Part IV of the Piketty Trilogy. (The right people will get that reference...) Words not in his index: 1. Entrepreneur(ship) (though we do get entrepreneurial income) 2. (Monetary) calculation 3. Coordination This, my friends, is why he thinks capital just grows automatically. Aside from not distinguishing between capital and capital goods, theres no notion that capital must be put to particular uses by specific human beings and that such uses must (but might not!) generate a profit for capital to grow. Theres no sense that owners of capital can make mistakes and make losses. Theres no sense that capital decisions might have to be rethought, leading to capital substitution and refitting. There are simply no human actors engaging in monetary calculation in the face of uncertainty in order to figure out how to make the jigsaw puzzle pieces of capital fit together correctly in their own plans. It is a vision of economic activity that is akin to the automaticity of natural phenomena like the movement of the planets. It is, for all of his little barbs at the mainstream of the discipline, a perfect example of everything thats been wrong with economics for almost a century.
Posted on: Mon, 01 Dec 2014 02:29:38 +0000
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