Sly, Manipulative, Smug Bourgeois Optimism (On D. McCloskey Article about the book by T. Piketty «Capital in the XXI century»)

Abstract

The book T. Piketty “Capital in the 21st century” is devoted to the growth of inequality, which is observed in rich Western countries, since the 80's last century. Piketty uses a two-factor model of economic growth, distributing GDP between labor and capital. Return on equity profitability, measured in percents. Thus, if the growth rate of the population that determines the growth rate of employment is less or equal to the growth rate of capital, and the overall rate of GDP growth is lower than the return on capital, the share of labor (wages) in GDP is reduced, and the share of income from capital is growing. D. McCloskey sharply criticizes both the methods of analysis used by T. Piketty, and the results of his research. She argues that Piketty ignores the “human capital” factor, which is the main source of economic growth. Thus, it reduces the process of economic growth to a one-factor model, where workers — owners of human capital — also become capitalists. Thus rhetorical fraud is allowed, and the category “human capital” is transferred from the sphere of production to the sphere of income distribution. McCloskey also admits personal attacks, trying to discredit the scientific reputation of Piketty as a person who does not know the basic microeconomic models. For this, a small mistake by Piketty is used, related to ignoring the supply response for a shortage of goods. At the same time, McCloskey, trying to hurt the enemy, ignores the availability of Weblen's goods and Schumpeterian competition. Finally, McCloskey is engaged in unrestrained propaganda of capitalism, which has nothing to do with the essence of work of Piketty. Nevertheless, Piketty conclusions can indeed be mistaken. However, this is due to a possible technological pause and significant changes in the social structure — factors that go far beyond the scope of the Piketty study.