Benjamin Wallace-Well, Daily Intelligencer 

Thomas Piketty’s Capital in the Twenty-First Century has thoroughly dominated the elite intellectual conversation during the four weeks since it was published. But it’s now also become a middlebrow phenomenon, the fourth-most popular nonfiction book in the country, according to the New York Times best-seller list and third-best seller (as I write) on Amazon, fiction or non-. That is an astonishing number of books sold to people who are mostly not social scientists. Its sales put it in the same blockbuster category as volumes in which a physician encounters God or Robin Roberts encounters cancer. Its popularity has helped turn inequality into a constant theme not just on MSNBC, but on Fox News.

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But ever since the financial crash, and especially since Obama’s election, the matter of how economic gains are divided — of who gets the money — have seemed to sweep aside virtually everything else. The galvanizing movement on the left (Warrenism) is an argument that the government has done a very bad job of managing the division of these gains. The energy on the right (around the tea party) has all been behind the conviction that the government should not get to do the dividing at all.

 Dani Rodrik, Project Syndicate

Perhaps the source of the book’s success should be sought in the zeitgeist. It is difficult to believe that it would have had the same impact ten or even five years ago, in the immediate aftermath of the global financial crisis, even though identical arguments and evidence could have been marshaled then. Unease about growing inequality has been building up for quite some time in the United States. Middle-class incomes have continued to stagnate or decline, despite the economy’s recovery. It appears that it is now acceptable to talk about inequality in America as the central issue facing the country. This might explain why Piketty’s book has received greater attention in the US than in his native France.

Capital in the Twenty-First Century has reignited economists’ interest in the dynamics of wealth and its distribution – a topic that preoccupied classical economists such as Adam Smith, David Ricardo, and Karl Marx. It has brought to public debate crucial empirical detail and a simple but useful analytical framework. Whatever the reasons for its success, it has already made an undeniable contribution both to the economics profession and to public discourse. 

 

Mark Thoma, Why Economists Are Finally Taking Inequality Seriously, The Fiscal Times

Because of this, there was little reason for economists to think about redistribution. Any redistribution to make income more equal would lower economic growth, an effect known as the equity-efficiency tradeoff, and there was no way to justify this through the value judgment that the redistribution helped more than it hurt.

This began to change with work such as a paper by Jonathan D. Ostry, Andrew Berg, Charalambos Tsangarides of the IMF showing that societies with more unequal distributions of income tend to grow slower, and that redistributing income does not have a negative effect on economic growth. It may even help economies to grow faster. The exact mechanism for this is unknown, though the paper suggests that “excessive inequality is likely to undercut growth – for example by undermining access to health and education, causing investment-reducing political and economic instability, and thwarting the social consensus required to adjust in the face of major shocks.”

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When thinking about income redistribution, one important question to answer is whether the rising inequality over the last few decades arises from the natural outcome of capitalism and markets, or from distortions in the distribution of income and wealth that have crept into our economic system. If inequality is a natural outcome of capitalism, then redistributing income could theoretically have either positive or negative effects on growth. It is ultimately an empirical question, and recent evidence points away from negative effects.

If, on the other hand, rising inequality is at least in part due to distortions in the market system arising from monopoly power, political power, or other factors that interfere with the distribution of income – if the rewards do not create the correct incentives for work, entrepreneurship, and innovation – then the redistribution question is much easier to answer. In this case, redistributing income is unlikely to harm economic growth, and it is very likely to enhance it.

 

John Eklund, Selling Thomas Piketty, Harvard University Press

Once the phenomenon was clearly underway—which I trace to Paul Krugman’s first call out, in which he christened Capital the “book of the decade”—the booksellers responded with equal aplomb. They have a lot more experience chasing bestsellers than we do publishing them, and I saw some very savvy order wrangling. Booksellers are great at selling what’s selling. Occasionally I wondered why they weren’t ordering more aggressively—can’t you get a couple cases and be done with it? But it’s for the same reason publishers have to be judicious with reprints—fear of having too many when the wave subsides. The wave isn’t subsiding.

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Aside from sharing the financial success that Capital in the Twenty-First Century has brought us this season, let’s also savor the chance to spread its message. My old boss and mentor David Schwartz was a big believer in books as change agents, and spoke about the “social profit” in bookselling as a kind of fringe benefit. Influencing public discourse by getting out a couple hundred thousand copies of a book like Capital is what he meant.

As Thomas Piketty himself said, “I wrote this book not for policymakers, but for people who read books. In the end, they are the people who’ll decide what politicians do, and it’s more important to convince them.”