CAPITAL in the Twenty-First Century

CAPITAL in the Twenty-First Century, written by Thomas Piketty, translated by Arther Goldhammer

So far, I have read throught Part One and Part Two of this famous book on economy written in 2013, and translated into English in 2014. The book is written in comparatiely easy English, so that I believe I could understand what the auther wanted to say in this book.

The following is an incomplete memorandom of reding this book.

The main theme of this book would be Part Three and Part Four where the detailed analysis will be done specifically the structure of Inequity, and the remedy to cope with it.

Before stepping into the main part of this book, it would be beneficial to summarize the contents for myself.

The introduction part of this book seems to handle the observation of this book. The transition of the share of top decile in national income in page 24 is frequently discussed on the context that inequity is glowing.

The Fundamental Force for Divergence: r > g
r: the average annual rate of return on capital, including profits, dividends, interest, rents, and ither income from capital, expressed as a percentage of its total value.
g: the rate of growth of the economy.

Part One
This part handles Income and Capital

{one} Income and Output

The First Fundamental Law of Capitalism: α = r x β
α: share of income from capital in national income
β: the capital/income ratio
r : the rate of return on capital

For example, if β = 600% and r = 5%, then α = r x β = 30%.

r average: 7-8% in rich country
real estate: 3-4%

National Accounts: An Evolving Social Construct
- Here the auther refers histrical evalution of the Social Construct
Global Distribution of Production ( page 59 )
- Here the auther refers geologial transition.
From Continental Blocks to Regional Blocks ( page 61 )
- Continued from the former section, the auther continues to argue that global inequity is best described in terms of regional blocks rather than continental blocks.
Global Inequity : From 150 Euro per Month to 3,000 Euro per Month ( page 64 )
- The auther enphasizes there's a large gap between those who have and those who have not.
The Global Distribution of Income Is More Unequal Than the Distribution of Output
- This is the auther's one of the conclusion in {one}. The auther emphasizes that there's a various aspects of inequality. This will be the basis to discuss in the latter chapters.

{two} Illusions and Realities
Based on the analysis that there's a inequality everywhere, the auther further makes an observation whether catching-up activities especially in the developing countties - by decomposing the growth factor into population growth and per capita output growth.

Table 2.1 World growth since the Industrial Revolution ( average annual growth rate )

Years - World output(%) World population(%) Per capita output (%)
1700-2012 1.6 0.8 0.8

The Law of Cumulative Growth ( page 74 )
The point here is that even a small percentage of the growth will in the long run will be turned out to be an considerable growth.
"The simple conclusion that jumps out from this table is that trowth rates greater that 1-1.5 percent a year cannot be sustained indefinately without generating vertiginous population increases.

The Stages of Demographic Growth

"The most likely hypothesis is that the global population grouwth rate over the next several centuries will be significantly less that 0.8%. 0.1 - 0.2 plausible."
Growth as a Factor for Equalization ( page 83 )

And the auther continues to analyze various aspects of growth..

Part 2 The Dynamics of the capital/income ration
Here the auther analyses histrical / geological changes in capital.

{three} Metamorphoses of Capital
France: Goriot land and bond

France and Britain have always been centuries based on private property( page 127 ).

THen how was in Japan in 19 century? The land-tax reform in 1868 was a epoch making reform of the society.

{four} From old Eurpoe to New World
capital in america was stable

"When it comes to progressive taxation, the Unites States went much farther thatn Eurpoe.

{five} The Capital/Income Ratio in the long run

The secund Fundamental Law of Capitalism:

β = s / g

β: capital/income ratio
s : saving rate
g: growth rate

G: Europe 1.5-2
america 2.5- 3

page 170 bubbles in japan analysys
saving rate was high , growth rate was also high. The history proves that Japan's case is not the exception, in the long run.

( to be updated later)










Latest journals
Search form
Latest comments
Latest trackbacks
Monthly archive
Display RSS link.