Andrew Lainton — Is Piketty the New Malhus?

Lets generalise Malthus’s argument, to look not just at land rent but all quasi rents on assets which though scarcity tend to return yield returns greater than g. 

All such asset purchases will deduct from savings and investment. If we take the proportion of wealth invested in assets as A then the correct expression is not S=I but S(1-A)=I. Of course we also need to consider the investment of yields from assets. So you can modify this through a geometrical expansion (effectively getting an NPV) adding interest as a term.

So we can see that rentier income r>g is deflationary, it reduces aggregate demand. One might indeed argue that the growth in debt over the 20th Century has been a means of compensating for this deflation and once this stops – as per now through austerity – we get deflationary stagnation. Of course assets cant inflate in price forever above their real returns, we get bubble and bust.

Decisions, Decisions, Decisions
Is Piketty the New Malhus?

Andrew Lainton