O que ja se inventou de util no modo de producao inventivo do capitalismo?

Economists Debate: Has All the Important Stuff Already Been Invented?

Northwestern University Colleagues Have Opposing Views of 21st Century Economy

Timothy Aeppel

WALL STREET JOURNAL, June 15, 2014

Economic odd couple Robert Gordon, left, and Joel Mokyr encapsulate the debate on the future of innovation. Rob Hart for The Wall Street Journal

EVANSTON, Ill.— Robert Gordon, a curmudgeonly 73-year-old economist, believes our best days are over. After a century of life-changing innovations that spurred growth, he says, human progress is slowing to a crawl.

Joel Mokyr, a cheerful 67-year-old economist, imagines a coming age of new inventions, including gene therapies to prolong our life span and miracle seeds that can feed the world without fertilizers.

These big-name colleagues at Northwestern University represent opposite poles in the debate over the future of the 21st century economy: rapid innovation driven by robotic manufacturing, 3-D printing and cloud computing, versus years of job losses, stagnant wages and rising income inequality.

The divergent views are more than academic. For many Americans, the recession left behind the scars of lost jobs, lower wages and depressed home prices. The question is whether tough times are here for good. The answer depends on who you ask.

"I think the rate of innovation is just getting faster and faster," Mr. Mokyr said over noodles and spicy chicken at a Thai restaurant near the campus where he and Mr. Gordon have taught for four decades.

"What's the evidence of that?" snapped Mr. Gordon. "There isn't any."

The men get along fine when talk is limited to, say, faculty gossip. About the future, though, they bicker constantly. When Mr. Mokyr described life-prolonging medical advances, Mr. Gordon cut in: "Extending life without curing Alzheimer's means people who can walk but can't think."

Mr. Gordon landed at Northwestern from the University of Chicago in the fall of 1973, a year before Mr. Mokyr arrived there from Yale after finishing his Ph.D. Their tit-for-tat repartee makes them popular speakers—for economists, at least. Mr. Gordon recently began charging as much as $20,000 for U.S. appearances—a fee, he said, dictated by his new booking agent.

Even there, the men are at odds. "I am a rank-and-file academic, not a basketball star," Mr. Mokyr said. "I have neither a literary agent nor a speaker bureau. I charge what they pay me. If it's not enough I don't go."

The professors headlined a Bank of Korea event in Seoul earlier this month. "We always go mano-a-mano," Mr. Mokyr said. "But we often end up talking about different things. Bob's a macroeconomist, I'm an economic historian."

Mr. Mokyr has long studied how new tools have led to economic breakthroughs. For example, how the development of telescopes allowed for rapid advances in astronomy. History makes him certain his colleague is wrong.

Mr. Gordon's ideas, in fact, fly in the face of modern economic orthodoxy. Since Nobel economist Robert Solow first argued in the 1950s that growth was driven by new technology, most economists have embraced the idea. Progress may be uneven, according to this view, but there is no reason to expect the world to run out of ideas.

"Bob says the low-hanging fruit has been picked, because we won't invent indoor plumbing again," Mr. Mokyr said. In speeches, Mr. Gordon often displays images of a flush toilet and iPhone and asks: Which would you give up?

Mr. Mokyr said many economists before Mr. Gordon have proclaimed the end of progress, but these pessimists have always been proven wrong. It was a popular theme during the Depression, he said, but modern economists now recognize the 1930s as a period of rapid technological progress with such advances as the development of jet engines and radar.

Today, Mr. Mokyr said, fast computing is a new tool that will open the way to new inventions in the future.

The darkness of Mr. Mokyr's family history contrasts with his optimism for the future. His parents were Dutch Jews who survived the Holocaust. His father, a civil servant, died of cancer when Mr. Mokyr was a year old. He was raised by his mother in a small apartment in the port city of Haifa in Israel. "My mother was not an optimist," he said. "She had lived a very tough life."

