The Logic of Capital

The fundamental logic of capital is that it is rent-seeking. No matter what form it takes, its purpose is to generate income for its owner. Although its purpose is uniform, the ways in which capital seeks this end, and even the forms capital assumes in order to do so, are diverse. Piketty emphasizes that for much of the history of wealth, capital existed in the forms of land and government bonds. During the Industrial Revolution, capital increasingly took the form of machines, buildings, and materials. These latter forms are distinguished as "dynamic" capital, while land and government bonds are seen as rent-seeking capital. Piketty observes that the "dynamic" capital is still just as rent-seeking, only with an entrepreneurial effort involved on the part of its owner. What makes the underlying logic the same for both is their ability to generate r, or rate of return...