Tuesday, March 18, 2014

Two on development

The rise of Anti-Capitalism by Jeremy Rifkin:
"Despite this impressive growth, many economists argue that the nonprofit sector is not a self-sufficient economic force but rather a parasite, dependent on government entitlements and private philanthropy. Quite the contrary. A recent study revealed that approximately 50 percent of the aggregate revenue of the nonprofit sectors of 34 countries comes from fees, while government support accounts for 36 percent of the revenues and private philanthropy for 14 percent.
As for the capitalist system, it is likely to remain with us far into the future, albeit in a more streamlined role, primarily as an aggregator of network services and solutions, allowing it to thrive as a powerful niche player in the coming era. We are, however, entering a world partly beyond markets, where we are learning how to live together in an increasingly interdependent, collaborative, global commons.'
Piketty on Marx by Matt Bruenig 
Matt Bruenig explains Piketty and Marx. Note that the second fundamental law (below the first) is an asymptotic law (in the long run) and Piketty says that it is only valid if one assumes that asset prices behave the same way as consumer prices. Secondly, it does not take into account the changes which may be coming pointed out in the NY Times article above. 
"Piketty plugs Marx’s somewhat vague prosaic presentation of this theory into the two formulas Piketty relies upon to describe the dynamics of capital.
  • β = s/g
  • α = r*β
  • ...............
The case where r decreases to compensate is the “tendency of the rate or profit to fall” scenario. The rate of return on capital trends towards zero and that causes all sorts of political instability because of capitalists tearing each other apart to try to scratch out a return. The case where α increases to compensate is a world where capital slowly gobbles up more and more of the national income until it gobbles up all of it, a scenario which will surely generate worker revolution.
So, if we assume growth or near-zero growth will eventually result after capital deepening has essentially run its course (Piketty’s account of what Marx may have had in mind), capitalism does appear to self-destruct from internal contradictions. It is only the existence of TFP-driven growth elements that allows us to stave off this particular conclusion, something Marx would not have been aware of."

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