“How do wealth-income and capital-output ratios evolve in the long run, and why? Until recently it was difficult to properly address this question, for one simple reason: national accounts were mostly about ﬂows, not stocks. Economists had at their disposal a large body of historical series on ﬂows of output, income and consumption – but limited data on stocks of assets and liabilities. When needed, for example for growth accounting exercises, estimates of capital stocks were typically obtained by cumulating past ﬂows of saving and investment. This is ﬁne for some purposes, but severely limits the set of questions one can ask.”

— Thomas Piketty

Piketty, Thomas, and Gabriel Zucman. Capital is back: Wealth-income ratios in rich countries, 1700-2010 http://piketty.pse.ens.fr/files/PikettyZucman2013WP.pdf. Centre for Economic Policy Research, 2013.

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Thomas Piketty 24

French economist 1971

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“I can now present the first fundamental law of capitalism, which links the capital stock to the flow of income from capital. The capital/income ratio β is related in a simple way to the share of income from capital in national income, denoted α. The formula is
α = r × β
Where r is the rate of return on capital.
For example, if β=600% and r = 5%, then α = r × β = 30%.
In other words, if national wealth represents the equivalent of six years of national income, and the rate of return on capital is 5 percent per year, then capital’s share in national income is 30 percent.”

Thomas Piketty book Capital in the Twenty-First Century

Source: Capital in the Twenty-First Century (2013), p. 52.

“The essential measure of the success of the economy is not production and consumption at all, but the nature, extent, quality, and complexity of the total capital stock, including in this the state of the human bodies and minds included in the system. In the spaceman economy, what we are primarily concerned with is stock maintenance, and any technological change which results in the maintenance of a given total stock with a lessened throughput (that is, less production and consumption) is clearly a gain. This idea that both production and consumption are bad things rather than good things is very strange to economists, who have been obsessed with tile income-flow concepts to the exclusion, almost, of capital-stock concepts.”

Kenneth E. Boulding (1910–1993) British-American economist

Source: 1960s, The Economics of the Coming Spaceship Earth, 1966, p. 9-10 as cited in: Mark W. W. McElroy, J.M.L. M. L. van van Engelen (2012) Corporate Sustainability Management.

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

Thomas Piketty book Capital in the Twenty-First Century

Source: Capital in the Twenty-First Century (2013), p. 1.

“The aggregate capital appears as the capital stock of all individual capitalists combined. This joint stock company has in common with many other stock companies that everyone knows what he puts in, but not what he will get out of it.”

Karl Marx (1818–1883) German philosopher, economist, sociologist, journalist and revolutionary socialist

Vol. II, Ch. XX, p. 437.
(Buch II) (1893)

“By one estimate, 90% of international transactions were accounted for by trade before 1970, and only 10% by capital flows. Today, despite a vast increase in global trade, that ratio has been reversed, with 90% of transactions accounted for by financial flows not directly related to trade in goods and services.”

Didier Sornette (1957) French scientist

Source: Why Stock Markets Crash - Critical Events in Complex Systems (2003), Chapter 8, Bubbles And Crashes In Emergent Markets, p. 304.

“But the stock market is not 1:1-it is not a zero sum game. So those deaf, dumb and blind economists can't find the capital flows.”

Andy Kessler (1958) American writer

Part VII, The Margin Surplus, Wealth How?, p. 261.
Running Money (2004) First Edition

“It [knowledge] is clearly related to information, which we can now measure; and an economist especially is tempted to regard knowledge as a kind of capital structure, corresponding to information as an income flow. Knowledge, that is to say, is some kind of improbable structure or stock made up essentially of patterns — that is, improbable arrangements, and the more improbable the arrangements, we might suppose, the more knowledge there is.”

Kenneth E. Boulding (1910–1993) British-American economist

Source: 1960s, Beyond Economics: Essays on Society, 1968, p. 142

“An income tax intended to reduce inequality and promote the diffusion of wealth has in practice fostered reinvestment of corporate earnings, thereby favoring the growth of large corporations, inhibiting the operation of the capital market, and discouraging the establishment of new enterprises.”

Milton Friedman (1912–2006) American economist, statistician, and writer

Source: (1962), Ch. 13 Conclusion, 2002 edition, p. 198

“So long as we confine our attention to income from property, and leave out of account any increment or decrement in the value of prospects due to changes in people's own earning power (accumulation or decumulation of “Human Capital”), Income No. 1 ex post is not a subjective affair, like other kinds of income; it is almost completely objective.”

John Hicks (1904–1989) British economist

178-9
Value and capital, (1939)

“First, most of the speculation about the superiority of the communist system - including the popular view that Western economies could painlessly accelerate their own growth by borrowing some aspects of that system - was off base. Rapid Soviet economic growth was based entirely on one attribute: the willingness to save, to sacrifice current consumption for the sake of future production. The communist example offered no hint of a free lunch.
Second, the economic analysis of communist countries' growth implied some future limits to their industrial expansion - in other words, implied that a naive projection of their past growth rates into the future was likely to greatly overstate their real prospects. Economic growth that is based on expansion of inputs, rather than on growth in output per unit of input, is inevitably subject to diminishing returns. It was simply not possible for the Soviet economies to sustain the rates of growth of labor force participation, average education levels, and above all the physical capital stock that had prevailed in previous years. Communist growth would predictably slow down, perhaps drastically.”

Paul Krugman (1953) American economist

Pop Internationalism (1996), Asia's Miracle (1994)

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