Piketty's Capital

Piketty's Capital

Wrong Theory Destructive Program

By:

George Reisman

Book Club members' rating

Click any button below to buy or to see prices and Amazon reviews:


Log in to add to wishlist, library or to rate the book

Summary

In his New York Times column of April 25 of this year, Paul Krugman wrote, “The really striking thing about the debate so far is that the right seems unable to mount any kind of substantive counterattack to Mr. Piketty’s thesis.”
Here is that substantive counterattack, in the form of my essay “Piketty’s Capital: Wrong Theory/Destructive Program.” In it, I show that Piketty's destructive program of confiscatory taxation of income and capital derives from his lack of essential knowledge in the areas of the theory of capital, profit, and saving.
My essay is not only a critique of Piketty but also an introduction to sound ideas in these and related areas. Its content is shown by the following list of topics.
•Prelude to Piketty: The US Government’s Assault on the American Economic System
•Piketty’s Destructive Program
•Overview of Piketty
•Piketty’s Ignorance of the Role of Capital in Production
•The Actual Role of Capital Accumulation and Technological Progress
•Technological Progress as a Requirement for Capital Accumulation
•The Contribution of a Higher Capital/Income Ratio
•The Relationship between Technological Progress and Capital Accumulation Is Reciprocal
•Piketty’s Theory of Profit
•Piketty’s Fear of Saving and Higher Capital/Income Ratios
•Piketty’s Contradiction on the Productive Contribution of Capital
•Time Preference versus Piketty’s Alleged Limitless Rise in the Capital/Income Ratio
•Contrary to Piketty, Capitalism Progressively Raises Real Wages and Increases the Wage Share of National Income While Reducing the Profit Share
•Higher Aggregate Costs as the Source of Lower and Progressively Falling Unit Costs and Prices
•Piketty’s Failure to Realize that a Higher Capital/Income Ratio Signifies not More Profit but a Still Lower Rate of Profit
•No Tendency toward a Falling Rate of Profit
•The Actual Effects of the Capitalists’ Activities
•Unravelling Piketty’s Confusions: The Increase in the Quantity of Money as the Cause of Continual Net Saving and Net Investment
•Collapse of Piketty’s Alleged “Second Fundamental Law of Capitalism”
•The Connection between Profit and Net Investment: The Net-Investment/Monetary Component in Profit
•The Net-Consumption Component in Profit
•The National-Income/Net-National Product Identity
•Reductions to Consumption
•The Monetary Component in the Rate of Profit Need Not Signify Inflation
•Why Saving in the Real World Is Not Accompanied by a Falling Rate of Profit
•Taxation that Reduces Saving and Investment Increases Profits and Reduces Wages
•Piketty’s Program Would Increase the Amount and Rate of Profit
•For the Capitalists to Cause the Harm Piketty Says they Will Cause, They Would Have to Do the Exact Opposite of What He Fears They Will Do
•Contra Piketty: In Defense of 1,000:1 Income Inequality
•Contra Piketty: The General Interest in the Inequality of Wealth and Income
•Piketty’s Data Are Fundamentally Flawed
•Profit as the Original and Primary Form of Labor Income
•Profits as a Labor Income Not Contradicted by Their Variation with the Size of the Capital Invested
•Economic Inequality and a History of the World in Two Scenes

Great Deals!


The FREE Kindle Reading App lets you read your favorite eBooks on most devices (PCs, smartphones, tablets, etc.). Click here to get the FREE Kindle Reading App.
However, you could read this and countless other books on a brand new Kindle E-reader for less than the price of a cup of coffee per week. Click here to choose your favorite Kindle E-reader.
And the best thing is that most Books of Liberty eBooks are actually available through Kindle Unlimited. Join Amazon Kindle Unlimited 30-Day Free Trial to read from over 1 million ebooks and listen to thousands of audiobooks, all for one fixed, low price.

Read or listen for free

Tags

Similar Books

loading

Related Starting Points

Economics

The economics category, as expected, is very well represented within the pages of this site. Of all the economics books, around half are explicitly Austrian Economics texts, and (with a significant overlap) around half discuss monetary theory. You may search specifically for economic treatises or books about economists; you will find historical or theoretical accounts of financial crises; you will stumble upon recent books on crypto-currencies (like bitcoin), books covering topics like income or wealth inequality, as well as more technical subjects like price theory, monopoly, division of labor, public choice theory and others. Additionally, critiques of Keynesian economics are to be found throughout the books in this category.

Of the Austrian Economics books, the largest portion discuss The Austrian Business Cycle and praxeology or human action, but you will find many covering to one degree or another topics like time preference, capital and interest, subjective value, and economic calculation, to name a few.

And for those interested in currency or money, whether sound money or fiat money, you will find books arguing the benefits of the gold standard, debates on inflation and deflation, banking, central banks and the Federal Reserve specifically.

At the heart of the free market system of unregulated, voluntary trade stands capitalism and its emphasis on private property. Unsurprisingly, a large collection of books are available on this subject, many of which outline quite clearly the fundamentals and the outcomes of capitalism, especially in contrast to other economic systems like socialism. Additional related topics, such as free trade, decentralization, risk, uncertainty, and the market process can be found in such books.

