Capital in the 21st century

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• Summary::
  • thesis: When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.
• notes::
  • Introduction
    • Thomas Malthus in 1798 primary threat was overpopulation -> stop welfare for poor
    • David Ricardo in 1817 worried about long-term evolution of land prices and land rents. scarcity principle applied to land -> ended up not panning out bc farm land declined relative to other forms of wealth as share of agriculture in national income decreased
      • technological progress was the unforeseen variable
      • “important to understand that the interplay of supply in demand in no way rulers out the possibility of a large and lasting divergence in the distribution of wealth linked to extreme change in certain relative prices. This is the principle implication of Ricardo’s scarcity principle.”
    • Karl Marx in 1867 wrote Capital using scarcity principle but applied to industrial capital
      • “A specter is haunting Europe—the specter of communism.”
      • dark prophecy came no closer to being realized than Ricardo’s—in last third of nineteenth century, wages finally began to increase -> growth for everyone will maintain stability even if large inequality but growth must be high enough
      • “What is more Marx devoted little thought to the question of how a society in which private capital had been totally abolished would be organized politically and economically.”
        • political nihilism approach, denounce existing system but no alternative
      • “Accumulation ends at a finite level but that level may be high enough to be destabilizing”
    • Simon Kuznets in 1955 published optimistic take that everything would work itself out
      • “the philosophy of the moment was summed up in a single sentence: “Growth is a rising tide that lifts all boats””