A Paradigm Shift Where Inequality and Redistribution Are Both Necessary for a Healthy Economy

Piketty debate exposed the dysfunction in economics

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By George Cooper

We are now far enough through the cycle of Piketty analysis to know how it will end. There will be no clear victor. Those who were instinctively supportive of Piketty’s thesis before reading his book will be able to ignore any alleged flaws in his data, and challenges to either his mathematical theory of capital accumulation or his narrative theory of capital destruction. This group will conclude what they already knew – inequality is too high and rising and should be addressed with higher taxation. On the other side, those who were immediately skeptical of his thesis will dwell on the discrepancies in his data and the challenges to his mathematics and history. This group will conclude that his thesis can safely be dismissed.

Of the small minority who have the time and patience to delve into multiple layers of argument and counter argument there will be a vanishingly small proportion who are persuaded to materially alter their position, based on what they have learned. A much larger number of people, on both sides, will find reason to consider their prior point of view as vindicated by the Piketty debate. This group will emerge from the affair with more deeply entrenched positions than before. As a result the economic debate will become more polarised and even more dysfunctional. In short, the confusion generated by Piketty’s book will push an already deeply dysfunctional economics further into crisis.

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Perversely the deepening crisis in economics is a triumph for Thomas Kuhn and his theory of scientific revolutions.

Anyone familiar with the science fiction of Isaac Asimov will know what is meant by a Seldon Crisis. According to Asimov’s stories, Hari Seldon was the supreme exponent of ‘psychohistory’ a fictitious mathematical branch social science (which bears more than a passing resemblance to mainstream economics) which allowed Hari Seldon to forecast social crises and revolutions with precision, hundreds of years into the future. In a sense Thomas Kuhn is the Hari Seldon of scientific theory. In Kuhn’s famous book, The Structure of Scientific Revolutions , he maps out in detail, how scientific crises begin, how they mature and how they are eventually resolved. Kuhn even spells out how the old guard will lash out against any new ideas in a final futile attempt to defend their own discredited theories.

It is fascinating to look at the debate over Thomas Piketty’s work through the lens of Thomas Kuhn’s analysis. Just as Kuhn predicted, new data is unable to resolve disputes once a field has entered a state of pre-revolutionary crisis. On one side Piketty has provided enough evidence to persuade the pre-converted and on the other side Chris Giles, of the Financial Times, has now provided enough doubt to persuade the un-converted. According to Kuhn, this crisis phase will persist indefinitely, regardless of the emergence of new data, until a new way to think about economic theory emerges – this will be the paradigm shift which resolves the crisis. The various competing schools of thought will see in any new data what they want to see. They will use their individual interpretations to convince themselves that they and their theories are correct and their opponents are wrong. Confirmatory data will be embraced uncritically while any inconvenient challenging data will be doubted, ignored, discarded or belittled.

In the debate over Piketty’s data this process of selective interpretation has been common on both sides. Those on the left-wing embraced Piketty’s data uncritically but immediately rejected the analysis of the Financial Times. Those on the right-wing largely ignored Piketty’s data until the Financial Times provided them with an excuse to belittle it. As Kuhn forecast, Piketty’s data has served only to harden rather than change opinions.

Similarly, when it came to either Piketty’s mathematical model of capital accumulation or his narrative model of capital destruction, the response was largely driven by prior opinions. For anyone whose priors were confirmed, Piketty’s models were accepted without challenge. On the other hand, those whose priors were challenged went looking for reasons to doubt Piketty’s arguments. I fell into this latter camp. I instinctively disagreed with at least two aspects of Piketty’s argument. Firstly my experience as a professional investor meant that ‘I knew’ he was wrong to assert that the return on capital was both structurally high, at around 5%, and largely independent of the rate of economic growth –  his famous r > g relationship. This feeling sent me on a quest to challenge his r > g inequality which lead to the following arguments: The Magical Mathematics of Mr Piketty Part I and Part II and Credit in the 21st century.

In addition, coming from a coal mining community in the North East of England ‘I knew’ that it was the union movement, not World War I, that achieved greater equality in the late 19th and early 20th centuries. This prompted me to examine his ideas about capital destruction in World War I. And this examination in turn furnished me with another reason to doubt Piketty’s historical analysis: The Horrible History of Mr Piketty.

