The two biggest books I’ve read this year, in a year of reading dictated mostly by my work, are Thomas Piketty’s Capital in the Twenty-First Century and Naomi Klein’s This Changes Everything. They are big in every way, in their thinking, their innovative synthesis of vast amounts of disparate material, their size. Both tap the zeitgeist, both became bestsellers, both say things well that need to be said: Piketty that the returns on capital tend to exceed the rate of economic growth (or income, in his model) and that this is responsible for the rising inequality we all so palpably feel, and that since the 1980s we have increasingly privileged the owners of capital over wage and salary earners in our tax structures; Klein that our present economic practices driven by the pursuit of profits and GDP growth, and powered by carbon-based fuels, are destroying the planet and must be changed.
I like Robert Manne’s review of This Changes Everything in the latest issue of The Monthly. Manne thoroughly summarises Klein’s enormous and often expansive arguments and tales from the cutting edge of climate change, and gives an excellent appraisal of her book’s achievement. I particularly like his opening observation:
‘Unless it turns out, through a miracle, that virtually the entire cadre of the world’s scientists who work in the area of climate are fundamentally wrong, the only people these future generations will be able to look upon with respect are those who saw the monstrousness of what we were doing and who gave their lives to the climate cause. One such is the Canadian leftist, Naomi Klein …’
And his conclusion – regarding the enormous changes that are required in the face of climate change – where he writes:
‘None of this will happen without a revolution in the way we think about our relations with the Earth and with our fellow human beings. Naomi Klein understands all this as clearly as any contemporary thinker, which is why I regard This Changes Everything as among the most brilliant and important books of recent times.’
I agree. (And say something similar in my review of Klein’s book for The Australian.)
Piketty is that most rare of contemporary economists: one concerned with and well versed in history, the long term, and one who writes with verve and clarity (which is no mean feat over almost 577 pages). He also has a disarming frankness which is endearing, such as when he confesses the idealism of his proposed solution to the inequality of returns on capital versus income:
‘the ideal policy for avoiding an endless inegalitarian spiral and regaining control over the dynamics of accumulation would be a progressive global tax on capital. Such a tax would also have another virtue: it would expose wealth to democratic scrutiny, which is a necessary condition for effective regulation of the banking system and international capital flows. A tax on capital would promote the general interest over private interests while preserving economic openness and the forces of competition. The same cannot be said of various forms of retreat into national or other identities, which may well be the alternative to this ideal policy. But a truly global tax on capital is no doubt a utopian ideal.’
Piketty is also – hooray! – scathing of his discipline’s over-dependence on mathematics:
‘To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences. Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in.’
Despite his aversion to the abstractions of mathematical economics, Piketty’s historical insights and revelations come from number crunching. (And he acknowledges the importance of numbers: ‘Refusing to deal with numbers rarely serves the interests of the least well-off.’)
Among the highlights for me – beyond his general theory about capital versus income – is Piketty’s analysis of our changing attitudes to taxing capital income versus labour income, especially in Britain and the US concerning progressive estate tax. He says ‘both countries distinguished between “earned income”, that is, income from labor (including both wages and nonwage compensation) and “unearned income”, meaning capital income (rent, interests, dividends, etc) … This distinction is interesting, because it is a translation into fiscal terms of the suspicion that surrounded very high incomes: all excessively high incomes were suspect, but unearned incomes were more suspect than earned incomes. The contrast between attitudes then and now, with capital income treated more favourably today than labor income in many countries, especially in Europe, is striking.‘ In other words, today as many so palpably feel, the tax burden on labour in some countries is greater than on those whose incomes derive from their wealth. How did it happen that this former (more egalitarian) suspicion of unearned incomes has gone the way of the welfare state?
For me Piketty’s historical analysis is more powerful than his proposed solutions to the problems he unearths, which mostly require unimaginable (to me) levels of political resolve, financial transparency and global cooperation. And given the urgency of climate change and its inextricable link to the imperatives of capital, I was dismayed to find Piketty dealt with this subject only as an aside, in a two-page section called ‘Climate Change and Public Capital’. This despite his acknowledging that:
‘The public debt … is not our major worry. The more urgent need is to increase our educational capital and prevent the degradation of our natural capital. This is a far more serious and difficult challenge, because climate change cannot be eliminated at the stroke of a pen (or with a tax on capital, which comes to the same thing).’
In other bookish news, I’ve been floored by a poem and am now engrossed in a memoir. I’ve been longing for poetry all year – the need became especially acute because I’ve been so immersed in accounting and economics – but nothing could penetrate my accounting brain, not even TS Eliot’s Four Quartets, the poems I always return to. Until on 17 November Mireille Juchau tweeted these lines:
Whenever I visit my mother
I feel I am turning into Emily Bronte
my lonely life around me like a moor …
And I was gone. I found the poem – ‘The Glass Essay‘ – and devoured it. And have been returning to it and digesting it ever since.
And thanks to an irresistible (because it features a bookish girl) trailer for the film Testament of Youth, I’m now reading Vera Brittain‘s riveting memoir, which is also a big book – and which The Times called ‘A haunting memoir for a lost generation.’ Among its many pleasures are its complex 1930s syntax, its often labyrinthine and many-claused sentences, rarely seen in today’s prose. Here’s how it opens:
‘When the Great War broke out, it came to me not as a superlative tragedy, but as an interruption of the most exasperating kind to my personal plans.
‘To explain the reason for this egotistical view of history’s greatest disaster, it is necessary to go back a little – to go back, though only for a moment, as far as the decadent ‘nineties, in which I opened my eyes upon the none-too-promising day. I have, indeed, the honour of sharing with Robert Graves the subject of my earliest recollection, which is that of watching, as a tiny child, the flags flying in the streets of Macclesfield for Queen Victoria’s Diamond Jubilee.’