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So what is Capital in the Twenty-First Century? Some notes on Piketty’s book Working paper, forthcoming in Capitalism & Society

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  • Kornai, János

Abstract

This study was inspired by Piketty’s excellent and important book. Its title and numerous statements in it arouse in readers expectations of a comprehensive analysis of capitalism. By comparison the author of this paper felt important aspects were lacking. The capitalist system has numerous immanent traits and innate tendencies, of which the paper takes a closer look at three properties. 1. One basic feature is dynamism, innovation, and creative destruction. No picture of capitalism can be full if this basic aspect is ignored. 2. Capitalism inevitably brings about a high degree of inequality; this must be eased by reforms, but cannot be entirely overcome. 3. The basic characteristics of capitalism – private ownership and the dominance of market coordination – give rise to strong incentive mechanisms that encourage but owners and enterprise executives to innovate and to cooperate effectively. One of the main incentives is competition, especially oligopolistic competition. There are strong mutual effects among these three important tendencies. It is impossible to understand well Piketty’s main subject, the distribution of income and wealth, if it is divorced from the other two tendencies. The study ends with its author’s own value judgements on the favourable and harmful, unjust attributes of the capitalist system.

Suggested Citation

  • Kornai, János, 2016. "So what is Capital in the Twenty-First Century? Some notes on Piketty’s book Working paper, forthcoming in Capitalism & Society," Corvinus Economics Working Papers (CEWP) 2016/09, Corvinus University of Budapest.
  • Handle: RePEc:cvh:coecwp:2016/09
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    File URL: http://unipub.lib.uni-corvinus.hu/2299/
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    Keywords

    capitalism; comparative approach; innovation; income distribution; incentives; sources of top income;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P10 - Economic Systems - - Capitalist Systems - - - General
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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