Some months ago, I had the opportunity to read the advance copy of Thomas Piketty's new book Capital in the 21st Century. We've all heard a lot about the book since then -- I've counted 700 pages of reviews (including my own). We've heard about how Piketty argues that unless the rate of return (a.k.a. "r") on capital is brought down, below or at least closer to the rate of growth (aka "g"), inequality will continue to rise. Economists have been debating his ideas ever since. But, one thing haunting me throughout the book was a question about what his findings meant for women and, so, inspired by Piketty, I picked up my Jane Austen anthology.
When I started rereading Pride and Prejudice, I wasn't exactly sure what I was looking for. I very quickly found myself immersed in the tale of Elizabeth Bennet, her sister Jane, and their quest for happiness. Any Austen reader knows that the heroine's happiness depends on her finding an appropriate mate, and that appropriate is defined as a man with a sufficient stock of capital to provide her with a lifetime of income. For Austen's heroines, there is always a tension between this economic reality and what her heart wants. She knows that a good income is not the only factor in her future happiness, but she also knows that there's no happiness without it.
That is certainly the case for Elizabeth Bennet. When I was a young woman reading for the first time about how Miss Bennet comes around to loving Mr. Darcy, I was -- as Austen intended -- struck by how constraining her life was, and yet how eloquently Austen described her situation. Miss Bennet was smart, capable, and someone who I could imagine as my friend. But, the world she lived in was terrifying. She is constrained by the reality that her life will be defined by her choice of spouse. Feminists laud Jane Austen for elevating the interior lives of women and the economics of marriage markets in the 18th century and for making clear these enormous constraints on women's choices.
Thomas Piketty points the reader to the novels of Austen and Henri Balzac in order to illustrate how in a period of high wealth inequality young people make choices about their lives based on marrying well, not pursuing professional goals. He uses the example of Rastignac, who has to decide whether or not to pursue the hand of an heiress or pursue a career as a lawyer in order to demonstrate the economic inefficiency of an economy where success depends on inheritance not on developing one's own skills and productivity. This is what Piketty means when he says that the "past devours the future."
Piketty's prognosis for the economy is frightening. Using an enormous amount of data from around the world, Piketty has brought to the fore the empirical fact that income inequality calcifies into wealth inequality. We already have income inequality at the same level as it was at the dawn of the 20th century. Relative to a century ago, more of today's high incomes are derived from wages than from capital. Piketty argues that, over time, however, the share of income from capital will rise as today's high earners save a portion of their income and pass it on to the next generation, creating greater wealth inequality in the process. Women should take heed of this.
The 20th century saw enormous forward momentum towards equality for women and racial and ethnic minorities, as well as for children, the disabled and other groups suffering discrimination. In the United States, the Civil Rights Act of 1964 made it illegal to discriminate against someone based on the color of their skin or their sex. The breaking down of barriers to education and participation in working life has benefited women (and their families) enormously. Mothers are now breadwinners or co-breadwinners in two-thirds of U.S. families. This greater employment and economic participation has also benefitted the economy. For example, Stanford economist Peter Klenow and his colleagues found that up to a fifth of the total growth in the U.S. economy between 1960 and 2008 was due to the opening up of professions to women and minorities. In my own work with Eileen Appelbaum and John Schmitt, we found that women's added hours of work since 1979 have added 11 percent to the U.S. gross domestic product.
This was possible because we lived in an economy where an individual can succeed and earn a living through developing skills and participating in the labor market. However, if economic success is, again, increasingly defined by inheritances, as it was in Austen's day, those who had been excluded will continue to be so. Since wealth is typically associated with a family, not an individual, a family's economic situation will be elevated over individual achievements. This will hardly be good for gender equality, or equality along any other axis.
As the Piketty mania took hold -- it actually hit number one on Amazon.com in the first few weeks after its release -- there was only one other woman, besides myself, that I knew of, Kathleen Geier, who published a review of the book. While scores of men debated r, g, and the substitution of labor for capital, women were strangely absent from the debate. I would like to encourage more women, and especially more feminists, to pick up Piketty's tome and give it a read. It's a good book and what you learn may be quite important for your and your children's economic future.
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