There’s been lots of chatter in the economicsphere about Thomas Piketty’s new megabook on Capital in the 21st Century (read a quick summary of the looooonnnnngggg book here). It offers a ponderous and rigorous overview of where economic inequality comes from, and why the marketplace alone won’t fix it. In the process, more to our purposes, it offers an extraordinarily useful perspective on wealth.
Nonprofit cultural organizations are often concerned, after all, with wealth. We need wealth to build things and buy things. And we need people/institutions that hold wealth to convey some of their earnings to our operating budget.
But, what is wealth? Is it land and property? Is it piles of cash? Is it investments or patents or intellectual goods? Is it the people who control these things?
As this useful article summarizes it, Piketty’s definition is that wealth is a socially constructed category, formed by and intertwined with laws, policies, and other social factors. We tend to think of wealth as a collection of ‘things’ — buildings, land, bonds, stocks, etc. And we tend to think of those things as separate and non-political. But those things only have value to the extent they can generate future streams of income. And those future streams are defined (almost entirely) by law, policy, and social context.
As the article states it:
”Market values, and therefore wealth, do not track objective valuations of things in the abstract; rather, they track the valuation of legally constructed rights and powers with regards to things.”
So, wealth isn’t a network of things owned by people that are protected by the law. It is a network of control and power relationships created by the law.
But before I grow a bushy beard and rail about the cruel fate of the proletariat (which I might do), it’s worth connecting all this back to cultural enterprise. And I see it connecting in two essential ways:
- Since nonprofit cultural managers engage ‘wealth’ in many ways — philanthropy, local politics, governance, grants — it’s rather useful to understand with some specificity what, exactly, we’re engaging.
- Since we use ‘capital’ or ‘wealth’ to accomplish our work (endowments, buildings, equipment, intellectual property), it’s also worth acknowledging that the nonprofit version of ‘wealth,’ by definition, looks and behaves rather differently than its commercial counterpart. It generates a flow of future revenue that is (on purpose) less than it costs to build or buy. That’s not a small difference. So our thinking and strategy must be different, as well.
I will be reading Piketty’s tome this summer, because that’s what scholars do for fun (we are not very bright in a range of ways). Whether the book creates future streams of insight worth the effort of consuming it, I will let you know. I know you can’t wait to find out.