by From Ikonoclast (originally a comment) n C21 Piketty was exposing the automatic outcomes of an axiom-based legal law, regulation and financial system. The real economy is a real system (obviously). The financial economy is a formal system whose operations are prescribed by its axioms. Our system of legal laws, regulations, financial rules and financial calculations (bookkeeping and national accounts) is a formal, prescriptive system founded on ideological property axioms and calculated out via prescribed operations in the numéraire (money or financial capital). The RWER article even happens to mention one property axiom of the modern system: the axiom “for unlimited private accumulation.” The expression r>g was not put forward by Piketty as a “law”. He put it forward as a tendency
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from Ikonoclast (originally a comment)
n C21 Piketty was exposing the automatic outcomes of an axiom-based legal law, regulation and financial system. The real economy is a real system (obviously). The financial economy is a formal system whose operations are prescribed by its axioms. Our system of legal laws, regulations, financial rules and financial calculations (bookkeeping and national accounts) is a formal, prescriptive system founded on ideological property axioms and calculated out via prescribed operations in the numéraire (money or financial capital). The RWER article even happens to mention one property axiom of the modern system: the axiom “for unlimited private accumulation.”
The expression r>g was not put forward by Piketty as a “law”. He put it forward as a tendency under certain conditions. The full expression of the tendency was;
If r>g then inequality increases.
It is a tendency prescribed by the axioms of the legal laws, regulations, financial rules and financial calculations. The outcome is axiomatic (meaning here “automatic”) given the prescribed axioms of capitalism and finance. This was not a Western problem while g was greater than r, in at least the imperial / post-imperial developed countries. Growing rewards could be given to labor. Capital came to an accommodation with labor (by exploiting the colonized world and Western inequality dropped.
The problem arises for the West and then the world with the secular (long run) stagnation crisis; when the economy can no longer grow or grow enough.After all, we live in a finite real world. Capital “wants” to expand for ever but the real economy cannot do so. This crisis was always going to come. The axiomatic system of capital prescribes a endless growth trajectory which is impossible in the real world.
Something must give at this point. There must be preemptive change by ballot box and statism, or violent revolution or civilizational collapse. These exhaust the real possibilities and they are not necessarily mutually exclusive, although we would have hoped that the first one could preempt the next two. This is no longer likely to be the case. Change has probably been left to late.