Nobel Prize-winning economist Robert Solow, who apparently uses the email address:firstname.lastname@example.org, was asked to comment on a New York Times book review of Thomas Piketty’s book, “Capital in the Twenty-First Century.”
He replied in a confidential email that called for massive socialization and intervention in the capital sector (my highlights)
PLEASE DO NOT FORWARD.I have never been impressed with Solow as an economic thinker, but I never realized he was this bad.
From: Barbara Lewis [mailto:email@example.com]
Sent: Thursday, January 30, 2014 9:54 AM
To: Sandler, Herbert Subject:
RE: NYTimes: Capitalism vs. Democracy
I know Piketty abit; he was my colleague at MIT for a couple of years, 20 years ago, and I wrote a recommendation for him when he wanted to return to France. Remember that he is Emmanuel Saez's co-author in a lot of research on very high incomes in US and elsewhere.
Somehow I missed the review of his book that is quoted by Edsall. I had heard that the book was coming out, and I have asked Leon Wieseltier if he would like me to review it for the New Republic. Piketty is very smart. I'm familiar with part of the argument he seems to be using (in fact I invented some of it 60 years ago!). Part of today's inequality problem could be reversible, part may indeed be deep in what is happening to advanced economies, and I hope Piketty can help with that. I have occasionally written that we may need to somehow democratize capital (like funded social security etc) so that profit income is more widely distributed. Apparently Dick Freeman agrees. On the whole I am very suspicious of "inevitability" arguments, but you don't have to interpret Piketty's data that way, even if he does. I hope Leon wants me to review the book, it would give me a chance to think more about this, which has always interested me.
We're still here.
Thomas DiLorenzo has written:
Solow seems to have no conception of human action as a process of plan coordination, although he uses Austrian-sounding language at one point in discussing "coordination failure" in the marketplace. He sees the job of the economist as the construction of obtuse mathematical theories to ostensibly explain this alleged "failure," but not to inquire how market participants act to overcome coordination problems. He doesn't appear to be the least bit interested in how markets actually work; only to "model" them as inherently "flawed" in order to stroke his own ideological predilections.
And Peter Klein wrote:
Robert Solow, in a glowing review of Piketty's book, states: "The key thing about wealth in a capitalist economy is that it reproduces itself and usually earns a positive net return." But this is nonsense from the point of view of microeconomics, entrepreneurship, uncertainty, innovation, strategy, etc.
But a "democratization" of capital is bizarre. Dilorenzo is correct. He has no conception of human action as a process. And Klien is correct, his view of capital is nonsense.