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Spring 2016

ISSN 0890-913X

Volume 31, Number 1

Categories: Spring 2016 | Economic Systems

The Mythology of Capital in the Twenty-First Century

Vipin P. Veetil, George Mason University

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TheJournalofPrivateEnterprise31(1),2016,21–36TheMythologyofCapitalintheTwenty-FirstCenturyVipinP.Veetil∗GeorgeMasonUniversity______________________________________________________AbstractInCapitalintheTwenty-FirstCentury,ThomasPikettyarguesthatcapitalismcangeneratearbitraryandunsustainablelevelsofinequality.Heproposesahostofmeasurestoaltertheinstitutionsofcapitalismtocreateamorejustsocialorder.Piketty’sanalyticalframework,however,assumesawaythereasonsfortheveryexistenceoftheinstitutionsheintendstomodify.Inaddition,Pikettytreatscapitalasahomogeneousentity.Intherealworld,thereisnosuchthingas“capital”apartfromtheconcreteandspecificformsittakes.Capitalhasbothatimestructureandagoodsstructure,withvaryingdegreesofspecificitywithinthosestructures.Thepricesystem,alongwithotherinstitutions,coordinatesthecapitalstructureofaneconomy.Withoutheterogeneityofcapital,therearenocoordinationproblems,andwithoutcoordinationproblems,thereisnoneedfortheinstitutionsofcapitalism.Inthissense,CapitalintheTwenty-FirstCenturyisprescriptionwithoutdiagnosis.______________________________________________________JELCodes:D33,E22,P16Keywords:Piketty,inequality,capitalstructure,coordination,pricesI.IntroductionSelf-reflectionisnotaluxurywarriorscanafford.Formuchofthetwentiethcentury,capitalismfoughtfascism,communism,andsocialismofallhues.Thegreatwarsareover.Oursisthecenturyinwhichcapitalismgoestotherapy.Capitalismwilllookintoitself.Andwhenitdoes,manyproblemswillsurface,oneofthembeinginequality.IntheUnitedStates,incomeinequalityhasincreasedconsiderablysincethe1970s.Whatarethefundamentalcausesofinequalityincapitalistsocieties?Willthetrendofrisinginequalitycontinue?Ifso,forhowlong?Willinequalitiesrisetounsustainablelevels?Willcapitalismcollapsefromwithin?WithCapitalintheTwenty-∗IthankPeterBoettke,JamesBroughel,ChristopherCoyne,AlexSalter,EdwardStringham,AkshayaVijayalakshmi,andRichardWagner.Allerrorsaremyown.

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Title	The Mythology of Capital in the Twenty-First Century
Authors/Creators:	Vipin P. Veetil, George Mason University
Year:	2016
Volume:	31
Number:	1
Pages:	21 - 36
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Piketty, inequality, capital structure, coordination, prices

Citation:
Veetil, Vipin P. / 2016. "The Mythology of Capital in the Twenty-First Century ." The Journal of Private Enterprise, 31(1): 21-36.