The nine stages of the Piketty bubble

By Robert Shrimsley

Everybody’s talking about that important work because they feel they have to

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Concern is growing that much of the western world is heading into a “Piketty bubble” – a social and economic phenomenon that arises when everyone who considers themselves to be anybody feels the need to talk about a new book by French economist Thomas Piketty.

Capital in the Twenty-First Century, which argues that modern capitalism is entrenching inequality, was written a year ago in an obscure European dialect(French). But it is now being hailed as a masterpiece after it was discovered by a US publisher and translated into American. Although available for digital download, it is proving popular in printed form as even those who know they will never read it want it on their bookcase.

Unlike the five phases in US economist Hyman Minsky’s classic bubble theory, a Piketty bubble boasts nine stages.

Stage one – buy-in: Anyone who believes they are part of the “big conversation” feels the need to talk about Prof Piketty’s views. Initially these are people of an economic bent who are genuinely interested in his work but soon other “thinkers” feel their credibility requires heavy investment in Piketty and so start referencing his conclusions.

Stage two – escape velocity: A critical mass of enthusiasm sees Piketty rise faster than Bitcoin. Escape velocity is reached as politicians and pundits realise its value in supporting their existing convictions. They observe that his book crystallises “the big issue of our day”. Such references must also always include the phrase “in his important work”. Bluffers’ guides spring up on the internet.

These guides also offer information on how to pronounce his name. Getting this right marks you out as an early investor, someone with whom he might have discussed the Laffer curve over a glass of absinthe before a Paris St-Germain(French football league champion) match.

Don’t call him Thomas, it’s “Thom-ah”. Correct pronunciation is crucial. The type of intellectual investment that boosts your career capital; “Thomas” sounds cheap.

Stage three – backlash: Initially this stage is welcomed by admirers as validation of the strength of Prof Piketty’s work since it shows he has worried his opponents. But his credibility takes a knock when it emerges he is François Hollande’s favourite economist. Then his credentials as a French intellectual are tainted by rumours he has never ridden a motorcycle or attended a soirée with (famous French singer and actress) Vanessa Paradis. Conservatives dispute Prof Piketty’s claims on inequality, arguing that it cannot be that bad since the poor all have access to running water. (Milton Friedman explained that the advancement of technology benefit mainly the poor, for example tap water: rich people enjoy clean water with or without this technology, while poor people can have cheap clean water through it. Thus, although income gap is big, living standard gap is not that big.) Still, confidence stays high as he remains at the heart of the “debate”.

In Stage four – counter-offensive Prof Piketty’s supporters fight back pointing out that most of his critics have not read his book. This is followed by Stage five – rearguard, in which critics reply that most supporters haven’t read it either.

Stage six – boredom: As Piketty references become ubiquitous, people begin to lament the overhyping of a book which “doesn’t tell us anything we did not know”.

In stage seven – disassociationeven supporters begin to be embarrassed to refer to him. Conversations start to include phrases like: “Look, I know it’s a bit cliche to mention Piketty but . . . ” Reassured that nothing will actually change, opponents stop bothering to attack his proposals for a swingeing wealth tax.

Stage eight – denial offers proof the bubble has burst as members of the thinking classes now feel it is chic to admit that they never read the work. The brand is further cheapened for intellectuals when his work is picked up by Russell Brand.

Stage nine – relocation: People move Prof Piketty’s book from the living room to the lavatory, where it sits on a shelf sandwiched between Stephen Hawking’s A Brief History of Time and Francis Fukuyama’s The End of History.

Prof Piketty, meanwhile, faces complaints that as wealth accrues disproportionately to star writers, his triumph is increasing inequality among economic authors.

There is a possible much later stage 10 – rediscovery. A new crisis promotes a revival in which people return to the book and note that Prof Piketty “had some interesting things to say on this subject”.