Mr. Gordon, the more famous of the two men, has the credentials to buck conventional wisdom. His parents and a brother were Ph.D. economists. His father, an expert on business cycles, taught at the University of California, Berkeley, for decades. Business Week called them "The Flying Wallendas of Economics," after the acrobatics family. Mr. Gordon wrote a widely used macroeconomic textbook and has served for more than three decades on a committee of the National Bureau of Economic Research that determines when recessions begin and end.

If anything, his family should have made him an optimist. Mr. Gordon's father grew up grindingly poor, at one point supporting three younger brothers after his own father died; his eventual success mirrored the larger transformation of the U.S. into the world's richest country.

"His generation saw the move from crowded tenements in the 1920s to suburbia in the 1950s—with everyone having a yard and a car," Mr. Gordon said, a leap showing how much progress has since slowed.

Mr. Gordon sees a hobbled U.S. economy ahead. Americans are getting older, leaving too few workers to support the aging population. The problem is even worse in other Western economies.

An aging citizenry is among a list of troubles, including the declining share of working-age men with jobs; stagnant rates of Americans earning college degrees; jobs lost abroad and high government debt. The biggest obstacle, he said, is growing income inequality.

To compensate, Mr. Gordon said, economies need technological advances. The problem is that the biggest breakthroughs—like electrification or the discovery of antibiotics—are behind us. Electricity changed how people lived and worked, and it spawned hundreds of new industries. The technology that allowed people to communicate instantly or travel quickly over long distances were 19th- and 20th-century innovations.

More recent inventions—including the Internet—won't pack the same punch, he said: "The rapid progress made over the past 250 years could well turn out to be a unique episode in human history."

Cellphones, he said, are just a refinement of the telephone. "Look at what an ideal kitchen looked like in 1955—it's not that different than today," Mr. Gordon said. "It's nothing like moving from clothes lines to clothes dryers."

Cars also illustrate how rapid advances have petered out in recent decades. A century ago, the Ford Model T, with its 20-horse-power engine, reached a top speed of 45 miles an hour. By the mid-1950s, Mr. Gordon said, his father had a Chevrolet station wagon that was five times as powerful. More than 50 years later, Mr. Gordon said, he has a Subaru station wagon that is comparable with his father's Chevy in size, speed and cargo capacity.

Mr. Gordon said his ideas began taking shape between semesters at graduate school. He worked during the summer of 1965 for a team of economists analyzing the dazzling productivity growth that began around 1920 and ran through World War II and the postwar boom.

Except for an upturn in the 1990s, growth has been tepid ever since.

"Everyone has looked for a big overarching factor to explain this," he said. "But it occurred to me, it could be as simple as that we'd run out of the great inventions."

Mr. Gordon said his ideas evolved from there. In 2000, he published a paper saying that computer technology, hailed as the driver of the "new economy," was far less impressive than earlier big inventions. He generated more controversy with a 2012 academic paper titled "Is U.S. Economic Growth Over?"

The paper included a dire prediction: The economy will grow less than half as fast as the remarkable 2% average it notched between 1870 and 2007. "Americans got used to their standard of living doubling from that of their parents. No more," he told investment managers in Germany this year:

If he is right, the standard of living for the average American—measured in per capita income—will in the future take 78 years to double, compared with the 35 years it took between 1972 and 2007. The wealthiest 1%, on the other hand, could double their standard of living in as little as 23 years, he said.

Other economists have voiced worries about stagnating growth, but none quite as sweeping. Tyler Cowen of George Mason University in a 2011 book described a technological plateau that slowed U.S. growth. Mr. Cowen has softened his stance lately, noting that such developments as the shale gas boom have improved the long-term outlook.

Larry Summers, former chief economic adviser to President Obama, told a gathering of the International Monetary Fund last year that the U.S. and other advanced economies faced a prolonged period of extremely slow growth known as secular stagnation.

