Thomas Piketty's 'Capital In The 21st Century': Its Relevance To Pension Fund Management
“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 other social sciences...... The 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”.
THOMAS PIKETTY, 2014
The Piketty Phenomenon
It has been quite some time since a book on economics has created the global buzz of French academic economist Thomas Piketty’s “Capital in the 21st Century”. The quote above from the book’s introductory chapter immediately resonated. Almost 700 pages later, we found him true to his word. His book is indeed full of serious historical research and multi-disciplinary thinking. As promised, it is blissfully light on mathematicas....and does indeed address complex questions posed by the world we live in.
So what is causing the global buzz for the book? Both the medium and the message. The medium is relentlessly didactic: proposition -> historical research -> application to proposition -> conclusion. To keep the reader engaged, the historical research is not just data-driven. For example, Piketty makes liberal use of Jane Austin’s and Balzac’s novels to convey the meaning and conceptions of capital and wealth in 19th Century England and France. In the end, he reaches three broad conclusions:
- Future distributions of societal wealth and income are not pre-determined: the paths of these distributions over time are deeply political, and not determined by economic laws.