Naturally constructing these arguments has left me, as Kuhn predicted, more firmly convinced that I was correct to be sceptical of Piketty’s thesis. On the other hand a few people have read my rebuttals of Piketty and a written their own counter rebuttals. Doubtless this exercise has left them also more certain of their own opposite views!

For those of us who enjoy debating macroeconomic issues this is all good entertainment. However, as a process for deciding how best to manage our economies, this sterile, divisive, debate is a dreadful way to proceed. Economics is ultimately responsible for setting the policies which determine the livelihoods of millions of people – we therefore owe it to ourselves and our children to find a better way to conduct the debate.

Fortunately Thomas Kuhn did more than just describe what scientific crises looks like, he also told us what needs to be done to resolve a scientific crisis. Kuhn explained we need to find a way to reconcile the apparently irreconcilable world views of the various competing schools of thought.

On the face of it appears an almost impossible task to find a theory which is able to agree with both the instinctively pro-Piketty crowd with his instinctive opponents. But with a little imagination there may be a way through this impasse.

Let’s step back from the details of Piketty’s data and his models, for a moment, and consider just the essence of Piketty’s thesis: capitalism has an inbuilt tendency to cause wealth polarization which must be counteracted with progressive taxation.

Now let’s consider the antithesis to Piketty’s argument: inequality must be preserved as it is the driving force of competition, innovation, economic progress and ultimately wealth generation.

According to Kuhn the path to progress is in finding a way to reconcile these competing world views. In other words, we need the paradigm shift which makes it clear why inequality and redistribution are both necessary features of a healthy economic system.

The problem is not as difficult as it looks:

Step 1: Accept that Adam Smith was correct

As a first step let’s side with those on the right-wing and agree that Adam Smith’s thesis is correct: it is the pursuit of self-interest that is the key motivating force for economic activity, innovation and progress. I doubt that many readers will have difficulty with this step.

Step 2: Accept that Charles Darwin was correct

Now let’s add just a small corollary to Smith’s idea. Let’s imagine that what really motivates us is not the pursuit of absolute wealth but rather the pursuit of relative wealth. Put differently we are not neoclassical optimizers but rather Darwinian competitors – we are motivated by our relative position in the social pyramid. (For those interested I provide some reasons to support this notion in Money, Blood and Revolution)

Step 3: Recognise the darker side of Darwinian competition

Our Darwinian competitive spirit has both a bright side and a dark side. On the bright side the spirit of competition spurs us on to achieve more than our peers. This is what continues to motivate us to generate ever more economic progress even when we have long since satiated our immediate needs. However, on the dark side, it also means that our social position is paramount. It is our wealth and status relative to our peers that dominate our behaviour. Those on the bottom of the social pyramid are motivated to compete to move up to a higher position. But for those at the top of the social pyramid, with few above them, the overriding priority becomes an urge to preserve the status quo, to ensure that those beneath them do not move up to displace them.

Darwinian competition motivates those at the bottom to strive for improvement while it motivates those at the top to strive for preservation of the status quo. For this reason an unfettered, Darwinian, competitive economy tends to evolve into a near stagnant feudal system.

Step 4: Accept that Karl Marx was also correct

Now let’s accept that the Karl Marx and therefore the essence of Piketty’s argument is also correct: capitalism does indeed have an inbuilt tendency toward wealth polarization.

Despite my previous posts criticising aspects of Piketty’s thesis I believe these wealth polarizing forces are real. I just happen to think Piketty has homed in on the wrong mechanisms.

Piketty has chosen to focus on the return on capital and its relationship to the rate of economic growth. By contrast I believe he could have built a more robust theoretical argument for wealth polarisation based on the cost of credit rather than the return on capital.

Those at the bottom of the social pyramid are, almost by definition, less credit-worthy than those at the top of the social pyramid. For this reason those at the bottom must pay higher interest rates to borrow money, reflecting their greater default risk. The ultra-rich can borrow almost directly from the central bank at rates often close to or below zero percent, in real terms. By contrast, the ultra-poor are forced into the hands of payday lenders charging hundreds or even thousands of percent in interest.

This differential cost of credit runs throughout the social pyramid. As most lending occurs vertically through the pyramid, with the poor borrowing from the rich, through the banking sector, these differential interest rates ensure a steady trickle-up effect, whereby wealth flows from poor to rich.

