran for Parliament in 1997, in the South London seat of Southwark and Bermondsey, his election leaflets described him as ‘a Londoner by birth’. When he stood successfully in Welwyn Hatfield in 2005, his literature stated that he was ‘born in Hertfordshire’.
In 2008 Shapps transferred his share in How To Corp to his wife and claimed he had “no [further] involvement” with it. Since he entered Parliament in 2010, all How To Corp’s websites have disappeared, removing all traces of “Michael Green” and his business activities.
So who would you trust and believe on the bedroom tax (or anything, come to that): the UN’s special rapporteur on housing, with five years’ experience of carrying out housing investigations in places as varied as the US, Croatia, Argentina, Israel, Rwanda, Palestine, Kazakhstan, Indonesia and Algeria… or a fly-by-night spiv from Watford who once used a false name to sell get-rich-quick schemes?
Below is an edited version of the speech given by Jim Kelly, the Chair of London and Eastern Region of Unite, at a Unite ‘Reconnecting with Labour Forum’ in April. It was previously published on the United Left email list, and obviously pre-dates the present row over Falkirk and Miliband’s proposed changes to the unions’ relationship with Labour:
Living in the world of Neo-liberalism
From 1979 onwards successive governments have been dismantling the institutions of the welfare state and replacing them with those of a no-rights, deregulated market economy – what has become known as neo-liberalism.
On any indices – workers’ rights, the gulf between rich and poor, we are increasingly living with the consequences of the rise of the neo-liberal state. For example child poverty:
· 3.6 million children living in poverty in the UK .
· 27% of children, – more than one in four.
· Almost two-thirds (62 per cent) of children growing up in poverty live in a household where at least one member works.
Contrast this with the obscene profits and greed epitomised by the bankers. Rather than an aberration poverty and greed are the foundation stones of the neo-liberals’ creed. When the likes of Johnson or Osborne defend bankers’ bonuses they are then defending a principle on which the society they wish to rule is organised. Such people are out to privatise the world and they are winning.
In my opinion we are near the end game; the institutions of neo-liberalism are all but in place… Such an assertion may seem alarmist, however consider the raft of measures which were enacted on April 1st – Welfare reforms, access to legal aid and of course the Health and social care bill the privatising of the NHS, what other litmus test do we need to signal this change? We have arrived at this place due to the bankers’ crisis, which facilitated a radical acceleration in the pace of change.
Some members of Unite viewed the crash, foolishly in my opinion, as sounding the death knell of neo-liberalism. Clearly it is a broken form of economics, but the idea the elites which rule us would simply give up on it with the concentration of wealth and power it affords them over working people was mistaken. Underneath the ConDem’s smokescreen of ‘we are all in it together’ of austerity Britain we have seen the embedding of the deregulated market over the state and people.
Strikes campaigns and politics
We are then at a tipping point, and the only question is what should we do about it? Our starting point is necessarily to defend union rights and working people in any way we can – strikes, protests, campaigns, demonstrations all are the tools at our disposal. Unite members are fortunate in that our General Secretary has supported all such forms of activity, and your Region has been in the forefront of fighting back…
Unite is then fulfilling the basic principle then, to defend our terms and conditions and our basic rights such as the NHS we have to struggle against those who wish to take them away – no one will do it for us….
Through strikes demonstrations and campaigns across the county we have then the beginnings of a movement. However if this is to go beyond being a protest movement it can only culminate, outside of a general strike, in a movement to change the law.
We need legislation to get rid of the anti union laws, we need legislation to end the reign of the loan sharks, legislation to throw out the privateers. So while some legal changes directly impact on the unions we also need laws which impose wider social controls over the vagaries of the market.
Unite then is driven not just to protest, campaign and undertake strike action to defend and advance workers’ rights, we along with the rest of the labour movement need wholesale legislative change which can only come about through a political party enacting such change through Parliament. It was this need which drove unions into politics at the turn of the 20th century and what is driving us now.
Labour Party and change.
Trade unions and working people need a party that is electable and is going to act in our interests in the here and now. Within Unite there are many who are unsure about engaging in any form of political activity. It is incumbent on all of us who understand the pressing need for a political solution to explain to these members why they should actively support our union’s policy.
There are also many Unite members – often the activists, – who have given up on Labour. You just need to consider New Labour’s role in the march from the welfare state to neo-liberalism to understand this. While New Labour was never its architects, they put their shift in, working overtime to dismantle the post-war state and establish the institutions of neo-liberalism. For example PFI or the NHS internal market, New Labour was up to its armpits in shaping the institutions and political consensuses that dominate the second decade of the new century.
Of course those Unite members opposed to working with Labour would say what do you expect? However such policies did not come out of thin air – they came out of a struggle within the Party which Blair won and the left lost…There are however a number of problems with this ‘what did you expect’ approach. Firstly it is fatalistic, as if the outcome was pre-ordained, second, it has seen them leave the field; if they were attempting to organise a factory would they give up on the war after losing a battle. To put it clearly such a stance is not serious. Third it fails to look reality squarely in the face. Someone needs to tell me what other party is there? So while we must talk and convince Unite members who are unsure that we should be undertaking any form of political activity, we should also ask all those disillusioned with Labour to stop sitting on their hands and get involved and help us in reconnecting with Labour.
In spite of these differences within Unite our drive to reconnect with the Party has met with a number of initial successes most notably the election of Ed Miliband. It is also extremely welcome that the present Labour leadership have distanced themselves form some of the worst excesses of New Labour not least with Ed Miliband’s statement on the Iraq War.
However, despite the pronouncements by Labour’s leaders, the banker’s crisis and election defeat it is clear many in the party remain wedded to New Labour
There are many reasons why they cling to the wreckage; timidity, routinism, conservatism, lack of vision all play their part. However behind the bureaucratic edifice that Blair created are human actors and for them it is a simple matter of self-preservation. The positions and lifestyles of those who put the shift in to build New Labour are absolutely dependent on the continuation within the party of Blair’s neo-liberal agenda. This grouping finds its main organisational expression in the Progress faction…. This conservative faction is already dominant within the PLP. The time, effort, and money they have spent on orchestrating the nomination of ‘their’ people as PPCS, show clearly their intention to try and continue their dominance of the PLP.
I should point out that many Unite members may well be supporters of Progress and of course that is their right. The position taken at this forum is based on union policy.
We are then, as in the 1980s moving inexorably to a struggle over the direction, shape and function of the Labour Party. However this will not be a simple rerun, there are some very important differences.
Firstly the impact of the left losing that struggle in the 1980s not only shaped policy it also enabled the imposition of a hugely undemocratic structure within the party…. Second the bankers crisis has not gone away we are not as in the 1980s entering a period of prosperity. Third rather then being at the start of the neo-liberal project we are now at its conclusion… and finally unlike in the 1980s when the drive for change came from the CLPs and with some notable exceptions the unions were on the side of the status quo today the biggest union in the country is leading the demand for change. Read the rest of this entry »