Demolishing Piketty

The spectre of Piketty’s book Capital in the Twenty-First Century still stalks world best-seller lists, learned pontification on National Radio, and the wet dreams of Laila Harre and John Minto.

Neither dreams nor pontifications –nor book sales – find themselves encumbered by the realisation that Monsieur Piketty just does not know his subject.

He purports to have written a book on capital and growth, claiming the rise in the former will outstrip the latter, thereby increasing inequality and undercutting wages. What he fails to understand – what he is utterly blind to – is the fact that it is capital itself that pays wages, and makes wage growth and real economic progress possible.

To this fact Monsieur Piketty is fundamentally blind, writing as a consequence a 700-page screed on a subject he knows nothing about, drawing conclusions as a consequence that are entirely erroneous, and making recommendations that would undermine the very growth and wage increases he claims in the book and subsequent interviews to favour.

The good news however, as Ryan McMaken points out, is that George Reisman read Piketty’s Capital so you don’t have to.

It seems Reisman is one of the few people who has actually read it. More good news: Reisman tells you what you need to know in a short and pithy monograph, and not in 700 pages like Piketty. The monograph is available at Amazon and at Reisman’s web site. 

Reisman provides a comprehensive list of topics that gives you the flavour of the demolition:

• Prelude to Piketty: The US Government’s Assault on the American Economic System
• Piketty’s Destructive Program
• Overview of Piketty
• Piketty’s Ignorance of the Role of Capital in Production
• The Actual Role of Capital Accumulation and Technological Progress
• Technological Progress as a Requirement for Capital Accumulation
• The Contribution of a Higher Capital/Income Ratio
• The Relationship between Technological Progress and Capital Accumulation Is Reciprocal
• Piketty’s Theory of Profit
• Piketty’s Fear of Saving and Higher Capital/Income Ratios
• Piketty’s Contradiction on the Productive Contribution of Capital
• Time Preference versus Piketty’s Alleged Limitless Rise in the Capital/Income Ratio
• Contrary to Piketty, Capitalism Progressively Raises Real Wages and Increases the Wage Share of National Income While Reducing the Profit Share
• Higher Aggregate Costs as the Source of Lower and Progressively Falling Unit Costs and Prices
• Piketty’s Failure to Realize that a Higher Capital/Income Ratio Signifies not More Profit but a Still Lower Rate of Profit
• No Tendency toward a Falling Rate of Profit
• The Actual Effects of the Capitalists’ Activities
• Unravelling Piketty’s Confusions: The Increase in the Quantity of Money as the Cause of Continual Net Saving and Net Investment
• Collapse of Piketty’s Alleged “Second Fundamental Law of Capitalism”
• The Connection between Profit and Net Investment: The Net-Investment/Monetary Component in Profit
• The Net-Consumption Component in Profit
• The National-Income/Net-National Product Identity
• Reductions to Consumption
• The Monetary Component in the Rate of Profit Need Not Signify Inflation
• Why Saving in the Real World Is Not Accompanied by a Falling Rate of Profit
• Taxation that Reduces Saving and Investment Increases Profits and Reduces Wages
• Piketty’s Program Would Increase the Amount and Rate of Profit
• For the Capitalists to Cause the Harm Piketty Says they Will Cause, They Would Have to Do the Exact Opposite of What He Fears They Will Do
• Contra Piketty: In Defense of 1,000:1 Income Inequality
• Contra Piketty: The General Interest in the Inequality of Wealth and Income
• Piketty’s Data Are Fundamentally Flawed
• Profit as the Original and Primary Form of Labor Income
• Profits as a Labor Income Not Contradicted by Their Variation with the Size of the Capital Invested
• Economic Inequality and a History of the World in Two Scenes

Read it or buy it now.