But in an interview, Mr. Summers said he didn't share Mr. Gordon's belief that innovation has stalled. He agreed, however, that the benefits of meager economic growth "will not be hugely felt by the middle class."

Other experts side with Mr. Mokyr. Timothy Taylor, an economist at Macalester College and editor of the Journal of Economic Perspectives, said, "People like Bob Gordon are making an argument that's been heard repeatedly for the last 150 years."

Former Fed Chairman Ben Bernanke, in a commencement speech last year, told graduates of Bard College at Simon's Rock, "Both humanity's capacity to innovate and the incentives to innovate are greater today than at any other time in history."

Criticism from Mr. Mokyr and others has prompted Mr. Gordon to focus more on economic headwinds. Even if the pace of innovation remains unchanged, he said, current obstacles are enough to support his projections.

Mr. Gordon is now writing "Beyond the Rainbow: The Rise and Fall of Growth in the American Standard of Living," one book in series on economic history being overseen by Mr. Mokyr as chief editor.

Much of Mr. Gordon's work focuses on an economy's output. Mr. Mokyr, meanwhile, is more interested in how new inventions improve the quality of life in ways that don't show up in traditional measures: new medicines that treat chronic pain or allow older people to stay active years longer. A hip replacement, he said, let him keep riding his bike to and from work.

"For Bob, it's all about the measure of input and output—especially output," said Mr. Mokyr. That is why the aging population is such a big problem for Mr. Gordon, since retired people stop producing.

Mr. Gordon countered that many of the innovations Mr. Mokyr anticipates—such as new technology to clean air and water pollution—will solve problems created by past economic growth. Those shouldn't be counted the same way as breakthroughs that add to output, he said.

"Maybe the problem is that we didn't measure growth in the past correctly," Mr. Mokyr retorted, "because we didn't account for the costs."

The two men agree on one point. "One of the main missions I have in life is to point out to my students how lucky they are to be born in the 20th century," Mr. Mokyr said. "Compared to what life was like 100 or 200 years ago, we're incredibly fortunate."

—Michael J. Casey contributed to this article

A transicao do socialismo ao capitalismo na Europa oriental: grandes e pequenas transformacoes - Anders Aslund

Apenas um extrato deste relato sobre importante conferência-balanço sobre a passagem do comunismo ao (semi-, em alguns casos) capitalismo, que merece todo o destaque, por retratar uma parte da terrível realidade de países ainda dominados pela máfia que sobrou do antigo regime e seus apparatchiks reconvertidos no capitalismo promíscuo (às vezes criminoso):

A striking insight at the conference was the importance of disrupting the old communist elites, who were corrupted by their hypocrisy of obedience to an ideology that nobody believed in. The worst part of the old elite has turned out to be the secret police, being the least transparent, the most lawless, the most ruthless, and also the most international. The continuing power of secret police networks is particularly apparent in Russia and Bulgaria.

Um bom resumo, esperando que saia logo o livro: The Great Rebirth: Lessons from the Victory of Capitalism Over Communism.

Paulo Roberto de Almeida

Transition in Perspective: 25 Years after the Fall of Communism

by Anders Aslund | 
Petersen Institute for International Economics, May 15th, 2014