Differential interest rates also cause a secondary wealth polarising mechanism. As the profitability of any business venture is a function of the gap between the cost of capital and return on capital, it follows that any given venture will be more profitable, and less risky, to those who can borrow money at the lowest possible rates. For this reason there are more potentially viable business ventures available to the rich than to the poor – as the saying goes: ‘the first million is always the hardest’.

Step 5: Properly integrate the state sector into our economic models

Having acknowledged the validity of Marx’s critique of capitalism and the darker side of our Darwinian nature the next step, toward a sensible unified economic paradigm, is to recognise that we have already established the necessary institutional arrangements to deal with both our Darwinian instincts and capitalism’s wealth polarization.

Marx failed to recognise that, at least in Britain, America and France, the social revolutions he called for in had already happened. The English Glorious Revolution followed by the American and French Revolutions began the democratising reforms necessary to check the power of those at the top of the social pyramid and, eventually, to counterbalance to the trickle up effect of capitalism.

Democracy eventually brought improvements in workers’ rights, minimum wages, state funded education, social security and of course redistributive taxation. All of which helped gradually establish the conditions necessary to allow those lower down the social order to compete more effectively with those above them.

In short, the partnership of democracy and capitalism established a circulatory flow of wealth through the economy – capitalism pushed wealth up the social pyramid and democracy pushed it back down. Together this partnership of capitalism and democracy placed the whole of society onto an invigorating competitive treadmill, enabling those at the bottom of the pyramid to compete and also obliging those at the top to compete.

It is forgivable that Marx failed to recognise that his revolution was already in progress as he wrote his ‘Capital’. Indeed it could be argued that his writings helped complete those revolutions. On the other hand I have rather less sympathy for the stance taken in Piketty’s ‘Capital’ where, like Marx before him, he chooses to analyse capitalism as an isolated entity, largely ignoring the role of the state sector with its progressive taxation and transfer payments. For example, his r > g relationship fails to take into account that, when thinking of wealth accumulation, we should consider returns net of taxation.

In Marx’s ‘Manifesto of the Communist Party’ he calls for a number of reforms. Two of the most important – “A heavy progressive or graduated income tax” and “Free education for all children in public schools” – have already been implemented. We should not now resurrect a new version of Marx’s critique of capitalism without acknowledging that these countervailing redistributive arrangements are already in place. A more reasonable approach would be to recognise their presence and to debate their size and construction.

[Intriguingly for those who are now arguing for monetary reform the Communist Manifesto also calls for: “Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.” The parallels with the recently published ideas of the Positive Money organisation are interesting.]

Thinking about our economic system with a circulatory flow model is far from a complete model of an economy. It may better be thought of as the kernel of a new approach to economic thinking – the first step in rethinking economics. Nevertheless, with only a little thought it becomes possible to see how such a circulatory growth model could reconcile the key ideas of Smith, Marx, Keynes, Hayek, Minsky, Schumpeter, Fisher, Veblen and Darwin with the ideas of the institutional, historical and behavioural schools of economics.

I discuss these ideas in greater detail in Money, Blood and Revolution where I also explain how the circulatory growth model can be used to understand why the excessive use of monetary stimulus – both through low rates and quantitative easing – leads directly to: structurally low economic growth, higher social inequality, deflationary pressures, high government deficits and an inevitable pressure for higher taxation.

It is impossible to know if this circulatory growth idea represents a ‘correct’ model of the economy, but at least until a better idea comes along, it could provide a useful conceptual device to encourage a more constructive debate over both macroeconomic theory and policy.

There is an unfortunate corollary to Kuhn’s analysis. Kuhn also explained the difficulty of changing people’s opinions once formed. Kuhn notes that the leaders of a discipline almost never accept the new ideas necessary to resolve the crisis in their field. Instead they simply insist that the way forward is for everyone to agree with them. Therefore the old guard either refuse to engage with the new ideas or attacks both them and their proponents. So far the reaction to the circulatory growth idea proposed in Money, Blood and Revolution has been precisely as Kuhn would have anticipated. Paul Krugman, for example, has managed to finesse the fine line of both rejecting the idea and refusing to acknowledge it! See: Paradigming is hard.

My reply to Krugman is simple: if you have got better ideas on how to fix the dismal failure of economic theory then let’s hear them. If you do not have the ideas then at least have the courtesy to respect those of us who are making an honest attempt to find a way out of the current confusion. With thousands of students of economics around the world now engaged in an open revolt against the teachings of mainstream economics the position that ‘all is well in economic theory’ is no longer tenable.

