Piketty, Post Keynesian economics and income distribution

This chapter compares the work of Thomas Piketty and Post Keynesian economics in terms of the causes of inequality, the consequences of inequality and one key policy issue related to inequality ‒ government debt. It argues that Piketty and Post Keynesian economics have similar analyses of the causes of inequality, and that Piketty’s famous inequality, r>g, follows straightforwardly from Post Keynesian analysis. However, they have different views of the consequences of inequality. Piketty’s Capital and Ideology focuses on the threat to democracy from high and rising inequality. In contrast, Post Keynesians focus on two macroeconomic consequences of inequality ‒ how inequality reduces effective demand and how it reduces productivity growth. Finally, the chapter argues that Piketty and Keynes held similar views regarding government debt. Both wanted cyclically balanced government budgets, but for rather different reasons.