I'm not trained in this field and I have not yet read Piketty's book, so take this all with a grain of salt, but my understanding from the discussion I have read is that Piketty's claim is that, if the rich can multiply their wealth faster than the middle class can become rich, then wealth becomes a hereditary entitlement rather than an incentive for hard work, and the meritocratic aspect of a capitalist system breaks down.

The Marxist thesis is essentially that the bourgeoisie (the rich) exploit the bourgeoisie because they generate more value from the proletariat's work than they pay in wages. Even if one accepts this line of reasoning, it is sort of orthogonal to Piketty's argument. One could imagine a society where the bourgeoisie exploit the proletariat, but, with intelligence, vision, hard work, whatever, the workers can still become members of the bourgeoisie, i.e., the "American dream." Piketty says that, under certain economic conditions, even this becomes impossible.

The reason this book is important is that he's shown the r > g idea with data. As Picketty mentions in that article, it's a field of research that's an "academic no-man's land." It's traditionally too "economic" for history and too "historical" for economics.

Marx was espousing a theory. He wrote a manifesto. This is based on data that no one else has bothered to look into.

(I've only started the book.) Its claim is: under reasonable assumptions, inequality increases over time under capitalism.

Yes, Marx argued this; Piketty has an elegant new analysis supported by a lot of newly collected data. The book is in part a rebuttal to Simon Kuznets and others, who argue (plausibly) that capitalism tends to decrease inequality in the long run.

I suspect a great many supporters of capitalism accept inequality as a part of it as well. They may even argue it's a feature, not a bug.

It is silly to talk about equality of capital. Imagine a world in which everyone is equal.

And imagine a philosophical man or woman, gazing up at the clear blue sky and being filled with wondrous thoughts that bring her or him great utility. Thoughts that no amount of money can buy. A simpleton can see nothing there. How can we call this equal? The very blue sky above us is unequal.

But that is the sky - the thoughts come from within. True, but what is a javascript console, just some pale blue sky, to be filled with whatever you want. The simpleton can not derive any utility. A programmer can create anything. How can we call that equal?

But that is just some writing.

And if we let this person publish those thoughts, that script, that site? Then the simpleton can have nothing - the programmer, anything. How can that be equal?

There is no such thing as equality. There is only equal opportunity. Today, more than ever, nobody needs vast riches to achieve that. Perhaps everyone should have the chance to be well-educated, to learn whatever is within their capabilities, to choose to train for the best profession they can qualify for. But that is not "equality", in the sense discussed here.

Mark my words: so long as man can gaze up at a clear blue sky, as long as people are allowed to be friends and to talk, to think and to learn, to create, to share, to communicate - actual equality is a silly, misguided notion.

Look at opportunities - rather than capital results. Forget equality of capital, and look at equality of opportunity.

I'm only part way through the book, but to give a counterpoint from it, one of Piketty's examples is from a Balzac story, which describes a situation where basically those in the top 1% of jobs earn nothing compared to those with the top 1% of accumulated capital.

So imagine if you can't even earn money through a good invention because the money would go to the project's financiers instead of you. This is the sort of world Piketty is worried will return and stifle invention.

What kinds of opportunities? Who gets to decide? Should everyone be given some prime investment opportunities and the ability to make a lifechanging investment? That way, your entire decision and the outcome is based on you (including realizing that the market may or may not be rigged), but there's absolutely no risk to your current life if you make a bad investment choice. That's not an opportunity many people have.

You're still drawing lines in the sand whether you're talking about capital or opportunity equality. 'How much inequality is tolerable to the economy?' and other such questions. I haven't studied American capitalism much, but any system becomes weird when you can use/abuse the rules of the system to change the rules of the system. Eventually you start calling it something else.

One of the major points in the interview/book is the amount of inherited wealth, so to turn your example around, the programmer gets decent pay after building something of value while the simpleton who has contributed nothing has a mansion, several vacation homes and a fleet of vehicles. There can be some natural resentment when hearing that story and it's going to be a focus of the inequality debate.

Equality of opportunity was lost once pure ideas become patentable, and competition became a race for the largest pool of obscured threats backed by government force.

Well, it's a 700 page book that (I'm guessing) few of the reviewers have read, so it's entirely possible that you and many others are missing something.