A note from the curator: Liberty Classroom provides courses like: Austrian Economics Step by Step, two courses on the History of Economic Thought, and What’s Wrong with Textbook Economics, to name a few. With courses like these, how can you not become a fan of Liberty Classroom? I know I am.

And would you like your homeschoolers to learn economics right the first time around? The Ron Paul Curriculum homeschool program covers 12th grade economics from teachers you can trust. In full disclosure, Books of Liberty will get a small advertising fee for purchases made through our links.


Critique of the State

Shedding more light where once was dark, this topic includes a wide array of critiques surrounding the function of the State, but mostly around policy critiques and warfare. As it relates to the State’s functioning, everything from central planning, coercion and government expansion through to propaganda, taxation and the act of voting are discussed.

The State apparatus and its institutions, the CIA, FBI, NSA, and other alphabet soup organizations – they are all brought to account together with their counterparts in the military-industrial complex and the deep state. The Supreme Court, criminal justice system and the prisons are not immune to critique. And the filth of politics and lobbying are described in great lengths.

Policy critiques cover everything from abortion to welfare. It all starts with state intervention in the affairs of private individuals and foreign intervention (which includes the seemingly benevolent foreign aid) in the affairs of other groups of people. More specifically, US foreign policy and US military intervention are popular policies to critique.

Some of the other more common topics include: drugs, eminent domain, environmentalism, poverty, protectionism, muh roads, slavery, and other forms of public policy. Needless to say, these and other policies lead to ridiculous levels of government spending, itself a valid topic to critique.

And of course, the most destructive activity perpetrated by the State is warfare. The wars abroad and at home are discussed at length. Of the ‘traditional’ wars, World War I and II and the so-called American ‘Civil War’ (always in quotation marks) feature in the most number of books, some of which include discussions on genocide and war crimes. But then there are also the wars on amorphous, undefined entities, such as: the war on drugs, which leads to domestic violence, militarization and a police state; and the war on terror, which brought us torture, more terror and the ever-increasing drone warfare.

A note from the curator: The State is thoroughly critiqued within Liberty Classroom and the Ron Paul Curriculum homeschool program. In full transparency, I have no direct experience in homeschooling but I have heavily researched Ron Paul’s program and found it to be an outstanding alternative to the public school system (a system where you would never hear a critique of the State).

I am a very satisfied Master Member of Liberty Classroom and have taken the Introduction to Government course that is available through the Ron Paul Curriculum. Between this course and others available through Liberty Classroom, you can’t get a better or more thought out exposition critiquing the State and all its failures or faulty premises (and in a way that is suitable for the younger ages too). I’ll disclose that Books of Liberty will get a small advertising fee for purchases made through our links.


Personal Freedom

Since the mission of Books of Liberty is to help you find content to free your mind, you can’t go wrong with clicking on personal freedom and seeing where it takes you. Topics that are likely to be correlated with personal freedom include education and critical thinking, entrepreneurship or other means of achieving financial freedom, physical and mental wellbeing, and for the parents out there we have books on peaceful parenting and some reading ideas for your own young readers.


Education

It should come as no surprise that the education topic is chock-full of great material. Given the range of items it covers, you will see why it is the third most popular topic on this site. The two largest topics you’ll find within education are your "how to" books and those that bust myths and misconceptions. These two categories assist you greatly in your long path of autodidacticism (self-directed learning). Both the "how to" and the myths and misconceptions books cover a wide range of interests, helping you educate yourself (and others) in pretty much every other topic on this site. Case studies are also well represented and learning from them is a good way to help bring clarity to a subject.

However, in addition to books that educate, a large number of books discuss the education system itself, such as higher education and college alternatives, or the public school system and public school alternatives (whether it be homeschooling, Montessori, a Sudbury School approach, or other forms of unschooling).

For those homeschooling or otherwise teaching young ones, resources exist on reading (including debates between whole-word / look-say and phonics), and for the older student and certainly for the self-directed learners out there, you will find resources on the trivium method that provides a systematic approach (of grammar, logic and rhetoric) to learning any subject effectively, and you will find plenty of study guides on a variety of subjects.

A note from the curator: The Ron Paul Curriculum homeschool program is promoted throughout the site and in full disclosure Books of Liberty will get an advertising fee for those purchases made through our links. While I do not have direct experience in homeschooling, I have researched Ron Paul’s program extensively and found it to be an outstanding alternative to the public school system and very recommended for those who go down the homeschooling route.


For Parents

The "for parents" topic is a very important component of Book of Liberty. After all, for those who have kids, if you would like to affect change in the world one of the most important roles you have in this context is being a responsible steward of your children. Raising a strong, moral, peaceful individual can have tremendous positive impact.

The non-aggression principle is best displayed through its application in interpersonal relations, of which peaceful parenting is one such strategy. Like many other topics covered by books on this site, this too can be controversial and in no way are we prescribing behavior or applying judgment. There is no one-size-fits-all approach, but we do encourage the same rigor and logical consistency to be applied to your relationships with others in your life as we apply to the relationship between the individual and the State.

