I'm only about two thirds done with Piketty - it's been very busy this summer between events, getting the dissertation proposal off the ground, and starting work again at the Urban Institute. But I just happened to get to one of the parts in Piketty that Acemoglu and Robinson quote, and it turns out to be an extremely dishonest rendition. They quote this to show that Piketty doesn't think institutions matter (from page 365):
"The fundamental inequality r > g can explain the
very high level of capital inequality observed in the nineteenth
century, and thus in a sense the failure of the French revolution.... The formal nature of the regime was of little moment compared with the inequality r > g.".
So what is in that ellipses?
He explains that the revolution didn't change the course
of inequality (relative to monarchical Britain) because the new
institutions that were established were much closer to Britain than
popular perception in France at the time suggested! It was NOT a big
change in institutions, which was why the French revolution did not
shift the parameters of the model. Immediately after this he goes on to
discuss changes in institutions in the 20th century that WERE
substantial enough to impact inequality, and he even reviews how
inter-country differences in these institutions explain differences
between (for example) Germany and France.
In other words, the
real point of this section is that institutions matter a lot, regardless
of what the hype and propaganda around the Revolution really said. And
not only did A&R get that wrong - they deliberately removed the portion of the quote where he made the point.
I have always taken one of the central theses of Piketty's book to be that institutions are central in shaping wealth and income distributions. He says that over and over again. All of the explanations for the empirical changes in the distribution over time are either (1.) institutions, or (2.) shocks (which, given the nature of these shocks, inevitably also have institutional origin). Apparently it's not just Acemoglu and Robinson that missed this memo. I have since had conversations with people who suggest that discussion of institutional determinants of inequality is minimal and that Piketty is just "covering his butt" when he mentions it. But as far as I can tell that's the whole point - the analysis is grounded in inequality.
Piketty without institutions in the capital share of income section could probably survive. Piketty without institutions in the inequality section of the book simply wouldn't exist any more. I mean, you'd have the data I guess, but the analysis is entirely institutional until you get to the last third of the book where he brings some of the subsumed Solow model (all that r > g stuff) back in to talk about with institutions
"Cover your butt" for these people seems to mean "have as your main emphasis for several hundred pages". This is like saying Milton Friedman wasn't all that concerned with money!