The (F)Laws of Piketty’s Capitalism: A Fundamental Approach

de la Fonteijne, Marcel R. (2014): The (F)Laws of Piketty’s Capitalism: A Fundamental Approach.

Abstract

The book 'Capital in the Twenty-First Century' by the French economist Piketty about the inequality of income and wealth distribution is already quite a while in the spotlights. Throughout his book he uses two formulas which he has named ‘the first fundamental law of capitalism’ and ‘the second fundamental law of capitalism’. With his reasoning he tries to show that, with these laws in place, he is capable to explain inequality phenomena with respect to the income and wealth distribution.

Without going into the significance of his reasoning and conclusions, we will show that the use of the laws, the way he does, is fundamentally wrong.

We suggest alternative formulas and a new approach. The inequality r>g is in our opinion not a meaningful equation with respect to inequality.

• Item Type: MPRA Paper
• Language: English
• Keywords: sustainability, inequality, unemployment, GDP growth, income, wealth distribution
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; H - Public Economics > H6 - National Budget, Deficit, and Debt > H60 - General

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