Capital in the Twenty-First Century

www.hup.harvard.edu/books/9780674430006
What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In CAPITAL IN THE TWENTY-FIRST CENTURY, economist Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.

[@thomasd2444]

00:01 - My book is trying to puts facts and to put history and to put data in one of the most controversial issues in history, which is the issue of inequality and unequal income and wealth.

[@Khayyam-vg9fw]

Of course what he's saying is essentially true, but it's amazing that such a self-evident phenomenon - the concentration of wealth among the super-rich - is in any way newsworthy, let alone the basis for an acclaimed book. It's obvious that the trend that Piketty describes, combined with the dumbing down of the education system and the wider culture, have ensured that what ought to be a fairly transparent - and politically reversible - development is an occult process in need of explanation by a high-powered academic in the first instance to his fellow academics and other pundits. On a somewhat trivial note, it's bizarre that such a highly educated man - and an alumnus of the LSE, moreover - should sound like Inspector Clouseau.

[@Khayyam-vg9fw]

The trouble, Sandra, is that the economic left has become detached from the sociocultural left (the votaries of "political correctness", the predominant strand in supposedly left-of-centre thinking and policy formation), who have largely embraced neoliberal economics. This creates the bizarre situation in which supposedly "far right" political parties are generally well to the left of any mainstream political party on economic issues.

[@ChadKukahiko]

the problem is more than simple education (though that is a MAJOR part of it) - it's also a long and well-funded propaganda machine that conflates "The Market" with "America". sadly i know many well-educated people who believe this lie and somehow see Ayn Rand's fictitious world as real life.

[@Khayyam-vg9fw]

That is a good point, Chad.

[@roelwesterhof6581]

Very impressive findings!

[@aymarda]

I am going to read this book.

[@noblebrown]

i just pre-ordered on audible--it comes out may 22

[@edmundosullivan6394]

the problem here is that definition of capital has changed over time. In ante bellum us, capital included property in the form of slaves. Fifty years ago the assets on the balance sheets of most major corporations in advanced economies were mainly machines, buildings and inventories. Today around 80 per cent is in the form of non-tangibles and intangibles. in service firms, most assets are things economists 50 years ago wouldn't have considered to be things. The fastest growing element of corporate balance sheets are intangibles. The biggest change in capital therefore is not its growth, but how it is defined. this is socially determined, like slavery. It has nothing to do with economic theory.

[@metallicakixtotalass]

How is that a substantive criticism? All of those things *are* forms of capital, and thus if returns to those assets are growing faster than the economy as a whole, clearly, the economy is becoming less dependent upon labor and productivity growth. It's literally exactly the same thesis.

[@edmundosullivan6394]

ohgobwhatisthis The argument is based on time series data for capital. but this quantifies something that is inherently unstable. What is treated as capital today wasn't considered capital fifty years ago. You may consider high returns to be bad or good. What's important is the way capital is defined and measured. This is mainly coditioned by law and convention. Therefore, if you want decisively to change the share of income between capital and labour you need to change the law and popular attitudes about what actually is capital and what isnt. Punitive taxation based on the conventional definitions of capital will only reward capital flight to low tax juriisdctions, validate bigger state bureaucracies, punish the honest and increase state snooping. It will probably be ineffective as well as illiberal. the fact is most assets on corporate balance sheets are non-tangibls and in reality don't exist. If they were banned by law they would disappear. That would automatically slash capital's share of income and reward creativity rather than passive ownership. It would also be simultaneously egalitarian and libertarian as well as efficient.

[@edmundosullivan6394]

They are "deemed" to be forms of capital, but what is the definition of capital? The fact is that the definition in contemporary economics' texts is so all-encompassing that it is practically unusuable. There was a time, a hundred years ago, when capital was considered to be something tangible: machines, buildings, bullion money. Today, the world's fastest-growing companies are constructed on intangible capital; things that have no tangible existence (think Facebook, Google etc). So the concept of capital has not only changed semantically. It's changed substantially as well. Once that happens, the numerator in the r/K ratio is unstable and arbitrarily defined. That means that g can be measured coherently over time. Which means that the foundations upon which Piketty's argument is based (data) collapse, but not for the reasons conventional critics suggest. The definition of capital is not unchanging and eternal and it reflects convention, legislation (like laws protecting copyright) and accounting codes (check out the way the FASB has been altering ways it defines and measures different forms of intangible capital). Once that is grasped, it is obvious that any concentration of wealth primarily reflects human mental constructs. It is not the product of a machine using measurable inputs and producing measurable outputs, which is the way conventional economics views economies. It is the outcome of the way human beings interact with each other. It was considered normal and natural in much of the world for human beings to be able to count other human beings as wealth or capital until the end of the 18th century. In the Confederate states of the US, human beings were measured as providing the majority of their capital until 1865. The fact that that form of capital evaporated has nothing to do with economic theory. It was because it was decided that capital from that point on could not and should not include slave labour. This story is continuing. The amount of tangible capital necessary to support economic growth is declining as a result of the application of human ingenuity to manufacturing, communications and energy. In due course, the amount of tangible capital needed will be almost negligible. That is the moment when the world as we know it will end.

[@jcaites]

Edmund O'Sullivan I'm not really sure about your idea of 'tangibles' and 'intangibles'. Certainly, the service industry has grown, as has things like the internet and telecommunications created intangibles like 'cyber' real estate- but goods and concrete materials have and always will be the basis of economy, in either production or consumption.

[@andrews9719]

Edmund O'Sullivan To suggest that Piketty was unaware of this disparity is unnecessarily patronizing, meaning your critique was already accounted for in the study. I would also argue that the fact that technology has evolved the economy is not a substantial counter argument to Piketty's claims. In fact, I think it was part of his thesis. Economists at some point must be philosophical too, lol. Don't take my comment harshly, you made a good point to consider.

