Wednesday, November 19, 2014

Thoma on Piketty: a Matter of Context.


Thomas Piketty's Capital in the 21st Century has generated an enormous amount of comments and reviews (see here for a partial list of reviews), some of them quite favourable, others not so much; some very accurate, some others missing the point entirely. In general, the authors of these comments and reviews have focused on, let's say, the technical aspects of Piketty's work.

Without denying the importance of these aspects, these commentators and reviewers have largely neglected Piketty's place in the history of economic thought. Mark Thoma (professor of Economics, Department of Economics, University of Oregon, here) has made an important contribution to fill that void for the general public.

I cannot but recommend his recent article (The Fiscal Times, 18-11-2014), from which I quote:
“What Piketty has done in his book is revive the study of the distribution of wealth without violating the positive and normative distinction that economists hold so dear. It’s fine to leave questions about the distribution (or redistribution) of wealth to the political arena, but how can politicians make good decisions if economists cannot tell them about the laws of motion that determine the evolution of wealth and income distributions? Whether or not Piketty is correct about the fundamental determinants of these distributions remains to be seen, but he deserves much credit for reviving these questions and bringing them to the forefront of economic research.” (emphasis added)
In addition to a brief overview of the history of economic thought, Thoma sums up brilliantly what -- in my opinion -- are both Piketty's greatest contribution and limitation: while distribution is a political decision, is it really fine for the little guy to leave questions of distribution to the political arena?

His mainstream Keynesian colleagues, their Post-Keynesian critics, and many a Marxist would do well to think long and hard on the issues Thoma raised in this piece. Anyone with an interest on Marxism should also read Thoma's account of the history of economic thought.

Kudos to Prof. Thoma (h/t MNE)

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