Topics such as homeschooling, Montessori, or other forms of unschooling can be found when browsing the "for parents" topic, as well as books for young readers. If you have a young reader at home, consider browsing this section for inspiration on books for them to read.

A note from the curator: If you are a parent of a 5-11 year old (or know someone who is) The Tuttle Twins series of books would make a great addition to their library. Similar to the advertising fees we get from books purchased through Amazon, the creators of The Tuttle Twins support Books of Liberty with a small advertising fee for purchases made through our links, and I would not promote these books if I didn’t highly recommend them myself.

Same goes for the Ron Paul Curriculum homeschool program, who support Books of Liberty through advertising fees for those who purchase through our links. I haven’t gone through a homeschool program and my daughter isn’t old enough for school yet, so I can’t speak from personal experience but I have heard nothing but tremendous positive feedback from homeschooling parents for Ron Paul’s program and I am happy to be recommending it.


Personal Development

Between education, entrepreneurship, communication skills and other such important topics, personal development forms a key component of one’s path to personal freedom. No human is perfect and while we ought to balance the recognition of this fact with self-esteem and acceptance of our nature, there is room for improvement in us all (and if nothing else, there is room for us to at least maintain our level of awesomeness).

I've included books covering important components of personal development and tools to increase your efficiency. These include productivity and time management methodologies (such as the highly recommended Getting Things Done or GTD), leadership skills, creativity, resilience, organizational skills and many more, all of which require the formation of great habits, self-discipline and willpower. Other intriguing topics like stoicism and minimalism are covered too.

Topics related with personal development include physical and mental wellbeing as well as psychology.


Anti-individualism

Sadly, where there is light, there must be shadow and the topics you’d find in this category pertain to the darker parts of human existence. We’ve included some books that espouse such ideals, such as various communist treatises or books that advocate various forms of socialism or those that hail democracy as some crowning achievement of mankind. I, for one, feel that it is important to know the arguments of the opposing side to strengthen your understanding of your own position. But if you do buy these books and enrich the authors or their publishers, please buy through our links so that at least a liberty-loving outfit would gain a buck or two out of this deal…

Aside from a few books that support such views, the majority of the titles tagged with the above topics are there to shine light on, and provide a critique of these views. Other anti-individualist topics include: the seemingly benign bureaucracy that makes the State inefficient; the deceptive egalitarianism and the nanny state, a path paved with good intentions that we all know where it leads (hint: may include redistribution of wealth and slavery); the outright evil in ideologies such as Fascism and Marxism that lead to despotism, dictatorship, tyranny and totalitarianism; and crony capitalism (corporatism) and its predecessor mercantilism, which masquerades as capitalism in most people’s minds and leads to anti-capitalist views.


Cultural Issues

Legal and political issues aside, it is often the cultural and social issues that are upstream from any legislative action. Especially in a democracy, politicians know that to get reelected they need to tread a fine line and take a stand on topics that are culturally in vogue. Books providing cultural analysis or ones that talk of the social order are numerous within our site.

These books include racism, sexism, feminism and other such social justice issues relating to discrimination, freedom of association, freedom of speech, human rights, or political correctness. The topics of popular culture, American culture and Western Civilization are also represented.

Observations from many writers on these issues are provided through commentary and opinion and often investigative journalism leads down an interesting path, shedding light on these and other topics.


Philosophy of Freedom

Within this topic you’ll find a wide variety of books, many of which we hold in the highest regard. These books are also associated with other topics, such as anarchist traditions and practical liberty. All your great libertarian manifestos, books that discuss individual liberty, the non-aggression principle, laissez faire, objectivism, etc. are found within.

Anarchist traditions would be a great shortcut to find books specifically calling out anarchist principles. The name "anarchist traditions" is purposefully broad, because in addition to anarcho-capitalism and voluntaryism, there are books on anarcho-syndicalism, anarcho-communism or other forms of collectivist anarchism, as well as egoism and other schools of thought.

Practical liberty has a hodge-podge of awesome content, from the great anti-war and abolitionist books to theoretical treatises on private defense and private law; from whistleblowing and WikiLeaks to other forms of activism and civil disobedience; from secession to jury nullification and describing revolution and resistance. We’ve even thrown in some interesting "how to" books on affecting change to further one’s activist ends.

The topic of philosophy is closely associated, as many of the books tagged to the philosophy of freedom contain deep philosophical arguments from ethics and epistemology to political theory and religion. A wide variety of ideologies are represented and critiqued within the pages of the books linked here, covering the full political spectrum: whether it is Fascism versus Communism; Neoconservatism versus Progressivism or Liberalism; Nationalism and Nazism versus International Socialism and everything in between.

A note from the curator: You may see throughout the site banners promoting Liberty Classroom. As a very satisfied Master Member, I cannot recommend enough the courses within Liberty Classroom, all of which are imbued with the philosophy of freedom, including How Freedom Settled the West and History of Conservatism and Libertarianism. In full disclosure, Books of Liberty will get a small advertising fee for purchases made through our link.