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Twenty-five years after the fall of communism, a clear consensus has arisen about what kind of economic policies were most successful in helping countries make the transition into stable and prosperous market economies. Countries with visionary leadership, willing to take major and comprehensive steps rather than incremental reforms, achieved the best outcomes, and privatization of state-owned enterprises and deregulation were essential to their success. But another consensus exists that is more ominous. Recent developments, notably the renationalization in Russia and the reversal of both economic and democratic reforms in Hungary, have humbled reformers and cast a shadow over the legacy of the transition a quarter century ago.
These were some of the conclusions of a two-day symposium of political leaders, policymakers, and scholars to assess lessons learned and the road ahead. The conference—entitled "Transition in Perspective" and held in Budapest, Hungary, on May 6–7, 2014—drew an extraordinary group of former leading policymakers and specialists from Russia, Ukraine, Poland, Hungary, the Czech Republic, Slovakia, Latvia, Bulgaria, Romania, Georgia, and other countries. It was organized by Simeon Djankov and me of the Peterson Institute for International Economics, together with Wolfgang Reinicke of the School of Public Policy at Central European University. Participants discussed 10 country studies and 5 theme papers in 8 different sessions on such aspects as the future of Ukraine, why many economic reforms in Russia and elsewhere are being reversed, and the role of privatization of government enterprises. We plan to produce a book of essays from the conference later this year, tentatively entitled The Great Rebirth: Lessons from the Victory of Capitalism Over Communism.
Among the participants (photographed above) were Leszek Balcerowicz, Vaclav Klaus, and Anatoly Chubais, architects of economic reform in the 1990s in Poland, Czechoslovakia, and the Czech Republic and Russia respectively. (See the conference program attached [pdf].) Although the discussions were off-the-record, I can offer a brief summary of the proceedings based on permission obtained from the participants.
Several speakers pointed out that overall transition can be considered a success in terms of economic performance because each subregion has increased its share of the global economy. Five countries have not reached their GDP per capita level of 1990 as yet, however. Daniel Treisman, political science professor at the University of California, Los Angeles, noticed that countries have tended to converge with their neighborhoods: Central and Eastern Europe has converged with the European Union, and Central Asia with its neighbors Afghanistan and Pakistan. As a whole, the conference discussed the rise of anti-capitalist and nationalist sentiments in Russia and Hungary but also new opportunities for reform, especially in Ukraine.
Poland and Estonia stand out as the greatest economic and political successes today. Polish reform leader, twice finance minister and also chairman of the central bank, Leszek Balcerowicz, repeated his longstanding contention that radical approaches work the best, noting: “A risky strategy is always better than a hopeless one.” In order to work, reforms need to move on several tracks: deregulation, macroeconomic stabilization, privatization, and institution building.
Hungary was a reform leader together with Poland in the 1990s, but since 2001 the country has regressed. Former Finance Minister Lajos Bokros and preeminent Hungarian economist Professor Janos Kornai discussed this disturbing trend. In the early 1990s, Kornai coined the phrase “premature social welfare state” for Hungary, describing its excessive tax burden and social expenditures. Today these attributes have resulted in low growth and high public debt, although Hungary developed excellent European institutions. Since 2010, the accumulated pension funds have been abolished or nationalized, and the government is creating new monopolies and nationalizing enterprises. Predatory taxes are chasing away foreign investors, and utility prices are being fixed at low levels. Is this a temporary setback or a secular decline? A Hungarian in the audience argued that the change has been profound. Half the Hungarians reject modernity in all its forms, and 60 percent are strongly dependent on the state and support a paternalistic society. The April 2014 election results reflected a revolt of Hungarian villagers against urban elites.
Former Czech Prime Minister and President Vaclav Klaus laid out his case for radical reform and stated that one prerequisite for reform was the unconditional liquidation of the communist system as a whole. He said the key for success was avoiding rent seeking and gradualism and to ensure that political and economic reforms move in parallel. The decisive part of the transition was the privatization of all state-owned firms.
Former Slovak Finance Minister Ivan Miklos (1998–2006) explained how Slovakia had lagged in economic reforms in the 1990s but caught up by adopting reforms in 2003–04, producing the highest economic growth in Central and Eastern Europe in 2000–2010. The reform breakthrough had been preconditioned on the elaboration of a reform program in opposition, the propagation of reform ideas, and finally swift implementation when the political preconditions existed. Miklos emphasized the importance of political leadership, referring to Klaus and his Prime Minister Mikulas Dzurinda. He quoted Benjamin Disraeli: “Whereas politicians care only about the next election, statesmen think of the next generation.”
A striking insight at the conference was the importance of disrupting the old communist elites, who were corrupted by their hypocrisy of obedience to an ideology that nobody believed in. The worst part of the old elite has turned out to be the secret police, being the least transparent, the most lawless, the most ruthless, and also the most international. The continuing power of secret police networks is particularly apparent in Russia and Bulgaria.
Both Treisman and Gerard Roland, professor of economics and political science at the University of California, Berkeley, showed in their papers that democracy and market economic reform go together. Treisman argued that the causality runs from democracy to market reforms, rebutting arguments that radical democracy and market economic reform are inherently incompatible. Leadership matters, they agreed. The three leaders who stood out for that quality were Yegor Gaidar of Russia, Dimitar Popov in Bulgaria, and Balcerowicz of Poland. Roland and Oleh Havrylyshyn, former deputy finance minister for Ukraine, emphasized the positive impact of a strong civil society and national cohesiveness.
Will reforms in Ukraine succeed despite disputes with Russia over borders? The case of Georgia may be instructive. The near-failure of the Georgian state made radical reforms even more necessary. The main impetus for reform must be domestic, on the other hand. Little can be done without a parliamentary majority. The European Union and the International Monetary Fund are important tools, but they cannot do the job on their own. The European Union has proven most effective in requiring adjustments before a country accedes to it. A dividing line persists between the Central and East European countries that have become members of the European Union or are on that track and the former Soviet republics, which are far more corrupt. Though among the latter, Georgia greatly improved after its Rose Revolution in 2003 and to some extent so did Moldova while adjusting to the European Union.
While the importance of deregulation and macroeconomic stabilization is unquestioned, issues surrounding privatization remain controversial, raising concerns about fairness, justice, and trust because of the way that state-owned enterprises have been handed to oligarchs and insiders in too many cases. Russia and Hungary stand out as examples of the fragility of the post-communist transition and the fact that privatization can be reversed. Hungary and Kazakhstan have nationalized all the mandatory private pension savings, and Poland has nationalized half of these funds. Many countries have reduced the financing of mandatory pension savings, and Bulgaria has frozen the gradual increase in the retirement age.
One lesson from the transition is that economic policymakers need to explain and disseminate their ideas more intensely, using old and modern social media. Economists must be able to sell their proposals to a broad public. Few achievements are safe from being reversed. As the grand old man of East European economics, Professor Kornai, pointed out: “Anything can happen. Low probability events do occur.”

