Ok, so these aren’t actually about Piketty. But I came across a few selections tonight reading through Jesus Huerta de Soto’s Money, Bank Credit, and Economic Cycles that are very relevant in light of recent discussions about Thomas Piketty’s book Capital in the Twenty-First Century and his r>g theory.
The first is from Bohm-Bawerk:
“There was and is always the choice between maintaining, increasing, or consuming capital. And past and “present” experience tells us that the decision in favor of consumption of capital is far from being impossible or improbable. Capital is not necessarily perpetual.”
The second is from Hayek:
“This basic mistake–if the substitution of a meaningless statement for the solution of a problem can be called a mistake–is the idea of capital as a fund which maintains itself automatically, and that, in consequence, once an amount of capital has been brought into existence the necessity of reproducing it presents no economic problem.”
That last one is especially relevant to Robert Solow’s review of Piketty’s book, in which he states:
“The key thing about capital in a capitalist economy is that it reproduces itself and usually earns a positive net return.”
…a statement Peter Klein has called “nonsensical from the point of view of microeconomics, entrepreneurship, uncertainty, innovation, strategy, etc.”