Piketty's Capital

Piketty's Capital

Wrong Theory Destructive Program

By:

George Reisman

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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

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