University of Texas economist James Galbraith has recently joined in the criticism of Piketty's theory that capitalism is the culprit of growing inequality. Galbraith points out some technical flaws with Piketty's theory here, and argues in an essay for Financial Times that policy choice rather than capitalist institutions are behind rising inequality.
Writing for The Spectator, BBC's Evan Davis compares Thomas Piketty's views on inequality to those of Deidre McCloskey. As many readers have heard by now, Piketty's recent book Capital in the 21st Century has received quite a bit of attention, with progressive-leaning folks rallying behind Piketty's call for a global wealth tax as a means to slow the growth of inequality.
McCloskey offers a different perspective, suggesting that it is not capital accumulation that contributes to huge disparities in wealth. Rather, it is the returns to intellectual property that raise living standards across the spectrum that give rise to individual fortunes. In a society characterized by institutions and values that promote innovative entrepreneurship by rewarding those willing to take substantial risks to bring products and services to market that increase our well-being, market-produced inequality should not be viewed negatively. When individual fortunes are accumulate and preserved through plunder, coercion, and cronyism, the resulting structural inequality should be viewed as socially undesirable. My working paper, "Legal Origins and the Distributional Consequences of the Rule of Law," deals with this issue.
Assistant Professor of Economics at Patrick Henry College.