The Rise and Decline of General Laws of Capitalism

Daron Acemoglu and James Robinson

Journal of Economic Perspectives, 2015, vol. 29, issue 1, 3-28

Abstract: Thomas Piketty's (2013) book, Capital in the 21st Century , follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality.

JEL-codes: B51 D31 D63 D72 O25 O43 P16 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/jep.29.1.3
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (133)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/jep.29.1.3 (application/pdf)
http://www.aeaweb.org/jep/data/2901/29010003_data.zip (application/zip)
http://www.aeaweb.org/jep/data/2901/29010003_data.zip (application/zip)
http://www.aeaweb.org/jep/app/2901/29010003_app.pdf (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: The Rise and Decline of General Laws of Capitalism (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:jecper:v:29:y:2015:i:1:p:3-28

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

Journal of Economic Perspectives is currently edited by Enrico Moretti

More articles in Journal of Economic Perspectives from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert (mpa@aeapubs.org).