viernes, 10 de abril de 2015

Piketty still fails to substantiate his “grand narrative” about the decline of democracy

There is no evidence that capitalism is a threat to democracy

By Otto Brøns-Petersen


Thomas Piketty has caused a stir with his predictions about increasing inequality and private and inherited wealth growing at higher rates than incomes. 

His projections are far less certain than often implied in his book. They do not follow from his “two fundamental laws of capitalism” and historical trends.

Increasingly, his empirical work has been called into question, too. However, even taking his projections for granted, would it send democracy on decline?

This “grand narrative of capitalism” is no doubt what he considers his most important message. But it is also the weakest founded part of his theory.

It is no coincidence that his book is titled Capital in the 21st Century: Fundamentally, Piketty shares Karl Marx’s understanding of politics under capitalism as a class struggle between workers and capitalists. Picking up where Marx left off, the “grand narrative” in Piketty’s work is as follows: Democracy blossomed in the 20th century due to the relative displacement of capital, as aided by wars, depressions, and high economic growth. Therefore, according to Piketty, a future hike in the wealth-income ratio will force democratic institutions back on the defensive. Piketty presents these assertions with a certitude that belies his lack of supporting evidence. For instance, he writes:

“The rentier, enemy of democracy” (p. 422) 
“Under such conditions, it is almost inevitable that inherited wealth will dominate … and the concentration of capital will attain extremely high levels – levels potentially incompatible with the meritocratic values and social justice fundamental to modern democratic societies” (p. 26) 
”[C]apitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based” (p. 2)

Remarkably, the negative consequences postulated by Piketty here are mostly illustrated by references to 19th century literary authors, such as Austen, Balzac, and Tolstoy.

Despite the fact that “capital’s” share of incomes is unlikely to increase, even if the wealth-income ratio were to do so, it seems that the size of the wealth-income ratio is by itself enough to worry Piketty. Hence, in Piketty’s view, the wealth-income ratio practically becomes a measure of how poorly democracy will fare.

I see a number of problems with this “grand narrative.”


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