The Rise and Decline of General Laws of Capitalism
Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a gui...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Published: |
American Economic Association
2018
|
| Online Access: | http://hdl.handle.net/1721.1/113636 https://orcid.org/0000-0003-0908-7491 |
| _version_ | 1811088153066340352 |
|---|---|
| author | Robinson, James A. Acemoglu, K. Daron |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Robinson, James A. Acemoglu, K. Daron |
| author_sort | Robinson, James A. |
| collection | MIT |
| description | Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality. |
| first_indexed | 2024-09-23T13:57:06Z |
| format | Article |
| id | mit-1721.1/113636 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T13:57:06Z |
| publishDate | 2018 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/1136362022-09-28T17:20:13Z The Rise and Decline of General Laws of Capitalism Robinson, James A. Acemoglu, K. Daron Massachusetts Institute of Technology. Department of Economics Acemoglu, K. Daron Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality. 2018-02-13T19:20:20Z 2018-02-13T19:20:20Z 2015 2018-02-12T20:18:57Z Article http://purl.org/eprint/type/JournalArticle 0895-3309 http://hdl.handle.net/1721.1/113636 Acemoglu, Daron, and Robinson, James A. “The Rise and Decline of General Laws of Capitalism.” Journal of Economic Perspectives 29, 1 (February 2015): 3–28 © 2015 American Economic Association https://orcid.org/0000-0003-0908-7491 http://dx.doi.org/10.1257/JEP.29.1.3 Journal of Economic Perspectives Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Robinson, James A. Acemoglu, K. Daron The Rise and Decline of General Laws of Capitalism |
| title | The Rise and Decline of General Laws of Capitalism |
| title_full | The Rise and Decline of General Laws of Capitalism |
| title_fullStr | The Rise and Decline of General Laws of Capitalism |
| title_full_unstemmed | The Rise and Decline of General Laws of Capitalism |
| title_short | The Rise and Decline of General Laws of Capitalism |
| title_sort | rise and decline of general laws of capitalism |
| url | http://hdl.handle.net/1721.1/113636 https://orcid.org/0000-0003-0908-7491 |
| work_keys_str_mv | AT robinsonjamesa theriseanddeclineofgenerallawsofcapitalism AT acemoglukdaron theriseanddeclineofgenerallawsofcapitalism AT robinsonjamesa riseanddeclineofgenerallawsofcapitalism AT acemoglukdaron riseanddeclineofgenerallawsofcapitalism |