Thomas Piketty and Capital in the Twenty-First Century

After months away from the joys of reviewing due to another writing commitment – which didn’t  preclude a lot of reading -  I am delighted to be back to tell you about the good and the bad and there is no shortage of the latter!   However, one book has bowled me over and is one I shall go back to again and again and I have to thank the long dark cold wintery days that gave me the drive and time to work through a dense 570 pages:  it is Capital in the Twenty-First Century by Thomas Piketty.   It is this tome that has given rise to the buzz word of the year in economic, political and particularly media circles – inequality.   He identifies the main impetus of inequality as arising from the tendency of returns of capital to exceed the rate of economic growth leading to a concentration of and consequent unequal distribution of wealth and to counter this he sets out a new vision for Europe which, even if it seems to involve a bloodless revolution, just might be achievable.

Thomas Piketty is Professor of Economics in the Paris School of Economics, his alma mater being the LSE (where he got his Ph.D. at age 22 – no slouch then!) and Ecole Normale Superieure.     His speciality is of course wealth and income inequality.     Among his activities, he included serving as an economic adviser to Segolene Royal for the Socialist Party during the French presidential campaign.   According to Wikipedia, he rejected the French Legion of Honour order because he did not think it was the government’s role to decide who is honourable.   You have to like him! And to cap it all, he writes the most readable economic prose I have ever read.

The final sentence of his book reads, ‘if democracy is someday to regain control of capitalism, it must start by recognising that the concrete institutions in which democracy and capitalism are embodied need to be reinvented again and again’.   This is a concrete summing up of his thesis.   On the way to this sentence, he treats us to an economic history from the Industrial Revolution to the present day drawing data from twenty countries including the United States.   He explains the dynamics of the capital/income ratio looking at both Europe and the US up to the twenty-first century moving on to the structure of inequality in labour income, capital ownership and the global inequality of wealth in this century.   With this understanding behind us, he moves into regulating capital today and puts forward his thesis for a new Europe.   This is where it gets exciting!

He argues that 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 but quickly acknowledges that this is a utopian ideal but at the same time, the tax and transfer systems are in constant need of reform and modernization, and financial  capitalism needs controlling, both aims requiring strong state intervention suitably tooled up.   Over the last century, the creation and development of a progressive income tax has fostered the social state but as he points out, the tax is regressive when it comes to the top centile and he avers that ‘if the modern social state is to continue to exist, it is therefore essential that the underlying tax system retain a minimum of progressivity or at any rate that it not become overtly regressive at the top’.   Looking at the developed countries, there is a close correlation between the top marginal income tax rate and the size of the increase in the top centile’s share of national income.   

However, to really regain control of the fiscal system,  a progressive tax on capital would be the ideal.   This would effectively stop the indefinite increase of inequality of wealth and would serve ‘to impose effective regulation on the financial and banking system in order to avoid crises’.   It would involve a comprehensive global sharing of bank data and would include all asset types.   In other words, it would include not only real estate assets but also financial assets.   He points out that a tax on real estate assets already exists but is badly managed in that it takes no account of debt and is not progressive but generally charged at a flat rate.   He argues that without such a tax on wealth, the top centile share of global wealth will continue to grow indefinitely.   The EU which has successfully launched a currency  with no state has yet failed to accomplish anything like this  in the area of taxation though the proposed financial transactions tax could be the beginning of a true European taxation system.   He questions the effectiveness of the ECB and finds faults with its constitution.   He would like to see a ‘budgetary parliament’ made up of elected representatives from the Eurozone who would decide on matters like the size of national debts, maybe create a ‘redemption fund’ and agree budgets.  

It is likely that one might quail at the prospect of such seemingly loss of sovereignty but the reality is that monetary sovereignty is already of the past.   Such a budgetary parliament would de facto restore its own sovereignty to those countries already part of the Eurozone with the realization that monetary policy is but a tool in the restoration of growth, social cohesion, employment and its inherent dignity to the peoples of those nations without conflicting with the national parliaments.   Further, as Piketty points out, ‘in addition to pooling debts and deficits, there are of course other fiscal and budgetary tools that no country can use on its own’  – for example, a progressive tax on capital.

To try and summarise such a book crammed with analyses and proposals is impossible but I have tried to show that it should not be ignored.   His proposals are deeply thought out and argued and he represents a new way of looking at economic principles long past their sell by date.   He asks ‘are all these proposals utopian?   No more so than attempting to create a stateless currency’.   They could also lead to a rethinking of the timeworn institutions such as the ECB which by their very constitutions no longer function to advantage and reinvent them again.   It is certain that unless serious reconsideration is given to the notion of restoring a failed system the direst Marxian prophecies will come true.

Capital in the Twenty-First Century (Thomas Piketty) Harvard University Press and London, 2014 (Book Depository, €33.89)

Impac Award 2014

We have a winner!   Yes a South American but not Andres Neuman.   This time it is a Columbian,  Juan Gabriel Vásquez  with the third of his novels to appear in English, The Sound of Things Falling, translated by Canadian Anne McLean. Vásquez is also the first South American to win.

