- 10 Mar 2017 20:29
#14784237
It depends on what you mean by, "capital." If you take Piketty's word that virtually all assets capable of yielding a return are "capital," then the returns are increasing. But as Matt Rognlie of MIT has showed, what Piketty calls a return to capital is actually mainly the return to residential real estate holdings -- i.e., in fact, land. This is not too surprising, as the landowner, uniquely among all asset holders, is legally entitled to pocket everyone else's taxes. Other privileges in addition to land titles -- mainly IP monopolies and bank licenses -- also show increased shares of total income, while capital in the classical economic sense of products of labor devoted to production continues to receive a declining share. Marx may have had a point about the declining profitability of capital investment in the classical sense; but in response, capitalism has simply shifted from investment in productive capital goods to parasitic accumulation of rentier privilege, which yields greater and growing returns at far less risk.
Rugoz wrote:As for the (slight) increase in capital's share of total income, that is actually a very complex topic. It must not necessarily come from technological change.
It depends on what you mean by, "capital." If you take Piketty's word that virtually all assets capable of yielding a return are "capital," then the returns are increasing. But as Matt Rognlie of MIT has showed, what Piketty calls a return to capital is actually mainly the return to residential real estate holdings -- i.e., in fact, land. This is not too surprising, as the landowner, uniquely among all asset holders, is legally entitled to pocket everyone else's taxes. Other privileges in addition to land titles -- mainly IP monopolies and bank licenses -- also show increased shares of total income, while capital in the classical economic sense of products of labor devoted to production continues to receive a declining share. Marx may have had a point about the declining profitability of capital investment in the classical sense; but in response, capitalism has simply shifted from investment in productive capital goods to parasitic accumulation of rentier privilege, which yields greater and growing returns at far less risk.