Capitalists, Workers, and Thomas Piketty's Capital in the 21st Century

This paper interprets Piketty’s influential work through the lens of structuralist macroeconomic theory, which is a synthesis of the classical, Marxian, and Keynesian traditions. It shows that Piketty’s key inequality, r > g (the rate of profit is greater than the rate of growth) measures the influence of capitalist consumption on capital accumulation in the context of a growth model with capitalists and workers in the tradition of Nicholas Kaldor and Luigi Pasinetti. The paper shows how in the structuralist model the connections Piketty makes between growth and inequality become more transparent and less confusing than they are in the neoclassical theory he resorts to using. The paper also examines his data with emphasis on two central paradoxes of neoliberalism: with all the upward redistribution of income, there is surprisingly little concentration of the wealth distribution; and with a higher profit rate, there has been no corresponding increase in growth. The hypothesis suggested by structuralist growth theory is that neoliberal capitalism has transformed Marx’s “accumulate, accumulate” into “consume, consume.” The political-economic implications of this hypothesis are significant.