According to the published information about him, 'Vasquez (41) studied at the Sorbonne, and in addition to his years in Paris, has also lived in the Ardennes in Belgium and Barcelona, before returning to his birthplace, Bogotá, to settle.

He became internationally established on the publication of his coolly assured, historical thriller The Informers in 2008, which drew on a marginalised Nazi witch hunt as its inspiration. The Secret History of Costaguana (2007; English translation 2010) is the story of an angry man who believes that Joseph Conrad stole his life.

The Sound of Things Falling is a hard-edged narrative influenced by the legacy of drug trafficking in Colombia. It is an emphatically contemporary work, independent of the influence of magical realism that has tended to define Latin American fiction.

In Vásquez’s book, the narrator, Yammara, a young lawyer, becomes seriously wounded when in the company of an acquaintance, a former drugs trafficker. Yammara has other problems, however, and becomes intent on finding out what kind of a man he has become. In order to do so, he must not only examine himself, he must investigate his country’s past.

Chance plays a central part in the story. Adopting the role of a keen anthropologist Vásquez pieces together various events, including two dramatic plane crashes balanced against the image of a hippopotamus escaped from the bizarre zoo created by drug baron Pablo Escobar in the Magdalena Valley.

The photograph of the animal shot dead by captors in 2009 reminded Vásquez of seeing the body of Escobar collapsed on a roof after the shoot out that ended his life.'

Sound interesting?

Prizes

Our two greatest writers are in the news again!   Eimear McBride has won the Baileys Women's Prize for fiction with her novel, A Girl is a Half-formed Thing.   The Baileys used to be the Orange Prize and represents a major award for her following on her achievement in winning the Goldsmith Prize.   She is also short listed for the 2014 Folio Prize.   Her book is probably the most exciting piece of writing in Irish literature since Joyce and you can read my review published on 14 November 2013.   Eimear is currently working on her second novel.

The second major Irish writer to make the news is John Banville who has won the prestigious Prince of Asturias Award for Literature in Spain.   This is an award given for a body of work rather than a particular novel and in this case, the judges cited not only his work as the novelist John Banville but also his alter ego, Benjamin Black.   According to the judges, 'Banville's prose opens up dazzling, lyrical landscapes through cultural references in which he breathes new life into classical myths and beauty...'

Shortly, now, we will have the results of the Impac Award jury!   There is a shortlist of ten including The Detour by Gerbrand Bakker, The Spinning Heart by Donal Ryan and Absolution by Patrick Flanery, all impressive works.   The money, however, appears to be on Traveller of the Century by Andres Neuman.   Neuman is a South American writer from Buenos Aires; his novel is translated from Spanish and is about philosophy, love, war and history going back into post-Napoleonic Europe.   Judging by the blurb, there seems to be hints of Borges there or Claudel.   I shall get back to you about this one!   Award to be announced on 12 June.

The Grand Budapest Hotel

Yes, I know, this is a film not a book but for lovers of Stefan Zweig everywhere, I have to bring it to your attention.   Having been told about it and urged to see it by a good friend I was completely taken with it.  

It is directed by Wes Anderson with an extraordinary cast - Saoirse Ronan, Ralph Fiennes, Edward Norton, Willem Dafoe, Jude Law, Owen Wilson, Léa Seydoux, Bill Murray, Adrien Brody, Tilda Swinton - and headlining the credits at the end of the film is the legend, 'based on the writings of Stefan Zweig'.   And indeed it takes its cue from one of Zweig's favourite formats in his novellas, that of the narrator striking up an acquaintance with a stranger while staying in an hotel and being told his or her life story.   In this instance, it is an elderly man, Zero, who tells the story of his life as a lobby boy in the Grand Budapest Hotel, under the patronage of the legendary concierge, Gustave H. during the thirties.   

We not only have the story and his experiences as a lowly page boy in this middle Europe hotel but also an entertaining escapade involving a stolen painting and a vast fortune with a lot of humour reminiscent of the silent movies and so peculiarly appropriate to the period.   All of the action takes place against the backdrop of the unsettling rise of fascism and the approaching war.

This was an issue that particularly occupied Zweig who was born in 1881 in Vienna and was living in Salzburg in the thirties.   Being Jewish, the rise of fascism disturbed him greatly and he left Austria in 1934 going first to London, then New York and finally Brazil where sadly in 1942, he and his wife committed a double suicide.

Zweig is perhaps best known for his novellas and we have Pushkin Press to thank for not only expert translations but publishing them in very beautiful editions.   He wrote two novels, Beware of Pity and The Post Office Girl.  But to really capture the man and the time and place he grew up in, one should read his autobiography The World of Yesterday.   He lived in the golden age of literary Vienna, numbering among his friends Joyce, Rilke, Yeats and Gorky and the book is described as 'both a recollection of the past and a warning for future generations'.   Given its title, it is not inappropriate that Zero says at the end of his story in the film, 'I think M. Gustave lived in a world that was already past'.

IMPAC SHORT LIST

The short list for the Impac award has been published and includes Donal Ryan for The Spinning Heart.  I reviewed it 18 November last year.   The winner will be announced on 12 June.   Here are the runners!

