The Rise and Decline of General Laws of Capitalism
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jep.29.1.3.pdf
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647.62 KB
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Adobe PDF
Checksum (MD5)
4c42dc6831d26495af95f1161962c446
Author(s)
Robinson, James A.
Acemoglu, K. Daron
Date Issued
2015
Journal
Journal of Economic Perspectives
Publisher
American Economic Association
Citation
Acemoglu, Daron, and Robinson, James A. “The Rise and Decline of General Laws of Capitalism.” Journal of Economic Perspectives 29, 1 (February 2015): 3–28 © 2015 American Economic Association
Version
Final published version
Abstract
Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understanding the past or predicting the future because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/JEP.29.1.3