Posted in Global Financial Crisis

O capitalismo e a desigualdade: um debate nao isento de equivocosconceituais

Quando as pessoas argumentam que o capitalismo causa desigualdades, elas estão pretendendo uma contradição nos termos: um sistema de moto perpetuo, ou seja, a criação de riqueza sem as alavancas da criação de riquezas, uma impossibilidade prática.

Paulo Roberto de Almeida 

The Opinion Pages|CONTRIBUTING OP-ED WRITER

Capitalism vs. Democracy

Thomas B. Edsall

The New York Times, January 29, 2014

Thomas Piketty’s new book, “Capital in the Twenty-First Century,”described by one French newspaper as a “a political and theoretical bulldozer,” defies left and right orthodoxy by arguing that worsening inequality is an inevitable outcome of free market capitalism.

Piketty, a professor at the Paris School of Economics, does not stop there. He contends that capitalism’s inherent dynamic propels powerful forces that threaten democratic societies.

Capitalism, according to Piketty, confronts both modern and modernizing countries with a dilemma: entrepreneurs become increasingly dominant over those who own only their own labor. In Piketty’s view, while emerging economies can defeat this logic in the near term, in the long run, “when pay setters set their own pay, there’s no limit,” unless “confiscatory tax rates” are imposed.

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Piketty’s book — published four months ago in France and due out in English this March — suggests that traditional liberal government policies on spending, taxation and regulation will fail to diminish inequality. Piketty has also delivered and posted a series of lectures in French and English outlining his argument.

