Thoughts on Thomas Piketty: There are two kinds of economist

4 July 2014

Thoughts on Thomas Piketty: There are two kinds of economist

Sometimes I feel just like a tee-shirt which has been lying for a long time in the cupboard and has suddenly come back into fashion. Many people have seen how inequality has grown and the consequences this has had for society. Now Thomas Piketty, a French economist, is saying it – in the language of economists. And these huge contradictions are also being taken seriously in politics. Capital in the Twenty-First Century is a classic book on economics, but also an item of clothing that has been taken out of the cupboard at just the right moment.

Ronald van Raak

Opinion as science

You’ll know them well enough, the media-economists who present their opinion as science, referring to economic models. These models start with rational people who have a knowledge of the market and make their choices freely. However, these sort of people don’t exist. Yet politicians base their policies on this, and every process must first be ground in the mills of, in the Netherlands’ case, the Central Planning Bureau.  That leads to scatter charts and snapshots of purchasing power, financial incentives and marketisation, all matters having nothing to do with reality.

Sectarian traits

Nowhere has this characteristic thought been driven so deep as by economists who believe that their models can predict people’s behaviour. This takes on sectarian traits, as the same economists who before the crisis preached their faith in the market continue to do so after the crisis. Piketty goes back to the basics of economic science, by making historical analyses, complemented by insights from other social sciences. Capital in the Twenty-first Century shows amongst other things the development of capital, wealth and incomes.

More stress, less self-confidence

In our country 10% of the population own more than 60% of the wealth; 60% of the population own 1% of the wealth. Hard work carries ever less reward. The differences in income levels grow, as do the differences in health and in life expectancy. In the face of greater inequality of income, people are subject to more stress and decreasing self-confidence, and are liable to be more sceptical and less involved in society. The growing division is also bad for economic growth.

Another kind of economist

Piketty’s Capital  prompted the Netherlands’ Academic Council for Government Policy (WRR) to launch the research project “How unequal is the Netherlands?”, which looks into the results of increasingly inequality. Last Saturday’s SP Council – made up of branch chairs and some ex-officio members, the Party Council is the SP’s supreme decision-making body between national conferences – heard WRR economist Robert Went present and explain the results. I asked him why the economic wonder-doctors could be seen so often in the media, while serious economists such as himself were seen so rarely. Went answered that he usually turned down this sort of invitation, because he only wants to talk about things of which he has an understanding; but that seems to me precisely the reason why he should accept them, and a good reason for journalists henceforth to invite economists of this ilk.  

Ronald van Raak is a Member of Parliament for the SP and writes for ThePostOnline (TPO), where this article first appeared in the original Dutch, on a range of subjects including politics, philosophy and religion.


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