A specter is haunting the world: capital.

Governments and communists and madmen waving their hands in the air have all railed against capital, its influence, its basis in “greed,” its . . . horrible property of not being ours.

Capital is something other people have. Nasty, bad people.

A French theorist, Thomas Piketty, has written a book that is now all the rage. It’s called Capital in the Twenty-first Century, and it seems to re-package the same old story we’ve been hearing from folks “on the left” for two centuries: “the rich get richer and the poor get poorer.”

Or, in this case, the rich get richer and the poor just cannot keep up.

I haven’t read the book; you’d have to pay me a small fortune to read it. I know enough about previous efforts by such folk in the data-torturing game to know that statistical arguments such as these fall under the category of


And then there’s the problem of attribution.

As Hunter Lewis notes on, all this talk about income and wealth gaps and how they change tend to ignore the big elephant in the room: the business cycle: “Relative income of the top 10 percent . . . peaked at two times: just before the great crashes of 1929 and 2008. In other words, inequality rose during the great economic bubble eras and fell thereafter.” Attributing inequality, therefore, to “capitalism” (implication: “free market”) gets it wrong.

Debit where debit’s due: to the workings of central banks like the Federal Reserve.

But Piketty’s problem was Keynes’s problem, as near as I can make out: he doesn’t understand what capital is. Economist Peter Klein, on the same page as Hunter, identifies that ignorance in just a few paragraphs. Capital is not money that makes money; it’s a varied stock of production goods with a structure that defies both easy statistical analysis and governmental manipulation.

And the solution to capital’s current struggles isn’t more taxes. Or confiscation.

Or more bigoted analysis of capital by people who find its continued existence too spooky for deep analysis.

Thomas Piketty

P.S. I know, I know: capital has many definitions. One could be “a fund” that can yield a return. But particular funds get lost, come a cropper. Why? Because of capital-as-stock-of-production-goods. Capital-as-money makes money (“a rate of return”) by being invested in production processes. And not all are equal. All are in the hands of managers — entrepreneurs, even, not “capitalists” — who are not merely fallible, like everyone else, but may be trying something good at the wrong time, or in the wrong place, or have the winds of history or policy or chance align against them in the one particular slice of time and space they put their efforts into action.

So, no. Capital as a fund of money isn’t the crucial thing. What’s crucial is the stocks of heterogenous goods that make up the bedrock capital upon which society depends and for sustenance and progress. And, from what I’ve read, both pro and con, Piketty doesn’t deal with that concept of capital in any way that would satisfy. He misses the real story. He does so, I gather (and I could be wrong), because he likes the anti-monied interest story. He is, in a sense, rehashing old anti-capitalism in a slightly new way (actually, in a familiar way: with the misuse of statistics, always implying causality wrongly to correlation). His book should probably be called Anti-Capitalism in the Twenty-First Century.