Capital in the Twenty-First Century

In Europe and elsewhere among developed nations, there has been a rise of leaders who propagate nationalistic and populist agendas. These leaders often advocate the vilification of ethnic and minority groups as the roots of many national problems. The root of social problems, these leaders often argued, lie with things like non-majority ethnicities, immigrants, and other marginalized minorities. Sound familiar? I am not actually describing the present. I am describing the rise of fascism in industrial nations just after the First World War. What does this have to do with the present documentary about capitalism? Everything.

At its core, "Capital in the Twenty-First Century" concerns how capitalism is currently operating in the industrialized world. Mainly the documentary offers a 100-minute overview of why and how economic forces are working the way they are in the present by using the unfolding of events and policies of the past as a guide. The core thesis is based on a book of the same title by Thomas Piketty, a French economist and historian. In a nutshell, the documentary argues through its commentaries, mainly recognized intellectuals in economic theory, that monetary elites are pushing much of the political establishment to maintain an economic system which benefits the 1% and even the .01% and .001% of income earners. This system of self-regulation by the upper class was essentially how first world nations operated prior to the First World War (1914-1918).

The main thesis of "Capitalism" is that the current economic divides which are now occurring throughout the industrialized world are becoming, or may have already become, mirror images of economic systems of centuries past, such as from circa 1700 to 1915. Prior to the outbreak of the First World War, a wealthy elite class dictated how the economic structure would be run. Laws were passed by "democracies" which tended to benefit those at the top. Politicians backed by wealthy elites with campaign contributions would maintain their economic interests. The middle classes would play second-banana to the economic constructs of the upper moneyed class. Sound familiar? It isn't coincidence that the rise of Nazi Germany was a direct outcome of economic hardship in Central Europe, which we'll get to later.

After the two world wars, this sensibility shifted drastically, especially with the worldwide Depression of the 1930's. After WWI and WWII, two things happened in terms of an outlook shift, especially in Europe but also in the US. Soldiers made up mostly of the middle class basically fought and won the war against the Axis Powers (Germany, etc.). People realized that the middle class should have at least some of the benefits which were reaped previously almost exclusively by the elites. Also, the governments of Europe needed capital to rebuild. The middle class had been largely employed for the conflict, so the only people left to tax was the rich, which allowed a new middle class to develop. (You couldn't tax a middle class family in Germany or France whose house and property had been destroyed as a result of the war!)

This idyllic situation was short-lived, from about 1946 to 1975. Some economic downturns occurred, particularly in the US, in the 1970s. This allowed an opportunity for the monetary elites to regain not only some of the pie they had lost after WWII which was now going largely to the middle class but regain their power over the economic system. A new breed of politician emerged, conservative Republicans in the US and Conservative Party politicians in the UK. (After circa 1980, the so-called conservative southern "Dixiecrats" in the US began to disappear, now favoring the Republican Party and its agenda.) They claimed the economic problems were due to too much regulation of capital and too much taxes on the wealthy. Later, immigration would be added to the list of contributors to economic problems. The doc argues that neither of these circumstances actually created the economic woes of the 1970's, which in large part were due to Middle East oil embargoes.

US President Ronald Reagan and UK Prime Minister Margaret Thatcher proposed a new economic outlook, labeled "trickle-down economics". The theory was by freeing up capital among the elites, such as lowering their taxes and deregulating finance, would allow for more investment. Yes, the elites would have more capital, i.e. More money, but the pie would grow and allow those of the bottom 90% to enjoy the same economic slice of a supposedly bigger pie. Theoretically, if the pie is bigger, even if the slice is the same percentage, the slice will be bigger also. Hence, the economic benefits would "trickle down".

Everyone agrees that the former occurred: the top 1% and in particular the top 0.1% and .01% saw their pieces of the economic pie rise significantly if not exponentially in a bigger pie. (You can clearly see the staggering economic gains by the wealthiest between 1980 and 1990 when a valuable painting which fetched $1 million in 1980 would go for $25 million in 1990.) What didn't happen was the slices of the middle class didn't increase but at best remained stagnant, and those on the bottom saw their slices shrink. You could argue that the slices of the middle class in a way did shrink because their wages and incomes remained largely unchanged. In other words, they were getting a smaller slice of a bigger pie, not the same slice in a bigger pie. For example, say the pie was four pieces, and the middle class receives one piece, basically 25% of the pie. The pie increases to five pieces by 1990 under Reaganeconomics, but the middle class was still receiving one piece of a five-piece pie, now 20%.

