The Education-Deficit Does Not Explain Rising Inequality

Mark Thoma posts an extract from Discussion of Matthew Rognlie: "Deciphering the Fall and Rise in the Net Capital Share": The Honest Broker for the Week of June 14, 2015, b J. Bradford DeLong.

So what, then, is going on and driving the sharp rise in inequality, if not some interaction between our education policy on the one hand and the continued progress of technology on the other? Thomas Piketty (2014) has a guess. Piketty guesses that the real explanation is that 1914-1980 is the anomaly. Without great political disturbances, wealth accumulates, concentrates, and dominates. The inequality trends we have seen over the past generation are simply a return to the normal pattern of income distribution in an industrialized market economy in which productivity growth is not unusually fast and political, depression, and military shocks not unusually large and prevalent. …

Emphasis Mine

So, economists are rediscovering the key insights of Karl Marx about Capital.

What is also missing from Piketty's insight is that the period of 1917-89 was when an alternative political and economic system severely challenged the legitimacy and hegemony of Capitalism. This system crushed Nazi Fascism by destroying its armies at Stalingrad, Kursk, Belorussia, and Berlin.

While this system of Russian Socialism was fatally flawed through the dominance of the bureaucracy of the central planning, it was viable for over seventy (70) years. A feudal country of peasants was rapidly modernised to a point that it could crush the second largest industrialised country in the world: Nazi Germany.

The USSR also challenged the USA in the realm of scientific advance and research. Remember the space race!

The October Revolution was indeed one of the great political disturbances.

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