So What is Capital in the Twenty-First Century? Some Notes on Piketty's Book

35 Pages Posted: 2 Jun 2016

See all articles by Janos Kornai

Janos Kornai

Corvinus University of Budapest

Date Written: June 2, 2016


This study was inspired by Piketty’s excellent and important book. It arose from the desire to explore the missing aspects of what claims to be a comprehensive analysis of capitalism. By comparison the author of this paper felt important aspects were lacking. The capitalist sys- tem has numerous inherent traits and innate tendencies, out of which the paper takes a clos- er look at three. 1. One basic feature is dynamism, innovation, and creative destruction. No picture of capitalism can be full if this basic aspect is ignored. 2. Capitalism inevitably brings about a high degree of inequality; this must be eased by reforms, but cannot be entirely over- come. 3. The basic characteristics of capitalism – private ownership and the dominance of market coordination – give rise to strong incentive mechanisms that encourage both owners and enterprise executives to innovate and cooperate effectively. One of the main incentives is competition, especially oligopolistic competition. There are strong mutual effects among these three important tendencies. It is impossible to understand well Piketty’s main subject, the distribution of income and wealth, if it is divorced from the other two tendencies. The study ends with the author’s own value judgements on both the favourable and the harmful, unjust attributes of the capitalist system.

Suggested Citation

Kornai, Janos, So What is Capital in the Twenty-First Century? Some Notes on Piketty's Book (June 2, 2016). Capitalism & Society, Vol. 11, Issue 1, Article 2, 2016. Available at SSRN:

Janos Kornai (Contact Author)

Corvinus University of Budapest


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