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Fig. 1: After-tax rate of return vs. growth rate at the world level from Antiquity until 2100. Thomas Piketty

Conservative readers will find that Piketty’s book disputes the view that the free market, liberated from the distorting effects of government intervention, “distributes,” as Milton Friedman famously put it, “the fruits of economic progress among all people. That’s the secret of the enormous improvements in the conditions of the working person over the past two centuries.”

Piketty proposes instead that the rise in inequality reflects markets working precisely as they should: “This has nothing to do with a market imperfection: the more perfect the capital market, the higher” the rate of return on capital is in comparison to the rate of growth of the economy. The higher this ratio is, the greater inequality is.

In a 20-page review for the June issue of the Journal of Economic Literature that has already caused a stir, Branko Milanovic, an economist in the World Bank’s research department, declared:

“I am hesitant to call Thomas Piketty’s new book Capital in the 21st Century one of the best books in economics written in the past several decades. Not that I do not believe it is, but I am careful because of the inflation of positive book reviews and because contemporaries are often poor judges of what may ultimately prove to be influential. With these two caveats, let me state that we are in the presence of one of the watershed books in economic thinking.”

There are a number of key arguments in Piketty’s book. One is that the six-decade period of growing equality in western nations – starting roughly with the onset of World War I and extending into the early 1970s – was unique and highly unlikely to be repeated. That period, Piketty suggests, represented an exception to the more deeply rooted pattern of growing inequality.

According to Piketty, those halcyon six decades were the result of two world wars and the Great Depression. The owners of capital – those at the top of the pyramid of wealth and income – absorbed a series of devastating blows. These included the loss of credibility and authority as markets crashed; physical destruction of capital throughout Europe in both World War I and World War II; the raising of tax rates, especially on high incomes, to finance the wars; high rates of inflation that eroded the assets of creditors; the nationalization of major industries in both England and France; and the appropriation of industries and property in post-colonial countries.

At the same time, the Great Depression produced the New Deal coalition in the United States, which empowered an insurgent labor movement. The postwar period saw huge gains in growth and productivity, the benefits of which were shared with workers who had strong backing from the trade union movement and from the dominant Democratic Party. Widespread support for liberal social and economic policy was so strong that even a Republican president who won easily twice, Dwight D. Eisenhower, recognized that an assault on the New Deal would be futile. In Eisenhower’s words, “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear from that party again in our political history.”

The six decades between 1914 and 1973 stand out from the past and future, according to Piketty, because the rate of economic growth exceeded the after-tax rate of return on capital. Since then, the rate of growth of the economy has declined, while the return on capital is rising to its pre-World War I levels.

“If the rate of return on capital remains permanently above the rate of growth of the economy – this is Piketty’s key inequality relationship,” Milanovic writes in his review, this “generates a changing functional distribution of income in favor of capital and, if capital incomes are more concentrated than incomes from labor (a rather uncontroversial fact), personal income distribution will also get more unequal—which indeed is what we have witnessed in the past 30 years.”

Piketty has produced the chart at Figure 1 to illustrate his larger point.

The only way to halt this process, he argues, is to impose a global progressive tax on wealth – global in order to prevent (among other things) the transfer of assets to countries without such levies. A global tax, in this scheme, would restrict the concentration of wealth and limit the income flowing to capital.

Piketty would impose an annual graduated tax on stocks and bonds, property and other assets that are customarily not taxed until they are sold. He leaves open the rate and formula for distributing revenues.

The Piketty diagnosis helps explain the recent drop in the share of national income going to labor (see Figure 2) and a parallel increase in the share going to capital.

Piketty’s analysis also sheds light on the worldwide growth in the number of the unemployed. The International Labor Organization, an agency of the United Nations, reported recently that the number of unemployed grew by 5 million from 2012 to 2013, reaching nearly 202 million by the end of last year. It is projected to grow to 215 million by 2018.

