Thomas Piketty

 Capital in the Twenty-First Century, by Thomas Piketty, 2013

https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century

https://www.gatesnotes.com/Books/Why-Inequality-Matters-Capital-in-21st-Century-Review

Capital in the twenty-first century / Thomas Piketty ; translated by Arthur Goldhammer.

1. capital.

2. income distribution.

3. wealth

4. labor economics.

HB501.P43613 2014

332'.041—dc23

2013 in France (la France), 2014 in United States 

Copyright © 2014 by the President and Fellows of Harvard College

First published as Le capital au XXI siècle, copyright © 2013 Éditions du Seuil

Acknowledgments

This book is based on fifteen years of research (1998–2013) devoted essentially to understanding the historical dynamics of wealth and income. Much of this research was done in collaboration with other scholars.

     ••••   •••   •••• 

Conclusion

I have presented the current state of our historical knowledge concerning the dynamics of the distribution of wealth and income since the eighteenth century, and I have attempted to draw from this knowledge whatever lessons can be drawn for the century ahead.

   The sources on which this book draws are more extensive than any previous author has assembled, but they remain imperfect and incomplete. All of my conclusions are by nature tenuous and deserve to be questioned and debated. It is not the purpose of social science research to produce mathematical certainties that can substitute for open, democratic debate in which all shades of opinion are

represented. 

The Central Contradiction of Capitalism: r > g

The overall conclusion of this study is that a market economy based on private property, if left to itself, contains powerful forces of convergence, associated in particular with the diffusion of knowledge and skills; but it also contains powerful forces of divergence, which are potentially threatening to democratic societies and to the values of social justice on which they are based. 

   The principal destabilizing force has to do with the fact that the private rate of return on capital, r, can be significantly higher for long periods of time than the rate of growth of income and output, g.

   The inequality r > g implies that wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future. 

   The consequences for the long-term dynamics of the wealth distribution are potentially terrifying, especially when one adds that the return on capital varies directly with the size of the initial stake and that the divergence in the wealth distribution is occurring on a global scale.

   The problem is enormous, and there is no simple solution. Growth can of course be encouraged by investing in education, knowledge, and nonpolluting technologies. But none of these will raise the growth rate to 4 or 5 percent a year. History shows that only countries that are catching up with more advanced economies—such as Europe during the three decades after World War II or China and other emerging countries today—can grow at such rates. For countries at the world technological frontier—and thus ultimately for the planet as a whole—there is ample reason to believe that the growth rate will not exceed 1–1.5 percent in the long run, no matter what economic policies are adopted.1

   With an average return on capital of 4–5 percent, it is therefore likely that r > g will again become the norm in the twenty-first century, as it had been throughout history until the eve of World War I. In the 20th century, it took two world wars to wipe away the past and significantly reduce the return on capital, thereby creating the illusion that the fundamental structural contradiction of capitalism (r > g) had been overcome. 

   ... ... ...

Yet it seems to me that all social scientists, all journalists and commentators, all activists in the unions and in politics of whatever stripe, and especially all citizens should take a serious interest in money, its measurement, the facts surrounding it, and its history.  Those who have a lot of it never fail to defend their interests.  Refusing to deal with numbers rarely serves the interests of the least well-off.

   ____________________________________

Donella H. Meadows, Edited by Diana Wright, Thinking in systems   

p.127

  Success to the successful is a well-known concept in the field of ecology, where it is called “the competitive exclusion principle.” This principle says that two different species cannot live in exactly the same ecological niche, competing for exactly the same resources. Because the two species are different, one will necessarily reproduce faster, or be able to use the resource more efficiently than the other. It will win a larger share of the resource, which will give it the ability to multiply more and keep winning. It will not only dominate the niche, it will drive the losing competitor to extinction. That will happen not by direct confrontation usually, but by appropriating all the resource, leaving none for the weaker competitor.

     (Thinking in systems : a primer, Donella H. Meadows, Edited by Diana Wright, sustainability institute, 2008, QA 402 .M425 2008, )

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