Economics at your fingertips  

Again on Piketty's Capital in the Twenty-First Century or Why National Accounts and Three Simple Laws Should not be a Substitute for Economic Theory

Christian Flamant ()
Additional contact information
Christian Flamant: Economist (retired) worked for AFD (French Development Agency), IMF and OECD

World Economic Review, 2015, vol. 2015, issue 5, 22

Abstract: This paper reviews Piketty's book Capital in the 21st Century. Although the facts described by Piketty are widely indisputable, the paper criticizes the actual economic theory underlying the central thesis of the book, and this on two main points: first the nature and thus the consistency of capital, and second the direction of causality. The paper discusses first the confusion made by Piketty between “capital” and “wealth” which for him cover the same economic reality, and shows that productive capital, real estate capital and net financial assets cannot be put on the same conceptual level. Secondly, it shows that the rate of return on capital as the ultimate explanatory factor for the growth in inequalities does not hold, because Piketty's three laws are not acceptable as such: the first one is a mere tautology, the second implies the identity of the long-term growth rates of income and capital, and for the third law the fact that r is greater than g is not in itself a sufficient condition for β and therefore α to increase. Even in Piketty's analysis it is not really r but s, the owners of capital's consumption choices, which drive capital accumulation. The paper finally proposes an alternative explanation for the evolution of developed economies over the last 35 years.

Date: 2015
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) ... for-economic-theory/ (text/html) (application/pdf)

Related works:
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:

Access Statistics for this article

World Economic Review is currently edited by Kyla Rushman

More articles in World Economic Review from World Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Jake McMurchie ().

Page updated 2020-04-18
Handle: RePEc:wea:worler:v:2015:y:2015:i:5:p:22