Capital in the twentyfirst century

the armchair economist

Capital, an inescapable work for understanding capitalism, its history and its categories, is undoubtedly one of the milestones in the history of thought. With this essential work, Marx not only revolutionized the way of conceiving economics, philosophy, history and politics, but also described a new perspective from which to analyze society that, to this day, has not been surpassed.

4. Circumstances which, independently of the proportional division of surplus-value into capital and revenue, determine the volume of accumulation: degree of exploitation of labor power; productive force of labor; magnitude of capital advanced; increasing difference between capital employed and capital consumed; and, finally, the degree of accumulation of surplus-value.

piketty inequality

For Thomas Piketty, intellectual and political debates on the distribution of wealth have been fueled above all by great prejudices and very little data. In this battlefield, ideas have converged on equality among citizens, the right of people to be paid according to their merits, the confidence that economic growth naturally mitigates the contrasts between the most favored and the frankly neglected, but concrete information, referring to a long term and to various geographies, has not been used with sufficient rigor to understand how wealth accumulates, what social consequences this process has and what States can do to deal with it.

For Thomas Piketty, intellectual and political debates on the distribution of wealth have been fueled above all by great prejudices and very little data. On this battlefield have converged ideas about equality among citizens, the right of people to be paid according to their merits, the confidence that economic growth naturally mitigates the contrasts between the most favored and those who are frankly poorest, and the right of the poorest to be paid according to their merits.

wikipedia

The book argues that the world today is moving back towards “patrimonial capitalism,” in which much of the economy is dominated by inherited wealth: the power of this economic class is increasing, threatening to create an oligarchy.[4] Piketty cites novels by Honoré de Balzac, Jane Austen and Henry James to describe the rigid class structure based on accumulated capital that existed in England and France in the early 19th century.

Piketty considers it necessary to reduce economic inequality for which he proposes a progressive flat tax on wealth of up to 2% combined with a progressive income tax of up to 80%; although he acknowledges that such a tax “would be politically impossible.”[5]

Without tax adjustment, Piketty predicts a world of low economic growth and extreme inequality. His data show that over long periods of time, the average return on investment exceeds productivity-based income by a wide margin.[7] He rejects the idea that productivity gains resulting from technological advances can be used to return sustained economic growth. We should not expect that a “more just and rational order” will emerge based on “vagaries of technology” and that the return on investment can be increased when technology can be substituted for people.[5]

economics in one lesson

The book argues that the world today is moving back towards “patrimonial capitalism,” in which much of the economy is dominated by inherited wealth: the power of this economic class is increasing, threatening to create an oligarchy.[4] Piketty cites novels by Honoré de Balzac, Jane Austen and Henry James to describe the rigid class structure based on accumulated capital that existed in England and France in the early 19th century.

Piketty considers it necessary to reduce economic inequality for which he proposes a progressive flat tax on wealth of up to 2% combined with a progressive income tax of up to 80%; although he acknowledges that such a tax “would be politically impossible.”[5]

Without tax adjustment, Piketty predicts a world of low economic growth and extreme inequality. His data show that over long periods of time, the average return on investment exceeds productivity-based income by a wide margin.[7] He rejects the idea that productivity gains resulting from technological advances can be used to return sustained economic growth. We should not expect that a “more just and rational order” will emerge based on “vagaries of technology” and that the return on investment can be increased when technology can be substituted for people.[5]