Strangely, what's been happening now is a growing divide between the middle class and upper class, fueling the rise of populist and nationalistic leaders. Interestingly, these leaders are eerily similar to figures who rose up 100 years ago. They are against free press, advocate lower taxes, vilify institutions like hospitals and schools. As importantly, they tend to blame easy targets for economic woes: immigrants and minorities. (Donald Trump accused people from south of the US border for "bringing crime and drugs".) The rise of Donald Trump as President of the US is not a phenomenon in a vacuum. This populism, a backlash against the economic divides, has allowed fascist leaders and ideologies to come to the fore. The vote in favor of Brexit and some eastern European far-right politicians are cases in point. Viktor Orbán, Prime Minister of Hungary. Has led the country more towards a totalitarian state with less free press and much anti-immigration in a nation where the population is declining.

As one economist explained: the blame against ethnic and other kinds of minorities as the cause of economic difficulties are the wrong targets. Even if governments adopt policies to expel illegals and other immigrants from first world nations, there is little if no evidence to suggest that that in and of itself will create any kind of economic prosperity for middle-class citizens. The illegals and minorities are not the problem and expelling them on a mass scale probably won't create a significant number of jobs. Viktor Orbán has put into place all these anti-immigration policies in Hungary and there's almost no evidence these policies have helped Hungary's economic and social problems. Some academics in international economic policy have argued his policies may be hurting his own country in the long term.

The documentary points out that Nazi Germany propagated that Jews and other minorities were responsible for their economic woes of its country in the 1930's. Adolf Hitler also blamed Jews for their losing the First World War, and expanded the rhetoric to include other European countries. This outlook basically was Germany's justification to invade other European countries who were responsible for their demise. There was some truth to this because the Treaty of Versailles, which ended WWI, forced Germany to pay huge monetary penalties and compensation which destroyed its economic recovery. Eventually, the policies were largely unenforceable and allowed Germany to augment their military infrastructure. They could have tried to renegotiate the terms of the original treaty but thought it would be much more fun to go to war instead. By 1945 when the Allies forced Germany to surrender, much of Germany was completely destroyed, essentially the result of economic and international policies that imploded on its own country.

Could these economic disparities also lead to a military crisis not unlike WWI and WWII? I think the question is open and much more relevant today than it was even 20 years ago. The solution proposed by the economists is to return to regulating and taxing the elites again as they did from circa 1946 to 1975. Is the political will there to achieve this? It's difficult for politicians to bite the hands that feed them. As long as the elites control the politics, it will be an uphill climb.

There is a lot of important thought in this film, but it misses an entire, and important, chapter in the history of economic thought that provides clearer answers and actual solutions.

Early in the film, there is a great deal of talk about land. In classical economics, it was recognized that there are not two but three factors of production, LAND, LABOR and CAPITAL. The neoclassical economists, from whom almost all of today's college and university instructors learned their economics, somehow managed to treat LAND as if it is merely a subset of CAPITAL.

But LAND and CAPITAL are vastly different. LAND includes all the the natural creation -- the sites under our feet on which we live and work, the natural resources we draw from the earth,. the electromagnetic spectrum, geosynchronous orbits. LABOR uses those things to supply its wants and needs. Thrifty laborers can use their excess to create better and better tools that make LABOR more productive. That's CAPITAL.

But under it all is LAND. And if you think land is trivial today, consider that a single block in midtown Manhattan can be worth $250 million, $500 million or more. An acre of good farmland might be worth $2,500. It would take 100,000 acres of that farmland to equal the value of that single $250 million acre in Manhattan. And then we let them call it "CAPITAL"

Land was here before people were, and we're all equally entitled to share in its value. That's the chapter of the history of economic thought that most of the presenters in this film seem to have missed.

The names most clearly associated with it are Adam Smith, David Ricardo, John Stuart Mill and Henry George. Today, the people who know these ideas are often known as Georgists. Their thought has answers from which this film, and all of us, would benefit.