2015 september 4

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  • Pingback: Piketty Versus Kuhn. The Debate Over a New Econ...()

  • Brian Gladish

    Maybe the best idea would be to stop trying to manage the economy, and let it evolve (as in evonomics) on its own:

  • Swami Cat

    This is an excellent article reflecting original thought and a desire to redefine paradigms. Allow me to “add on” to your ideas…

    Markets and politics are complex adaptive problem solving systems of different but overlapping domains. Another such problem solving system is science. Together, a society can solve and accumulate an infinite range of solutions. The key is to grok the paradigm and to use the proper problem solving system in the particular domain (not always easy, and probably best determined via extensive experimentation).

    Each problem solving system has its strengths and weaknesses. Alone each is a mess, as likely to create problems as solutions (a solution for some can often be used as a problem for others). Together the potential is to improve the prosperity,mknowledge and constructive cooperation of the human species to unimaginable levels.

    Some minor pushback… Beware static views of income. In general, the young almost always start at the bottom of the stairs. Everyone I know did. We get a job, and work up from there getting minor loans which grow as our earning potential grows. The problem is with folks who are unable to move up the stairs. In some cases the problem is best solved via better politics and institutions (freeing inner city kids from bureaucratic union-run puppy-mill schools with no grasp of the power of constructive institutional competition and creative destruction might be a great place to start). In other cases, we almost are certainly encountering innate skill differences between people — some are simply terrible at climbing the stairs due to learning issues, behavioral issues, etc. These will probably need non market safety nets funded from market prosperity.

  • I am of the view that the flaw lies in the way both capitalism and democracy are currently practiced. The flaw arises from the government and businesses being able to borrow and use other peoples money. In terms of the government, it is the ability to use the future generation’s money and in terms of businesses, the ability to use the small saver’s money. The ability to borrow of governments, industry & trade, as well as citizens that drives excessive consumption/ environment issues (denuding the Earth at a fast pace and leaving the future generation to be taxed and pay back government borrowing). The future generation cannot vote out the government that actually taxed it (we steal their democratic right). The same borrowing is a key driver of inequality. For paucity of space I provide a link to a paper I wrote

  • My 2c: (1) Your criticism of Piketty has a problematic starting point as can be seen in the way you represent Marx. Marx first and main insight was that “capital is a social relation”. More specific the relation between paid labor and the owners of the production facilities. And these owners hire labor to realize profit (surplus-value) in the first place, which in turn should become profitable capital. Unchecked and problematic growth, (very) inequal distribution of wealth, accumulation in “publicly” owned multinationals all flow from this primary concept. And only by somehow altering this relationship a real solution is possible. This does not necessarily involve dissolving all inequality, the total disappearance of all notion of capital, or a (bloody) revolution.

    (3) I prefer reference to evolution in stead of Darwin as this encompasses more recent advances in the social and psychological fields. Also the misunderstanding around “fittest” and as a consequence the accusation of “social Darwinism” is better avoidable.

    (2) The invocation of Kuhn won’t help much. The status as “science” as compared to the object of Kuhn’s theory is problematic. Mainstream economics is still more ideology than science. And of course it is the dominant, hegemonic ideology. It will take a lot of strategical thinking to overcome it.
    (PS1: It would be nice if contributions are dated)
    (PS2: I wonder if the author will answer.)
    (PS3: You can mail me at victor(dot)onrust-at-xs4all(dot)nl)

  • Duncan Cairncross

    I am not sure what you have added to the debate
    NOBODY is calling for “equality” – that is just a straw man

    Piketty simply formalizes the
    Those who have – Get
    That everybody knew beforehand

    So now we are looking at
    (1) What is the optimum level of inequality
    (2) How doe we get there and maintain that level

    We should now be looking at arguing about the optimum level of inequality
    NOT zero and almost certainly less than the current level

    • Carbonman1950

      Mr. Cairncross – Your question “What is the optimum level of inequality.” Contains in it the assertion that there is an optimum level of inequality. And assertion that is not by any means settled.