• The Detour by Gerbrand Bakker (Dutch), translated by David Colmer
• Questions of Travel by Michelle De Kretser (Sri Lankan / Australian)
• Absolution by Patrick Flanery (American)
• A Death in the Family by Karl Ove Knausgaard (Norwegian), translated by Don Bartlett
• Three Strong Women by Marie NDiaye (French), translated by John Fletcher
• Traveller of the Century by Andrés Neuman (Argentinian), translated by Nick Caistor and Lorenza Garcia
• The Light of Amsterdam by David Park (Northern Irish)
• The Spinning Heart by Donal Ryan (Irish)
• The Garden of Evening Mists by Tan Twan Eng (Malaysian)
• The Sound of Things Falling by Juan Gabriel Vásquez (Colombian), 

 I reviewed The Detour on 17 May 2012.  A compelling and intense novel.

Stoner by John Williams

The first question is:  how come a book originally published in 1965 to no great acclaim has become the must read of 2014?  And all due to word-of-mouth - with a little help from Waterstones who made it their book of the year for 2013.   It is the story of an ordinary man living an ordinary life in an ordinary university in mid-west America in the 1930's and 40's.   And yet it is a page turner and unforgettable.   Perhaps part of the answer is that it is more European than American.   Nothing too much out of the ordinary happens and Stoner is no American hero and not living the American dream.   It is the story of a life, not a drama.

William Stoner, we are told in the first paragraph, entered the University of Missouri in 1910 at the age of nineteen, received his Ph.D. in 1918 and taught in the same University until his death in 1956.   Few remembered him after his death.   He came from humble origins, the only son of a small farmer, old before his time from working the arid land but who had the vision to send William [or Stoner, as he is known throughout the novel] to college to do an agricultural degree.   Stoner spent two hard years working methodically at his basic science subjects while, at the same time, supporting himself by working on a local farm.   However, being required to take an English literature course, he came under the influence of Arthur Sloane and had a veritable epiphany.   Totally enraptured by the beauty of poetry,  he promptly ditches his agricultural degree and devotes the rest of his life to literature.

Not wanting to be a spoiler, I can only tell you that the succeeding years follow the path of an ordinary life - love, internecine staff quarrels and enmities, friends and accompanying issues - until, as the end of his life is very near, his daughter remarks that things haven't been always easy for him and he replies, 'no, but I suppose I didn't want them to be'.

Williams writes a beautiful limpid, fluid and quiet prose that draws you in and on page after page.   He brings to mind the Dutch author, Bakker, who similarly can make the ordinary exciting.   Julian Barnes commented that Stoner is a '"reader's novel", in the sense that its narrative reinforces the very value of reading and study'.  And it is more than that - this book is elegant music.

 Stoner, John Williams, published by Vintage, pb, £8.99  [€7.64 Bookdepository.co.uk]

Americanah by Chimamanda Ngozi Adichie

Americanah has just been nominated as one of six titles on the Baileys Prize for women's fiction.  The author, Adichie, is no stranger to the prize lists having already won [in 2007] the Orange Prize with Half of a Yellow Sun and has already garnered the National Book Critics Circle fiction prize with Americanah.   The bookies have her as second favourite for the Baileys.   Adichie is a Nigerian author who moved to the States when she was 19 to study and now divides her time between Nigeria and the United States.

Should she win it?   Let me say first of all, it is too long.   I have no problem reading a very long book if it is worth it but increasingly, the American market seems to favour the blockbuster while editors in Europe go for the less is more school of thought.   I feel a book should give you room and pause for thought and not handhold you through every little nuance of the narrator's mind. 

That having been said, there is much of interest in Americanah.   The story concerns childhood sweethearts, Ifemelu and Obinze, who grow up in Nigeria and then Ifemelu, like Adichie, goes to the United States to study while Obinze travels to Britain.   More interesting than their love affair are their experiences as immigrants in two very different countries.   Adichie has the leeway that no African American probably has to comment on and criticise the nuances of race relations in the States.   Because of her failure to find work to support herself while studying, she takes up blogging and becomes immensely successful at recounting her experiences on line.   Obinze meanwhile, unable to get legally or illegally a social security number, living as an illegal but adopted by a liberal pc minded coterie in the UK, is having a totally different experience in a completely different culture.   This is the most interesting thread in the book I felt.  

A lot of Ifemelu's story is told as a flashback as she sits in a hairdressers having her hair expertly done before returning to Nigeria.   Initially, her account of how African curls are being dealt with using extensions, chemicals and weaves to try and achieve western white standards is fascinating but eventually I began to wonder if she would ever get out of the hairdressers.  

We are introduced to a third element then when Ifemelu does finally get back to Nigeria and that is her position as returned emigrant.   Her search for Obinze who returned much earlier and her problems in adjusting again to the Nigerian worldview are well portrayed.

Overall, Adichie paints an absorbing picture of the three cultures as seen from an African viewpoint with a lot of detail that would escape the native westerner and for this alone I would recommend the book.   She is easy to read but long-winded so the novel can frustrate at times and lacks the magic of a more tightly woven narrative.