Sunday, July 20, 2014

Capital in the Twenty-First Century

There was a book written in the middle of the Nineteenth Century with a similar name: Capital. It was written in German by a man living in England. Europe and the world then, were under social stress. In the beginning of the Twentieth Century, the world witnessed the First Social Revolution in the world, which exploded in Mexico. On my mother's side, my immediate family was involved. My grandmother's brothers joined a democratic movement, which sent the Mexican dictator to die in Paris.

I did not know the level of economic inequality then prevalent in Mexico, and Europe, until I read the book by Thomas Piketty, which is the subject of this note. Now, we are back to those horrendous levels of inequality, and even though, the book's author does not predict a repetition of those events, I do see very disquieting similarities to the time when the world unraveled, on July 28, 1914. 

Piketty is a tenured professor at the Paris School of Economics, which he co-founded. His parents witnessed the events of May 68, in Paris. On October 2, of that year, I almost witnessed the Tlatelolco Massacre myself. I can write this note, because I did not go to the democratic student protest, planned for that day. At least since that day, I have been trying to understand the events of my youth. I can report now my understanding, based on the rigorous scientific work of Thomas Piketty. 

For this introductory note I only write, that his findings can economically be expressed in the mathematical expression:



In future installments I'll try to elaborate more. Suffice it to say here, that it empirically describes the accumulation of Capital. Karl Marx, who was the German author of the other Capital, did not have access to the tax records, nor did he have the powerful computers needed to filter out, so much information, and discover the dynamics of Capital accumulation to the present time.

The final message is simple though. If wealthy people, are not taxed, we risk to have, another century of butchers ruling the world.

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