Policy Research in Macroeconomics

Piketty’s Determinism

Co authored by Ann Pettifor and Geoff Tily, Published in Real World Economics ReviewIssue no.69, 7th October 2014

In their review of Thomas Piketty’s Capital (Harvard University Press, 2014), Ann Pettifor and Geoff Tily argue that Piketty’s determinism (which suggests that inequality is set to continue to rise indefinitely and that interest and growth are on a preordained trajectory) is wrong.

Things don’t have to be this way. Piketty’s approach arises from his fundamentally neo-classical approach to interest as the marginal product of capital.

On our worldview, substantial and sustained interest rate changes follow from progressive governments taking control of money. The level of output and employment is then a function of interest so obtained.

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