Piketty’s wealth tax solution runs directly counter to the principles of contemporary American conservatives who advocate antithetical public policies: cutting top rates and eliminating the estate tax. It would also run counter to the interests of those countries that have purposefully legislated low tax rates in order to attract investment. The very infeasibility of establishing a global wealth tax serves to reinforce Piketty’s argument concerning the inevitability of increasing inequality.

Some Liberals are none too happy with Piketty, either.

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Fig. 2: Nonfarm Business Sector: Labor Share U.S. Department of Labor

Dean Baker, one of the founders of the Center for Economic and Policy Research, wrote me in an email that he believes that Piketty “is far too pessimistic.” Baker contends that there are a host of far less ambitious actions that might help to ameliorate inequality:

“Is it really implausible that we would ever see any sort of tax on finance in the U.S., either the financial transactions tax that I would favor or the financial activities tax advocated by the I.M.F.?”

Baker also noted that “much of our capital is tied up in intellectual property” and that reform of patent laws could serve both to limit the value of drug and other patents and simultaneously lower consumer costs.

Lawrence Mishel, the president of the Economic Policy Institute, responded to my email asking for his take on Piketty:

“We’d take the perspective that this phenomenon is related to the suppression of wage growth so that policies which generate broad-based wage growth are an antidote. The political economy is such that the political power to enact those taxes also requires a mobilized citizenry and institutional power, such as a robust labor movement.”

Daron Acemoglu, a more centrist economist at MIT, praised Piketty’s careful acquisition of data, as well as his emphasis on the economic forces and political conflicts over distribution that shape inequality. In an email, Acemoglu went on to say:

“Part of his interpretation I do not share. Piketty argues that there is a natural tendency for high inequality in ‘capitalist’ economies (the term capitalist is not my favorite) and that certain unusual events (world wars, the Great Depression and policy responses thereto) temporarily reduced inequality. Then both earnings inequality and inequality between capital and labor have been reverting back to their ‘normal’ levels. I don’t think that the data allow us to reach this conclusion. All we see is this pattern of fall and rise, but so many other things are going on. It is consistent with what Piketty says, but it is also consistent with certain technological changes and discontinuities (or globalization) having created a surge in inequality which will then stabilize or even reverse in the next several decades. It is also consistent with the dynamics of political power changing and this being a major contributor to the rise in inequality in advanced economies. We may be seeing parts of several different trends underpinned by several different major shocks rather than the mean-reverting dynamics following the shocks that Piketty singles out.”

There is, however, significant liberal applause for Piketty.

Richard Freeman, an economist at Harvard who specializes in inequality, unions and employment patterns, wrote me by email:

“I am in 100 percent agreement with Piketty and would add that much of labor inequality comes because high earners got paid through stock options and capital ownership.”>

Freeman and two colleagues, Joseph Blasi and Douglas Kruse, professors at the School of Labor and Management Relations at Rutgers, contend in their 2013 book, “The Citizen’s Share: Putting Ownership Back into Democracy,” that they have an alternative to a global wealth tax. They argue that:

“The way forward is to reform the structure of American business so that workers can supplement their wages with significant capital ownership stakes and meaningful capital income and profit shares.”

In other words, let’s turn everyone into a capitalist.

Piketty does not treat worker ownership as a solution, and he is generally dismissive of small-bore reforms, arguing that they will have only modest effects on economic growth worldwide, which he believes is very likely to be stuck at 1 to 1.5 percent through the rest of this century.

Piketty’s joins a number of scholars raising significant questions about how the global economic system will deal with such phenomena asrobotics, the hollowing out of the job market, outsourcing and global competition.

His prognosis is extremely bleak. Without what he acknowledges is a politically unrealistic global wealth tax, he sees the United States and the developed world on a path toward a degree of inequality that will reach levels likely to cause severe social disruption.

Final judgment on Piketty’s work will come with time – a problem in and of itself, because if he is right, inequality will worsen, making it all the more difficult to take preemptive action.