The challenge of promoting shared prosperity was one of the unifying themes throughout last week’s Spring Meetings at the World Bank Group and International Monetary Fund – the whirlwind of diplomacy and scholarship that sweeps through Washington every April and October. A remarkable new factor, however, energized this spring's event: In a vivid evolution of the policy debate, the seminars, forums and news-media coverage seemed focused, to a greater degree than ever, not just on the economic question of the creation of overall economic growth but on what has traditionally been seen as a social question: the distribution of wealth.
And in the wake of the Spring Meetings, Washington this week got a bracing reminder of how difficult it may be to build truly shared prosperity – not because our economic institutions lack the ability to achieve it, but because our political institutions may fail to summon the willpower to demand it.
A scholar whose work has taken the economics profession by storm, Thomas Piketty, captivated policy-watchers this week with the Washington launch of his landmark new work, “Capital in the Twenty-First Century.” Hailed as “the most important economics book of the year, and maybe of the decade” by Nobel Prize-winning economist Paul Krugman of the New York Times – and praised by Martin Wolf of the Financial Times as “an extraordinarily important” work “of vast historical scope, grounded in exhaustive fact-based research”– “Capital” offers vital new insights into how wealth and power are distributed in modern economies. “Piketty has transformed our economic discourse,” asserts Krugman. “We’ll never talk about wealth and inequality the same way we used to.”
Piketty’s account of “inexorably rising inequality,” according to New York Times columnist Eduardo Porter, challenges many of the economics profession’s “core beliefs about the organization of market economies” – including “the belief that inequality will eventually stabilize and subside on its own, a long-held tenet of free-market capitalism.” Instead, “the economic forces concentrating more and more wealth into the hands of the fortunate few are almost sure to prevail for a very long time.”