Thursday, April 24, 2014

Three Prophets of Doom

Thomas Piketty begins his book, Capital in the Twenty-First Century, with a look at some prophets of economic doom: Malthus, Ricardo, and Marx. Their points of view were very different: Malthus and Ricardo feared the social upheaval caused by increasing inequality while Marx cheered it on, but there was a common thread - seemingly ineluctable forces in demography and capitalism that immiserated the poor while increasing the concentration of wealth at the top. All of them ultimately proved wrong - at least in the medium run - for somewhat related reasons: the industrial revolution and the rapid progress of technology.

Of course Marx did ultimately get his revolution, only, as Piketty points out it only happened in the most backward nation in Europe, while the advanced countries found other ways to deal with increasing capital accumulation. Piketty makes the point that all three were severely limited by the paucity of good data on what was happening and what had happened. The centerpiece of his own work is the vast store of detailed economic data that he and his colleagues have assembled.