      • Duncan Cairncross

        I don’t understand your comment
        There has to be an optimum level –
        even if it is one of the extremes – total equality or one man owns everything

        There must be a level that gives society the best performance

        There is an optimum level for EVERYTHING

        • David Whitlock

          A single value optimum level may not occur if relative weighting functions are non-linear, if there are multiple objectives to be optimized, if they change over time, or if there is noise in the system, or if there are unknown factors involved (all of which are true for economic systems).

          What constitutes “best performance” is subjective. Of course the single person who owns everything is certain that this is the distribution that gives the “best performance”, even as 6,999,999,999 others are certain that it does not.

          Because of the “veil of ignorance”, we can’t know the effects of a particular distribution a priori. We can’t know that a particular level of inequality will produce an outcome that is “optimum”. People may, through self-delusion, convince themselves a certain distribution will produce optimal results (as in trickle-down economics), but this is more of a self-fulfilling prophesy. Of course the “haves” say that “trickle-down economics” is the “best of all possible policies”. This is a faith-based religious concept, not a result from any analysis.

          • Duncan Cairncross

            Hi David
            Sorry not to have replied earlier
            Maybe I should have changed that to from “optimum level” to a more general “optimum level to aim for in the current situation”
            Understanding that the “optimal level” is probably a moving feast

            This is like optimising engine performance – and really only applies when you get close

            At the moment we have a number of societies with different levels of inequality
            The graph of “goodness” v inequality shows a noticeable slope – we don’t have a limit case where the reduced inequality starts to move the line the other way

            In our current situation I would rephrase it as
            There is a “better” level of inequality – and it’s thataway!

  • Hannes Radke

    So common sense it almost hurts.

  • jothwu

    I thoroughly enjoyed reading your book, “Money, Blood and Revolution”. Regarding the optimal level of inequality as discussed here, is anyone suggesting this optimal level will have been achieved once saving rates have been equalized among various income levels, and specifically between median income earners and high income earners?

  • Kuhn did not suggest that competing paradigms were to be “reconciled”. The theory of the aether was not “reconciled” with Einsteinian relativity. It just disappeared. Rather, Kuhn suggests that the competition is only decided by the process of competition. Eventually, one side or the other wins.

    • Bruce Preville

      Kuhn also asserts that the new and old paradigms remain unreconciled, with the new paradigm continuing after the adherents to the old paradigm die off.

  • Chuck Willer

    George, Your essay is excellent. Thank you.

    One recommendation regarding the philosophy of science (i.e. Kuhn), if you haven’t already – you might find Larry Laudan of interest. His work may help in untangling the Gordian knot of economic theory’s possible evolution.
    Brief review of Laudan here:

    “Even those who disagree with Laudan recognize that his utilizing detailed evidence from the history of science is an important contribution to how philosophy of science is practiced.”
    “In Beyond Positivism and Relativism, Laudan wrote that “the aim of science is to secure theories with a high problem-solving effectiveness” and that scientific progress is possible when empirical
    data is diminished. “Indeed, on this model, it is possible that a change from an empirically well-supported theory to a less well-supported one could be progressive, provided that the latter resolved significant conceptual difficulties confronting the former.”[4] Finally, the better theory solves more conceptual problems while minimizing empirical anomalies.”

    • Laudan is a conservative thinker, and tends to objectify things like “problems”. He fails to ask: who’s problems? Who defined them as such? Who are the beneficiaries from their solution? Neither economics, nor science more generally, are asocial structures which operate independently of the larger human community. Formulations like “the better theory solves more conceptual problems while minimizing empirical anomalies” only obscure the fact that scientists and economists are workers in a social system, with all that such a fact entails. They are not working to abstract truth-conditions. They are working to produce intellectual goods which will be used by certain people to achieve certain ends, and abstract truth-conditions are just shorthand for an evaluation that the intellectual products have served their purpose. Obscuring this fact impedes efforts at changing both society, and the kinds of intellectual production which Evonomics so extensively critiques.

      • Chuck Willer

        Just noticed your reply David. I hardly believe the label ‘conservation’ applies to the debates in the Philosophy of Science circa 1960-1990 – Laudan’s era. If the label does apply it seems to me hardly helpful. I’m very aware of the Sociology of Knowledge and there is no question a strong sociology of power is operating in the social sciences – if not all sciences. I find arguments that attack mainstream economics by reference to the obvious interest and power dynamics useful but that doesn’t get the job done in my book. One needs to explain problems and offer better alternatives. Steve Keen is an example in economics.

