Piketty and Harvey : on the Concept of Capital and Economics Education

The concept of capital has been a controversial issue at the heart of Economics Education since the conceptualization of capital enhances deep implications on the apprehension of the economic, social and political dimensions of reality.

Thomas Piketty’s book has been worldwide discussed on behalf of his data sets and explanation for increasing disparities in wealth and income in the context of neoliberalism. Among critical readers of Piketty’s analysis to explain growing inequality, David’s Harvey concern pointed out that his argument relies on a mistaken definition of capital. In short, although there is much that is valuable in Piketty’s data sets, his explanation seems to be founded on a neoclassical theoretical background where capital is mainly a factor of production.  Indeed,  Piketty defines capital as the stock of all assets held by private individuals, corporations and governments that can be traded in the market (no matter whether these assets are being used or not).

Under Harvey’s approach, the definition of capital as a stock of assets excludes the idea of capital as a social process where money is used to make more money often, but not exclusively, through the exploitation of labor power.

Following Harvey’s concern, we need to highlight that the nexus between the current global scenario and inequality encloses inner tensions between the hypertrophy of finance and the expectations of society about citizenship, labor and income. In the current historical context, labor markets have become a key variable in macroeconomic and business adjustments.  In truth, capital mobility has favored the regulation of social relations based on growing flexibility. In contemporary capitalism, the global institutional architecture has favored capital mobility and short term investment decisions – increasingly subordinated to rules of portfolio risk management. While recent changes in productive organization have been based on competitiveness and corporate governance criteria, job instability and fragile conditions of social protection have forced the reorganization of survival strategies. Thus, workers must redefine their skills or become informal entrepreneurs. Given the decreasing power of workers in recent decades, it is not surprising that both the globalization process and its outcomes have favored  the concentration of wealth and changes in social behavior.

While money is an end in itself, social behavior has been overwhelmed by the “profit motive”, as Karl Polanyi warned in his masterpiece The Great Transformation. Consequently, in the last decades, groups of particular interests have spread and social cohesion has diminished. Growing social violence and civil wars, as Eric Hobsbawm clearly said, are some of the outcomes of the  current relations between national states, the free markets and societies in the global order. Indeed, the conflicts between solidarity and particular interests have revealed the current inner tensions to reshape ethical societies.  The current  challenges to reshape the Economics Curirculum need to be thought in this scenario.

 

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