George Cooper — The Magical Mathematics of Mr Piketty – Part II

The philosopher Friedrich Nietzsche wrote: “There is no more dangerous error than confounding consequence with cause: I call it the intrinsic depravity of reason.” In economics the problem of confusing cause and effect is rife and frequently leads to disastrous policy mistakes.

The more I think about the logical framework of Thomas Piketty’s Capital In The Twenty-First Century, the more I become concerned that Mr Piketty has fallen into Nietzsche’s trap. I fear that Piketty has got his causes and effects the wrong way round.

To explain where I think the problem lies, I am going to use a thought experiment similar to the one I used in my earlier article: Credit in the twenty-first century. If you have not done so already it may be worth reading The Magical Mathematics of Mr Piketty before continuing with the rest of this article.

The Magical Mathematics of Mr Piketty – Part II
George Cooper