It’s almost the equivalent of the Rolling Stones playing at your neighbourhood bar: the rock star of economists, Thomas Piketty, is to deliver this year’s Nelson Mandela Lecture in Johannesburg in October.
His 577-page doorstopper, Capital in the Twenty-First Century, had sold 1.5-million copies in French, English, German, Chinese and Spanish by the beginning of this year.
Based on a simple premise, that the dynamics of wealth accumulation are causing global inequality levels to widen, it was lauded by economists and business leaders.
John Maynard Keynes wrote that the ideas of economists and political philosophers are “more powerful than is commonly understood. Indeed, the world is ruled by little else”.
Many enthusiastic readers of the left-wing Piketty agree. Chris Huhne, writing for the Guardian, argued that the massive popularity of his book showed that the intellectual tide was turning: his use of heroic number-crunching offering “proof” that, under free-market capitalism, inequality is the norm, not the exception, may finally convince governments and the public alike that markets must be tamed.
Piketty tracks income and wealth over the past century in Britain and the United States, and over a longer period in France, where tax records have existed for longer. He shows that income inequality rose until the Great Depression in 1929, before falling sharply for the next 15 years, and then stabilising from the end of World War II through to the mid-1970s. But, after this, inequality has risen sharply, hitting 1929 levels again by 2008.
His central thesis is that, when the rate of return to capital outstrips the rate of growth, inequality tends to rise. This has been the case in the US where wealth has become even more concentrated than in the “old world” of Europe. In 2010, 1% of Americans owned about one-third of all the wealth in the country; in Europe about one-quarter own the same proportion.
Developing countries have also been affected by increasing global inequality. In Argentina, Columbia, China, India, Indonesia and South Africa, wealth is becoming increasingly concentrated at the top.
Piketty’s first chapter, Income and Output, begins with August 2012’s Marikana massacre. “This episode reminds us that the question of what share of output should go to wages and what share to profit – in other words, how should the income from production be divided between labour and capital? – has always been at the heart of distributional conflict.”
Sello Hatang, the chief executive of the Nelson Mandela Foundation, said this week they had been keen to “find a voice who could speak eloquently to a new global economic model and who is well equipped to engage fruitfully with the South African and African political economy today. Professor Piketty is ideal for this purpose.”
David Priestland, a professor of modern history at Oxford University, writing in the Guardian, said: “Big books can make a difference, even in a country notoriously suspicious of intellectuals.
“But they can only have a major impact when they coincide with serious political and economic crises – and so far it seems that 2008 was not serious enough. In the meantime, the left will have to be satisfied with more piecemeal advances.”
- Thomas Piketty will speak at the University of Cape Town on September 30, at the University of the Witwatersrand on October 1 and at the University of Johannesburg (UJ) on October 2. He will then address the annual Nelson Mandela Lecture at UJ on October 3 at 2pm