Common cents ?

The English economy was once controlled by barons. Nineteenth-century America was run by robber barons. Historically, capitalism has grown from unpretty beginnings - might is right - and its growth spurts are often accompanied by ugly land grabs. But with the evolution of kinder capitalism, involving checks and balances as well as democratic institutions, these massive wealth disparities generally give way to a more level playing field.

It seems the world is going through a sort of global robber baron phase. Thanks to massive technological advances, combined with the post-cold war opening up of once closed markets, everything is being shaken up. People in the "first world" used to think they could have it all: endless growth by exploiting (for good or ill) the emerging economies, while somehow retaining their fortress-like first-world privileges.

But that fortress was only intact so long as the emerging economies were kept at arm's length. As long as "we" kept our competitive advantage. Once the world became flatter, our economic moat started to dry up.

The world's robber barons began to have more in common with each other, irrespective of country and culture, than with their less-fortunate (or less opportunistic / unethical) compatriots.

But there is a key difference. A middle-class Westerner is more likely to feel pessimistic than his equivalent in an emerging economy. He has experienced reduced spending power and stagnant wages and maybe some downward mobility. But his counterpart in, say, China is much more optimistic. His country is coming up in the world and even though he isn't among the robber baron class, the future overall looks much rosier than the past.

And on a "global village" level, he might be right. If history is our guide, this global robber baron phase will eventually pass and lead to a shrinking rather than widening of the gap between rich and poor.

So that's my two cents on the subject. Why do I offer it ? Because a French economist has just made headlines by claiming that capitalism has hit the buffers. It reminds me of Fukuyama declaring the "end of history" when the Iron Curtain fell. To add to the latest sensation, the FT has waded in, declaring that Piketty got his sums, or figures, wrong. Capitalism is alright ! Piketty has responded, claiming the FT is wrong. Yes, no, yes, no, yes, no etc. ad nauseam.

Why do so many apparently wise people seem so blinkered ? Political and nationalist agendas always get in the way. The evolution of things is much more important than how they seem at any one place and time.

Is the French economist really just reflecting a certain kind of prejudice in his homeland ? The country that invented the middle class, la bourgeoisie, is a place which today seems paralysed by its "glorious" past. It continues to believe it can keep its economic sacred cows intact (protectionism, high taxes and a massive public sector) despite the howling winds of globalisation.

So, Monsieur Piketty, maybe you are right that the middle classes in your country and the once bullet-proof West, are on a downward slope. But don't be so arrogant and blinkered as to assume that this is because capitalism per se has failed. No, it's because the West is now having to compete on a more level playing field - a global playing field. The West is a (temporary) victim of capitalism's (global) success.

PS - Your book has sold very well, proving (as I think other wits have noted) that there is a great market for books announcing the death of capitalism.