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Is there any academic economics book that has elicited as much interest in the past decade (and perhaps longer) than Thomas Piketty’s Capital in the Twenty-First Century?

All kinds of friends and colleagues have been asking me about it and sending me links. And, everywhere I turn, there seems to be a new review of the book.

To be honest, I just received my copy of the book. I haven’t read it yet and probably won’t be able to find the time to do so until the semester is over. (But, as I indicated, I will be teaching it in the fall.) So, while I’ll hold off on commenting on the content of the book itself until I’ve had a chance to carefully work my way through it, I do want to mention a couple of things.

First, my sense is the book is generating so much attention precisely because of a certain nervousness out there, the fact that capitalism is facing a legitimacy crisis right now. The capitalists’ project of becoming a universal class seems to have become derailed in the midst of the Second Great Depression, and Piketty’s discussion of the return of inherited wealth in the second Gilded Age speaks directly to that concern.

Second, many of the reviews I’ve read imply—and often explicitly state—that “our” views about capitalism are being challenged by the general rise in inequality and, in particular, by Piketty’s focus on the returns to capital. Paul Krugman’s essay in the New York Review of Books is a good example: “The result has been a revolution in our understanding of long-term trends in inequality.” “This is a book that will change both the way we think about society and the way we do economics.” “We’ll never talk about wealth and inequality the same way we used to.” (Emphasis added in all cases.) And so on.

Excuse me but who is this “we” and “our”? I expect I’ll learn a lot from reading Piketty’s book (especially since it includes such evocative phrases as “the past tends to devour the future”) but, please, there are a lot of us who have been writing and teaching about capital and inequality for a very long time. They are central to how we’ve long understood and analyzed the changing dynamics of capitalist economies. I doubt, therefore, that Piketty’s book will contribute to a revolution in our understanding of long-term trends in inequality or in how we think about society and the way we do economics.

But clearly Piketty’s book may have that effect on how other people make sense of capital and inequality—economists who have spent their careers ignoring what their less-orthodox colleagues have been writing and teaching for many, many years.

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Thousands of workers at a major shoe factory in China, which employs more than 40,000 workers in Dongguan and supplies brands including Nike and Adidas, are striking over social security payments.

Workers at the Yue Yuen factory, in the southern industrial hub Dongguan, are demanding better social insurance and housing fund contributions.

The dispute has been ongoing since early April, with workers reportedly rejecting an offer from the company.

China has faced growing labour strikes in recent years.

The Yue Yuen workers are said to be angered at unpaid social security payments.

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Oklahoma Governor Mary Fallin signed a bill [ht: sm] this past Monday prohibiting any city in the state from establishing mandatory minimum wage and employee benefits, including vacation or sick leave days.

In 2012, 64,000 workers earning the federal minimum wage or less made up 7.2 percent of all hourly paid workers Oklahoma. From 2011 to 2012, the portion of hourly paid workers in Oklahoma who earned at or below the federal minimum wage rose from 6.8 to 7.2 percent. The percentage of workers earning less than the federal minimum rose 1.5 percentage points in 2012 to 3.9 percent, while the share earning exactly the minimum wage fell 1.0 points to 3.3 percent. Oklahoma’s proportion of hourly-paid workers earning at or below the prevailing federal minimum wage ranked third highest among the 50 states and the District of Columbia.

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Once again, this coming fall, I’ll be teaching Karl Polanyi’s The Great Transformation in my Topics in Political Economy course.

It’s a course based entirely on books (plus a few political economy films, starting with Charlie Chaplin’s Modern Times). I teach four classic texts of political economy, starting with Adam Smith’s Wealth of Nations and then moving on to different responses to Smith’s theory of capitalism: by Karl Marx (volume 1 of Capital), Thorstein Veblen (The Theory of the Leisure Class), and finally Polanyi.

I match each classic text with a contemporary one: for example, Deirdre McCloskey’s Bourgeois Virtues with Smith, Stephen Resnick and Richard Wolff’s Knowledge and Class with Marx, and Joseph Stiglitz’s The Price of Inequality with Veblen. Next time, I’m planning to teach Thomas Piketty’s Capital in the Twenty-First Century as the follow-up to Polanyi.

The discussion, of course, gets pretty complicated—since, during the semester, the students learn that the various authors are not only responding to Smith (whose text, they also figure out, has been poorly rendered in their other economics classes), but also to each other. Polanyi with Marx, for example. And changes in the world are making those intellectual exchanges even more interesting, as Robert Kuttner understands:

Looking backward from 1944 to the 18th century, Polanyi saw the catastrophe of the interwar period, the Great Depression, fascism, and World War II as the logical culmination of laissez-faire taken to an extreme. “The origins of the cataclysm,” he wrote, “lay in the Utopian endeavor of economic liberalism to set up a self-regulating market system.” Others, such as John Maynard Keynes, had linked the policy mistakes of the interwar period to fascism and a second war. No one had connected the dots all the way back to the industrial revolution.

The more famous critic of capitalism is of course Karl Marx, who predicted its collapse from internal contradictions. But a century after Marx wrote, at the apex of the post–World War II boom in both Europe and the United States, a contented bourgeoisie was huge and growing. The proletariat enjoyed steady income gains. The political energy of aroused workers that Marx had imagined as revolutionary instead went to support progressive parliamentary parties that built a welfare state, to housebreak but not supplant capitalism. Nations that celebrated Marx, meanwhile, were economic failures that repressed their working classes.

Half a century later, the world looks more Marxian. The middle class is beleaguered. A global reserve army of the unemployed batters wages and marginalizes labor’s political power. Even elite professions are becoming proletarianized. Ideologically, the view that markets are good and states are bad is close to hegemonic. With finance still supreme despite the 2008 collapse, it is no longer risible to use “capital” as a collective noun. The two leading treasury secretaries during the run-up to the 2008 financial crash, Democrat Robert Rubin and Republican Henry Paulson, were both former CEOs of Goldman Sachs. If the state is not quite the executive committee of the ruling class, it is doing a pretty fair imitation.

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Special mention

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It’s tax-paying day for most of us. But, according to the Americans for Tax Fairness, it’s tax-break-and-subsidy day for Walmart and the Walton family.

Walmart and the Walton family receive tax breaks and taxpayer subsidies estimated at more than $7.8 billion a year – that is enough money to hire 105,000 new public school teachers.

Which means Walmart gets higher profits and the Walton family more income and wealth—while we get higher taxes and fewer public services, including fewer public school teachers.

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Special mention

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