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A few days ago, Daron Acemoglu and James Robinson published a critique ("The Rise and Fall of General Laws of Capitalism") of Thomas Piketty's book "Capital in the Twenty First Century".
In it, Acemoglu and Robinson liken Piketty's views with those of "the great classical economists, Malthus, Ricardo and Marx":
"We argue that all of these general laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions in shaping the evolution of technology and the distribution of resources in a society".Branko Milanovic replies to the charge that Piketty totally neglects institutions:
"This is hard to understand since Piketty's explanation for a large part of changes in inequality in the US, France and elsewhere are precisely institutional: higher and then lower income and inheritance tax rates, abolition of slavery …So far, so good. The Acemoglu/Robinson charge against Piketty is obviously unfounded.
"Actually, that part of the critique is fundamentally dishonest. It proceeds as follows. First, Acemoglu and Robinson establish the equation Piketty=Marx …"
But then, as if to show he is a reasonable mainstream economist, Milanovic "bounces" the charge against Marx:
"They then criticize Marx for ignoring institutions, more or less correctly (but clearly that has nothing to do with Piketty)".
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Today, David Ruccio literally taught the three men a lesson. Out of Capital, volume 1 -- only -- he cites thirteen (yes, 13!) chapters where Marx considers institutional details in addition to an assortment of works by Marx and Engels (including Engels' "The Origin of the Family, Private Property, and the State" -- can there possibly be any title more explicit about its institutional content?).
Ruccio closes his post with this (although I urge you to read the whole
"They want institutions? Then try this vivid summary (from Chapter 31) of the institutions that gave rise to capitalism:
"Tantae molis erat, to establish the 'eternal laws of Nature' of the capitalist mode of production, to complete the process of separation between labourers and conditions of labour, to transform, at one pole, the social means of production and subsistence into capital, at the opposite pole, the mass of the population into wage labourers, into 'free labouring poor,' that artificial product of modern society. If money, according to Augier, 'comes into the world with a congenital blood-stain on one cheek,' capital comes dripping from head to foot, from every pore, with blood and dirt.
"Acemoglu and Robinson and Milanovic (not to mention Piketty) can't, it seems, handle that kind of institutional analysis."
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Will Very Serious Economists learn anything from this? My guess, for what it is worth: not a chance in hell.
I recently started reading through Marx's Capital for the first time. It appears to me that Marx, in many ways, was the original "institutional economist," and the first institution he analyzed was political economy itself.
ReplyDeleteWhile I think there are likely many reasons to criticize Picketty, who fundamentally appears to be a modern globalist trying to reprise the role Keynes played back in the day (i.e., the global capitalist wolf in socialist sheep's clothing), you really can't say he does not consider institutions because he, in fact, addresses the most important institution of them all, the FIRE sector.
Good post.
Thanks, but it's Prof. Ruccio who deserves the applause, not me.
ReplyDelete