That said, if the main point of a huge book, even among many other smaller points, is an observation so ho-hum that it would make a college freshman's eyes roll, something else is going on. Maybe he proved his obvious thesis in an unusually gripping way. Maybe he proved the obvious threat to democracy in an unusually gripping way. (But why would it matter? Does anyone still think this is a democracy?)

Or maybe all the lefty economists decided implicitly to push this particular warmed-over cliche as a great innovation. Who knows.

I'm still looking for a proof that income inequality is a "threat" to "democracy"... Or as he put it, the "meritocratic values of democracy". As if we have anything remotely resembling a "meritocratic" society, even if it was a democratic one.

The threat is of wealth becoming political power and the government becoming an oligarchy... which has happened in the US, as shown by the recent study Northwestern and Princeton. When the few have the majority of the influence, that is no longer democracy, and there is no reason to believe that the control exerted by the wealthiest players is made for the benefit of those at the bottom. This a flaw of government more than of capitalism itself, but it's a flaw nonetheless, seeing as the two — capitalism and government — are intertwined.

I agree with you, of course. Though I'd say it's not just wealth, but political clout and "connectedness" as well. There are quite a few influential community/union leaders that aren't all that wealthy, but command a great deal of political power. Both by virtue of the people who they "lead" and the contacts they have in various levels of government.

What I'm trying to point out with the above is that: We are already assuming that the wealthy have a selfish or non-altruistic motive behind their actions, simply by virtue of them having wealth. If we go down that route, then we essentially need to admit that the problem isn't that the wealthy are selfish, but that their wealth enables them to exert that selfishness much more.

You are most certainly right that this is a flaw of government, or democracy in general. However, it is not a flaw of capitalism. It is, in fact, a virtue of capitalism: that money represents our "vote". But that vote doesn't magically stay with us, it get's transferred every time we "vote", or buy things.

</rant>

They don't have to be intertwined, Anarchocapitalism seeks to do away with the institution of political authority entirely to deal with this problem, for example. This absolutely terrifies the kinds of people who don't understand that the state is the cause of the problems with capitalism because they always attempt to address the problems by handing more political authority to the state, which sells it off in a process of regulatory capture.

You assume that these people are trying to address problems with capitalism and not, you know, quality of life. That's exactly like saying that an atheist is simply angry at God when the majority of atheists don't even think God exists.

> As if we have anything remotely resembling a "meritocratic" society, even if it was a democratic one.

It's not a threat in that sense. Income inequality has existed since the concept of income was relevant. Democracy, as viewed through economics, is part of the long march towards removing that inequality. It's less accurate to say that democracy is threatened by income inequality as it is to say that income inequality is threatened by a well-implemented democracy.

A well-implemented democracy--and I use this qualifier emphatically because I hardly consider America to be one; I barely consider Scandinavian countries well-implemented--depends on equal voice. Equal voice depends on two things: minimum thresholds of education and the strong dissemination and accessibility of information. Or shorter, understanding proposed policy and being able to talk about it.

These dependencies do not function cooperatively with income inequality. Look for people who argue that laws are overly arcane and complex precisely in order to keep lawyers in business. They have a point. Notice that tax code reform is opposed by companies making software to simplify it. Notice the sheer quantity of disillusionment among the population for the ability to do anything. Look at that iconic Tea Party sign demanding that the government leave a government program alone. Keeping income inequality in place is an important profit driver; it is rational to become a monopoly, to have full control over supply of a product, to gouge prices. The paradox of the price mechanism is that, when you subvert it, it reinforces that subversion. It only becomes rational to encourage competition when you look outside of your own self-interest.

The practice of maintaining any income inequality is, at the end of the day, kicking the feet out from underneath democracy. It's by no means a direct attack; it's just intelligent self-defense.

Piketty proves his point using data ( or should that be Data? ), so it's a bit harder to argue that it's just perception and that the losers in the game of life are merely angry that they were not born at the top of the meritocracy.

It's the difference between "it sure looks as though the lord of the manor is earning more than he deserves" and, "here are the books showing the lord of the manor took in 2 pounds of rent for every pound that was his by right.".

And Piketty is not even touching on the fact that we know that our financial elites basically rigged the game in 2008.

I am presuming the title of the book is a reference to Marx, although I haven't read it yet...