It's not that the documentary doesn't make some good points, but it makes it seem as though exploitation only began in the 17th - 18th centuries, when it is more like the unfortunate default of humankind.

A lot of information is given, but few solutions are actually presented which causes the documentary to end on a bleaker outlook. Perhaps that is the intention of the filmmakers, but a problem without a potential solution almost comes across as a complaint.

A memorising journey through time following the flow of wealth across centuries to give insight into where we might be heading.

The film is based on the best-selling book of the same name by French economist Thomas Piketty, who's research suggests we're trending back to a world resembling 18th Century style capitalism -- where a small number of mega-rich own everything and the rest of us are forced to 'rent' our lives; and where the middle-class shirks back to be almost as poor as the poorest. It's a world where social mobility is low and inheritance is king.

Already today the very wealthy are able to avoid paying taxes - just like the aristocracy of the past - and many use their wealth to distort democracy for their benefit. The film is a call to rewire capitalism to produce fairer outcomes for the majority of the population. It doesn't reject capital, but instead calls for it to be tamed.

Though this is no dry lecture... never has economics been more entertaining. Capital in the Twenty-First Century is a mash-up of pop culture through time that reflects the moods of the eras it traverses - from Jane Austin to The Simpsons - and it's all set to a killer soundtrack!

That said, the film is also careful not to dumb down the economics. Piketty's most famous finding, R>G (essentially that the growth rate of capital over time is consistently higher than the growth rate of the economy), is elegantly explained. As are ideas for solving tax havens and new ways to tax and control capital.

Highly recommend the film as an easy introduction to the ideas of one of the world's preeminent economic thinkers. Of course the 700 page book goes much deeper, but this is far more fun.

There is a good documentary underneath the layers of ideology pushed in this documentary. The people who made this documentary humorously talk about equality whilst promoting identity politics. Further, this documentary suffers from people who don't know their history very well. I specifically do not put this onto the author of the book.

The documentary opens with slavery and tries to attribute all wealth of Europe and England to slavery. This doesn't work for countries like Germany and Switzerland (among others). Further, they purposely ignored slavery in Africa (by Africans) or slavery by the Arabs and why that was somehow different.

What the creators almost completely missed was the Industrial Revolution (it was touched on). The drive away from slavery had a significant impact on productivity and competition (but you have to know history to know that).

Then during the documentary, you have people like Kate William who (unbelievably) said we must remember the "working class and women". It's unclear if she meant "no woman must ever be poor" or if she was promoting the "Ophrah Winfrey is oppressed" angle. With an ideologist (more specifically, a sexist), reason is always missing.

The documentary also touched on how noble China was, ignoring how people were welded into their houses, how Hong Kong was destroyed, or how the Uyghurs are interned in concentration camps. This isn't to side-step the criticisms of the west (which are predominantly spelled out in this documentary - and quite fairly might I add). It's unclear what the motive of this false narrative was.

Then there's the jaw-dropping narcissism of Faiza Shaheen who unbelievably said "why does my 26yo brother in law have to live at home". My parents lived in a garage for 10 years! I lived in shabby accommodation for 10 years - but Ms Shaheen believes she is special! The narcissim was unbeliebable.

Then there's the "all white people are racist narrative". In recent months, AOC and Nancy Pelosi and Jo BIden who continually disparage all white people with the "white supremacy" pejorative that the documentary "glossed over". Instead, they went for the "we are all equal (some more than others)" narrative.

Rather than glorifying Margaret Thatcher in a "girl power" narrative, they could have talked how she destroyed working class Brits and incited significant levels of violence whilst destroying people's lives, especially as that was a theme of the documentary. Sadly, such analysis would never have been permitted when the documentary was heavily influenced by ideology.

If you can make it past the indoctrination and the "you shouldn't think for yourself", there is an excellent message about tax havens, inheritance, concentrations of wealth and the failure of trickle down economics.

My honest advice is the director and several of the guest speakers were unfit to be involved in a documentary and the documentary suffered for it. The message was clear... all people are equal but some are more equal than others. A message sung loudly by Kate William and Ms Shaheen

I'm being kind and giving it 6/10 because the underlying message (under the ideology) was solid.