In Chapter Four, Piketty discusses the transformation of capital in the US, and at the same time starts using popular culture references. David Cameron’s Titanic, Quentin Tarantino’s Django Unchained, and Matt Weiner’s Mad Men television series – neoclassic epics written by iconoclastic white men – are all offered up as examples of how the US economy has changed over the last 250 years. He also shows the difference in US national wealth if you include slaves – turns out slave labor was a major component of national wealth, a grim reminder of the value of “human capital.”
There’s also a section on Germany, preceding discussions of the US and Canada, that points out that German stocks are undervalued because, from an international point of view, the “stakeholder” model of German firms require a greater degree of coordination than the Anglo “shareholder” model of industrial organization. Piketty remarks that if one uses “book” value in place of the usual “stock” value, German firms are worth as much as those of Great Britain and France. The dynamics of capital in Europe, therefore, are more similar between nations than they are various.
But the observation that really set me off in this chapter came right at the beginning, as Piketty introduced the subject by summarizing the previous chapter (affecting me with the reassuring feeling that the book hangs together), he notes that one aspect of the transformation of capital over the past 300 years is the transference of value from agricultural land to urban real estate. And I thought about how Marx writes of the bourgeoisie as the revolutionary class that brings about capitalism – industrialisation transfers wealth from the country to the city, and in doing so, transforms society. From the Manifesto of the Communist Party:
The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life.
Piketty talks about wealth in terms of its value relative to income, giving the discussion a particular consistency. It’s not so much about size as shape. Furthermore, it’s not a story about how the transformation occurred; the story is simply that there was a transformation of capital over time. It’s a very tidy argument.
The chapter seems t0 point forward to the discussion of inequality. I’m really looking forward to Part III.