Monday, July 21, 2014

Capital in the Twenty-First Century (II)

List of some authors presented by Piketty in his Introduction:

  1. Thomas Malthus
  2. Arthur Young
  3. Adam Smith
  4. David Ricardo
  5. Karl Marx
  6. Friedrich Engels
  7. Simon Kuznets
These are not all, he presents a view of the European world in its transit from Feudalism to Capitalism. He emphasizes the lack of data of previous authors, and tools to use them. Armed with these data he was able to discover, what he calls "The Fundamental Force for Divergence: .

This is not an equation of Nature, like Newton's equations of motion, it rather expresses an empirical fact. For all the data he has compiled, the rate of capital reproduction, r, is bigger than the rate of growth, g. One simple way to state it, is that one is better off with acquired capital, than working for a salary.  He predicts that if nothing is done about this, i.e. tax regulations, inequality will keep growing, with possible destabilizing effects.

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