You Might Call It Wealth

Intellectuals and scholars reach once again for the rudder of a drifting American liberalism

Oriane Stender, untitled dollar drawing 8.18.2. 2015, ink on dollar bill. 2 3/8" × 6 1/8”. Courtesy of the artist.

Heather Boushey, J. Bradford DeLong, and Marshall Steinbaum, eds. After Piketty: The Agenda for Economics and Inequality. Harvard University Press, 2017.

What aspects of the economy are under our control? According to John Maynard Keynes, if interest rates are low enough to keep investment flowing and consumer spending high enough to maintain sales, everybody can be put to work. Businessmen will never lose their confidence, and their property will never be idle. The economy, in other words, could be manipulated to yield desired outcomes: manageable growth, full employment, and the boom and bust of a business cycle smoothed out of existence.

During World War II and the three decades that followed — the so-called golden age of capitalism — American and British economics departments reworked Keynes’s observations into a formula for endless expansion. Under the right conditions, they argued, society could create as much wealth and income as it wanted. Fiddle with taxes correctly and you’ll ensure the right amount of private savings and investment. Growth could be “balanced,” each group’s share stable into the future. It was like calculating the propulsion for rocket trajectory: adjustment by economic telemetry would guarantee optimal flight. These were the tenets of growth economics, a field of academic inquiry fused with policy proposals that would come to define midcentury liberalism.

More than half a century later, Thomas Piketty’s 2013 Capital in the Twenty-First Century is the discipline’s most lauded, yet apostate, progeny. As the editors of After Piketty: The Agenda for Economics and Inequality write, Piketty has continued the tradition of growth economics — but in a backward way. Unlike his predecessors, Piketty doesn’t aim to provide policy tools for managing the expansion of the economy. Instead, his data and equations explain why worsening inequality is inevitable and normal. No matter what tools you use, Piketty suggests, growth may never deliver equality. Wealth always accumulates at a greater rate than that of economic growth, an argument he made famous with the formula r>g (in which r is the rate of return on capital and g is the rate of economic growth generally). Absent a world war or unplanned cataclysm, market economies as a rule bestow increasing largesse on a minuscule portion of the population while leaving most people comparatively poor. We can’t control the distribution of growth, Piketty says; we can only “counter the effects of this implacable logic” by making the post-tax distribution of wealth and income more equal.

Although Piketty’s ideas come out of the confident tradition of postwar growth economics, his provocations

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