        • Hi Chuck. Since I wrote that I’ve had to revise my understanding of Laudan, so: agree! I think however the power dynamics are inescapable. My understanding of science as social practice is that it’s intellectually and practically tied into the question of control of material reality. The common operating thesis of many scientists, where theories are tested against theoretical predictions enables the production of knowledge that can be used to control. Since much of this is physical production (part of the economy), and physical destruction (warfare), science is socially entangled in both. It also presupposes that true knowledge is the ability to control, and therefore that the a piece of music or a piece of poetry do speak truth. And thus science becomes the allies of certain interests and sectors in our society, and does nothing for others. And your latter proposal doesn’t get us out of that. One explains problems, yes: but who defines the problems to be explained? One offers better alternatives, yes: but who defines better. Inevitably, the answer is: elites. Financial elites, political elites, or professional elites. Now, being a member of the last group, I can hardly damn the existence of elites. In fact, I think they’re inevitable, and even useful. But that doesn’t blind me to think that this problem solving paradigm doesn’t continue a social order defined by elites, and—more important—by the particular ways in which they (or rather we) see the world.

  • Also, if Marx is correct (I think so, largely) then capitalism does not have inbuilt tendencies. To think in this way is precisely what Marx warned against in his concept of reificaction, in which is to see people as subject to impersonal economic “forces”, and to take mental abstractions (those same forces) and treat them as real.

    Other than these quibbles: thanks for your paper. Very useful.

  • Jan de Jonge

    This article is written long ago, so I don’t know whether my comment is reached by the writer.
    You write: “Thinking about our economic system with a circulatory flow model is far from a complete model of an economy”. And you describe this as the kernel of a new approach to economic theory. A first step in rethinking economics. You apparently don’t know that the idea of the economic system as a circular flow was the starting point of economics as a science. The Physiocrats wrote about it and Adam Smith learned about it when he was in France. His book The Wealth of Nations was an elaboration of this idea. It remained the core of economic theory until Robbins took scarcity as the key concept. But it remained the core of Keynes’ macro economy.
    Maybe Heilbroner’s great book “The Worldly Philosophers”is still available in a library.

  • Let’s start with this:

    “Let’s step back from the details of Piketty’s data and his models, for a moment, and consider just the essence of Piketty’s thesis: capitalism has an inbuilt tendency to cause wealth polarization which must be counteracted with progressive taxation.

    Now let’s consider the antithesis to Piketty’s argument: inequality must be preserved as it is the driving force of competition, innovation, economic progress and ultimately wealth generation.

    According to Kuhn the path to progress is in finding a way to reconcile these competing world views. In other words, we need the paradigm shift which makes it clear why inequality and redistribution are both necessary features of a healthy economic system.”

    Mr. Cooper asserts that the inequality is driven by the cost of credit. This is true as one factor, but the cost of credit is largely a function of collateral through the accumulation of real assets. So, those with assets can leverage returns and accumulate more asset wealth than those without assets (see Buffett, Gates, etc.). State redistribution does almost nothing to alleviate this problem; we would have to redistribute asset wealth, not income. But wealth taxes merely regress us to the past where the process recommences. In other words, it’s the process, not just the endowment that drives polarizing wealth.

    Finance theory will show that wealth accumulation is a result of successful risk-taking – so how do we promote successful risk-taking regardless of income levels? By looking at how factors of production – capital, labor, and information – influence the distribution of outcomes. (Labor unions may have served well in the 1940s industrial economy – they will not in the Age of Information.) By looking at how we tax risk-taking at different class levels and how we empower risk-takers through insurance pooling against loss. Social insurance and entitlements play a role here, but must be subordinate to market solutions. Tax and redistribute fails in this respect.

    Mr. Cooper is correct to cite Kuhn – we need to start thinking outside the box. A circulatory growth model is a good start as dynamic macroeconomies are wholistic, not mechanistic. Piketty reminds me of Marx – right diagnosis, wrong prognosis.

  • Great some steps are made towards reality that includes both sides of the distribution, outside of unreachable absolute idealistic states views.

  • Derek R

    Everything old is new again. The idea of the economy as a circulatory system with money flowing around was originally promoted by Adam Smith’s hero, Francois Quesnay, the leader of the Physiocrats. So forward to the 18th century! The last 250 years of economics have been a distraction! Now we can finally put economics back to what it was originally meant to be!