[@kayedal-haddad]

Best way of bridging the divide between Capital and Labour?

[@tomhanks8212]

Fuck. I need captions!

[@kavalkid1]

@Lance- Thank you for being a sounding board for the issue. Your stance rings hollow. The ideas you have adopted are a hedge for "The Prisoner's Dilemma." There are global equilibria that are more beneficial to you and your progeny.

[@YayaBolender]

While I don't agree with all what he said, I appreciate that a French guy like me, makes efforts to speak English. However, I think he should improve his accent :-) Joke put aside, I know people who had basically nothing to start and who are now managing big companies which make much money and have big success. It is not easy, but not impossible. I don't believe in fatality. Instead of closing doors, we should open new ones, especially in France.

[@ianman6]

We all know people who've made it through hard work, and nobody denies it is possible. But that's not the point. The point is that it isn't possible for everyone at the same time in the current capitalist system. It is easier for some because of their circumstances, and harder or near-impossible for others for the same reason. What's more, it is a zero sum game. For you to 'make it', even through honest effort and diligence, there must be someone who doesn't make it. Some people have to lose the game for others to win it, even if they put in the same effort. The game is rigged, so to speak, in such a way that favors already accumulated wealth.

[@Earthgazer]

ianman6 wow nice. when you use a fallacy, you use it by name to let everyone know it.

[@ianman6]

UnderATallTree ?

[@Iamaplatypus42]

ianman6 The capitalist system is not a zero sum game. Every economist could tell you that. Study a bit the subject before saying non-sense.

[@ianman6]

I have studied the subject, and many economists say otherwise. It sounds as though you are very ill informed or delusional. Any economic system is a subset of a physical ecological system. It cannot be larger than the physical system that contains it. That system is finite, so therefore ultimately zero-sum. Ipso facto, any sub-system will be zero-sum. This is formal logic. If you can't grasp that, you're problems run deeper than your poor understanding of economics.

[@DragAmiot]

Democracy in the workplace. Abolish all positions on the boards of directors. Let workers vote on what they want to spend surpluses on.

[@bma051000]

What about the shareholders? Don't they get a say? And how do the workers know and on what to spend surpluses?

[@DragAmiot]

***** are you against democracy?

[@bma051000]

CryptedSky Depends on what you mean by democracy. If you mean our officials that represent us are elected by democratic process, fine. Absolute democracy, as in the case of Socrates being voted to execution, yes. The problem with democracy is that it's the Argumentum ad Populum Fallacy applied to politics. Just because a majority of people vote a certain way, doesn't make it right, now does it?

[@DragAmiot]

***** You're right. I was sort of trolling with that question. But here is what I meant initially. Maybe you're familiar with the Principal-Agent problem in which the principal and the agent have divergent interests and the agent ends making decisions that screw over the principal. (ie : the board of directors makes a decision that screws over the shareholders for their own benefit/ a larger bonus) I see society at large as the Principal and «moral persons» such as companies as the agent which accomplishes as few services for society at large in exchange for some sort of salary or profit. Well, the agent often makes decisions that are in his best interest and not in the best interest of the principal such as cutting corners around, let's say, disposal of chemicals or exporting jobs or other safety issues in order to get a higher return in the short term. The way cooperatives are organized makes them much less removed from the principal (society at large). That makes them much more likely to make decisions that are more in line with the interests of the principal. That much is logical.

[@tilemacro]

***** When you want to learn what's best for the people... You ask the people. That's what democracy is. I understand that democracy is against the interests of a few, but to call it a fallacy... We aren't arguing anything here. This isn't a debate. Democracy is decision making system.

[@alauc]

From my point of view the crucial question is the rate of return on human 90% and physical 10% capital. He did not analyze moral, intellectual, and social capital. Without it we are not capable to understand economic problem.

[@jcaites]

What do you mean by 'human' and 'physical' capital? I thought 'human' capital was always labour, in the sense of imbuing raw material with value. I can make an estimate of what you mean by social capital, but what is moral capital?

[@jsdpartners]

Ante Lauc The FT has been exposing the bad data used by Piketty to sell his 80% tax that will surely destroy the economy and result in major war. Piketty is the new Marx and he has been hurled to super rock-star status by the left media hell bent on trying to just grab other people’s money with a pen and laws rather than a gun.The socialists just cannot stop their envy of other people’s money and they feel that they have a right to just take what other people earn. Their greed cannot be justified with real data so they fake everything to pretend to be morally justified.

[@leooiler7873]

This guy manages to be such a neanderthal and a brilliant person at the same time

[@TP-zi5sv]

Cute :)

[@LanceWinslow]

The problem with #anticapitalists and #socialisteconomists

[@metallicakixtotalass]

Have no substantive criticisms then? What about "LALALA - CAN'T HEAR YOU!!!"

[@LanceWinslow]

Eat Dirt, I've got so much substantive critique, I wrote 6 economic eBooks about this nonsense.

[@spirit469]

Lance Winslow Ebooks aren't worth shit unless the data backs it up. Also, you probably are some nobody while this guy is a respected academic in the field.

[@LanceWinslow]

Well, I guess if a socialist in Academia says so - it must be true - who am I to question authority - or challenge the experts. You win you must be right then? Whatever.

[@Khayyam-vg9fw]

Lance Winslow Brilliant! You introduced the "S" word! End of argument. (You think.)

[@muh.ihsanharahap2466]

His French accent is annoying.

[@muh.ihsanharahap2466]

His French accent is annoying.