Note that I do not believe at all in technological determinism. My point is simply that we cannot bet everything on the caprices of technology and market forces, and that we ought to develop democratic transparency and fiscal institutions that allow us to adapt our policies to the speed at which the various income and wealth groups are rising.--Piketty to Schliesser, Personal Correspondence, May 2014 (quoted with permission).
It's clear from Piketty's reacton above (and Kervick's reactions here and here) that one of my earlier posts about Piketty's book was taken to imply that I attribute to Piketty the idea [1] (a) that technological developments necessitate economic outcomes, and that this entails (a') that governments are impotent in the face of this. I understand why they read me like this, although I had explicitly allowed that governments "can impact the distribution of wealth," and can generate policies that ensure (or prevent) that a country is at, or catches up with, the so-called "technological frontier." (So, I deny (a1).) My concern was really with the very idea of a 'technological frontier,' which fits uneasilly with the empirical methodology of Capital (and which I think embraces "a form of technological determinism," such that [2] if one (say, a country) is on the frontier, then one's growth potential is limited in a determinate way regardless of one's macro-economic policy).+ Some other time I return to this, but let me grant, at once, that Piketty's book advocates both 'democratic transparancy' and active government policies to combat the consequences of "the speed at which the various income and wealth groups are rising."* In fact, these two points are introduced early in the book in a remarkable passage that so far seems to have escaped commentary:
Taxation is not only a way of requiring all citizens to contribute to the financing of public expenditures and projects and to distribute the tax burden as fairly as possible; it is also [A] useful for establishing classifications and [B] promoting knowledge as well as [C] democratic transparency. (Piketty, Capital, 12 [letters added to faciliate discussion--ES)
Here I largely ignore [A] and the issues of reflexity, social control, and social fact generation (until the last sentence). Rather, I focus on [B] and [C]. The idea that taxation promotes knowledge might seem odd, but what he has in mind becomes clear throughout the book.
The basic ideas is this: absent efforts to tax some X (say, wealth) a lot of information about X remains private and unavailable to the public and researchers alike. One very significant aspect of this is that information about X remains so widely distributed and dispersed that nobody has any accurate information about X. Now, as Hayek taught, ordinarily, markets are epistemic machines and might generate some such information in the neighborhood of X (such that 'market prices' might give us some proxy about features of X, i.e., relative supply and demand, scarcity, etc.); but even though wealth management is a huge market, the agents in THAT market are actively concealing socially relevant facts (including from each other), such that one must rely on very bad 'unofficial sources' about X (Piketty discusses the limitations of such sources in Part 3). But as Piketty notes (518) once X is taxed everywhere, then governments and other institutions create circumstances in which a lot of information about X gets collected such that the very possibility of knowledge of X is, in principle, available to researchers and a wider public (put nods to Bentham and Foucault here). This is an epistemic point about the role of state bureaucracy.** But it is connected to a normative point.
So, well functioning state fact-gathering institutions, which exist to collect taxes, are, for Piketty, necessary conditions for the very possibility of genuine democratic debate about these institutions and other policy options. This is why he so often suggests that earlier democratic decision making is so often "chaotic" and improvisational in character (see here for instances); for even if the information is available it rarely enters into the discussion.
The 'taxation-fact gathering-transparency-possibility of genuine democratic debate-cycle' is a substantive, normative-empirical position and, I think, worthy of further reflection from philosophers (who may not be so impressed by Piketty's first-order normative arguments; he is clearly unaware of much philosophical literature on redistribution, including generational redistribution). This is why we can say that in a non-trivial sense, Piketty, too, embraces the technocratic conception of politics that is at the heart of Post WW-II consensus in professional economics (and professional philosophy).
Obviously, if the bureaucratic state is a prerequisite for genuine democratic debate in some areas then it would be madness for democracies to remove the bureaucratic state from fact-gathering in those areas. Unless, of course, democracies came to the conclusion that the evils of ignorance about some X are not worse than the evils that are consequent of the possibility of classification and control of X.
+ It is only limited form of determinism because one can certainly screw up one's policy so badly that one does not grow as much as one could. If one is not on the frontier one can grow faster than those countries that are on it by catching up with them.
*I have deliberately not talked about Piketty's policy proposals because these are received in rather predictable fashion along fairly predictable partisan lines (locally). But one of the most exciting and unappreciated features of Piketty's program is precisely is his receptivity toward new forms of organization and participation that do not require a binary choice between public and private approaches (see, especially, 569). I return to Pikett's interest in "new tools" in the future.
**Lurking in Piketty's book are also arguments in favor of more transparency about decisions in the process of knowledge formation. For, he argues that despite a discourse of meritocracy, access to elite, higher education, which is the recruiting ground of the next generation of elite scientists, is shrouded in opaqueness and favors the wealthy not just at Harvard (485ff).
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