Economics Dictionary of ArgumentsHome
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| Capital: Capital in economics refers to assets used to produce goods and services, including financial capital, machinery, buildings, and human skills. It represents an investment in productive resources, contributing to economic growth, productivity, and wealth generation. Capital can be physical or human, and its accumulation is crucial for development._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Thomas Piketty on Capital - Dictionary of Arguments
Bofinger I 111 Capital/Piketty/Bofinger: In simple terms, capital can be defined as net assets (RV), which corresponds to equity in a company. Net assets are made up of (net) monetary assets (GV), i.e. the balance of monetary claims and liabilities, and tangible assets (SV): RV = SV + GV VsPiketti: The concept of monetary assets is overlooked in the usual introductory books on macroeconomics, which leads to a lot of confusion - not least in Piketty(1). Piketty: In his theoretical explanations, Piketty understands "capital" to mean tangible assets. This is imperative when he speaks of production functions and substitution elasticities, since in neoclassical production theory there are only tangible assets in addition to human capital. >Elasticity. Method: In his empirical analyses, however, he uses a concept of capital that includes not only tangible assets but also net financial assets, i.e. in the sense of net assets. >Method/Piketty. Bofinger I 112 Growth theory: Due to the neglect of financial assets, the current growth theory assumes as a matter of course that savings are completely transformed into investments. Saving/investment: This is why it is not necessary to distinguish between the private savings rate (S/Y) and the private investment rate (I/Y). Piketty: Accordingly, Piketty assumes that the ratio of the capital stock to the gross domestic product is determined by the ratio of the private savings rate to real economic growth. It is therefore inevitable that the high corporate profits and savings of the rich are invested in an ever larger real capital stock. Problem: (…) that would be (…) a paradoxical development. Why should an ever larger real capital stock be built up in comparison to the national income, with which ever more goods can be produced, when the vast majority of the population has an ever smaller share of the national income and is therefore less and less able to develop purchasing power? Demand/Neoclassical economics: Since Piketty - like most neoclassical economists - believes that the demand side can be neglected in a long-term perspective, he does not ask himself this question. >Demand, >Neoclassicals, >Supply, >Markets, >Investments, >Consumption. Bofinger I 125 Method: The problem is (…) that Piketty uses the term “capital” differently: a) In his statistical analyses he understands this to mean net assets, b) in his capital theory analyses, however, he must mean tangible assets. This basically leaves open whether he understands the concept of tangible assets or net assets when he predicts the increase in K/Y under K. In a world with an ever greater concentration of income and assets and an ever worsening income position of the broad masses, a sharp increase in tangible assets compared to national income seems implausible. Investments: Experience from recent years shows that in times of weak overall economic demand, companies are very cautious about investments, instead building up financial assets and reducing their debt. Consumption: The private savings rate is therefore significantly higher than the private investment rate. See >Capital structure. Some basics for Piketty: >Cambridge Capital Controversy, >Geoffrey C. Harcourt, >Capital reversing, >Capital/Joan Robinson, >Exploitation/Robinson, >Reswitching/Robinson, >Reswitching/Sraffa, >Reswitching/Economic Theories, >Neo-Keynesianism, >Neo-Neoclassical Theories. 1. Piketty, T. 2014. Das Kapital im 21. Jahrhundert. München: Beck. Peter Bofinger und Philipp Scheuermeyer. 2015.“Das „Kapital“ im 21. Jahrhundert“.In: Thomas Piketty und die Verteilungsfrage. Ed. Peter Bofinger, Gustav A. Horn, Kai D. Schmid und Till van Treeck. 2015._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Piketty I Thomas Piketty Capital in the Twenty First Century Cambridge, MA 2014 Piketty II Thomas Piketty Capital and Ideology Cambridge, MA 2020 Piketty III Thomas Piketty The Economics of Inequality Cambridge, MA 2015 Bofinger II Peter Bofinger Monetary Policy: Goals, Institutions, Strategies, and Instruments Oxford 2001 |
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