Thomas Piketty’s big book: why Europeans love socialism

Philip Greenspun's Weblog 2014-05-15

I’ve started to read Capital in the Twenty-First Century, by Thomas Piketty. My iPad already feels heavier…

There is too much in this book to cover in one blog entry so I am going to save my readers the trouble of reading this massive tome with multiple postings.

Piketty says that Europeans and Americans have differing views on state ownership of industry and a planned economy because they had different growth rates during the heyday of government involvement in the economy:

Continental Europe and especially France have entertained considerable nostalgia for what the French call the Trente Glorieuses, the thirty years from the late 1940s to the late 1970s during which economic growth was unusually rapid.

In fact, when viewed in historical perspective, the thirty postwar years were the exceptional period, quite simply because Europe had fallen far behind the United States over the period 1914–1945 but rapidly caught up during the Trente Glorieuses. Once this catch-up was complete, Europe and the United States both stood at the global technological frontier and began to grow at the same relatively slow pace, …

In North America, there is no nostalgia for the postwar period, quite simply because the Trente Glorieuses never existed there: per capita output grew at roughly the same rate of 1.5–2 percent per year throughout the period 1820-2012.

These very different collective experiences of growth in the twentieth century largely explain why public opinion in different countries varies so widely in regard to commercial and financial globalization and indeed to capitalism in general. In continental Europe and especially France, people quite naturally continue to look on the first three postwar decades—a period of strong state intervention in the economy—as a period blessed with rapid growth, and many regard the liberalization of the economy that began around 1980 as the cause of a slowdown.

Do these political beliefs make sense? Piketty adopts the conventional attitude of a French academic, i.e., “most people are idiots”:

neither the economic liberalization that began around 1980 nor the state interventionism that began in 1945 deserves such praise or blame. France, Germany, and Japan would very likely have caught up with Britain and the United States following their collapse of 1914–1945 regardless of what policies they had adopted (I say this with only slight exaggeration). The most one can say is that state intervention did no harm.