October 27, 2014

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“Technology, Like The Market, Has No Limits Or Morality.” Thomas Piketty

The principle lesson… is surely that there is no natural force that inevitably reduces the importance of capital and of income flowing from capital over the course of history. In the decades after WW   II, people began to think that the triumph of human capital over capital in the traditional sense (land, buildings, and financial capital) was a natural and irreversible process, due perhaps to technology and to purely economic forces. In fact, however, some people were already saying that political forces were central. My results fully confirm this view. Progress toward economic and technological rationality need not imply progress toward democratic and meritocratic rationality. The primary reason for this is simple: Technology, like the market, has no limits or morality. The evolution of technology has certainly increased the need for human skills and competence. But it has also increased the need for buildings, homes, offices, equipment of all kinds, patents, and so on, so that in the end the total value these forms of nonhuman capital (real estate, business capital, industrial capital, financial capital) has increased almost as rapidly as total income from labor.  If one truly wishes to found a more just and rational social order based on common utility, it is not enough to count on the caprices of technology.

To sum up: modern growth, which is based on the growth of productivity and the diffusion of knowledge, has made it possible to avoid the apocalypse predicted by Marx and to balance the process of capital accumulation. But it has not altered the deep structures of capital- or at any rate has not truly reduced the macroeconomic importance of capital relative to labor.

Tomas Pikkety, 2014: Capital In The Twenty-first Century. Translation by Arthur Goldhammer.

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