Before the economist Yanis Varoufakis became the finance minister of Greece, he taught economics at the University of Texas at Austin. And three months before his party, Coalition of the Radical Left, won the historic election that opened the door to that powerful position, powerful because Wall Street and Berlin are paying very close attention to it, Varoufakis posted a paper that attacked the brilliant and most famous economist of the day, Thomas Piketty. The big surprise for me in this paper is that he dismisses Piketty's three laws, the third of which, r>g (the tendency is for the rate on the return capital to be higher than the growth of the economy, which, under normal circumstances, will be low), I thought was obvious. (Coincidentally, I'm meeting at Vermillion at 7 p.m. to talk about these laws with participants in a Piketty class I taught at Hugo House and anyone who cares about such things, and will be happy to explain my surprise at Varoufakis's criticism of the third law of capital.)
Furthermore, Varoufakis thinks Piketty does a disservice to us all by not separating capital from wealth. What is the difference? For Piketty, capital is anything that can be bought or sold on the market. This is why he does not believe in human capital. Humans can only be capital when they are slaves—when they can be sold on the market for a loss or a profit, not when they sell their labor on the market. The proponents of human capital think that the investment that's made for a marketable skill is a form of capital.
Varoufakis, on the other hand, believes capital is what produces products. Capital is first and foremost productive. Wealth is not. There is some value to this way of thinking, which is Marxist with a peculiar twist. Varoufakis: "In short, production and growth depends on material or physical capital. And while capital is a form of wealth, a great deal of wealth is not a form of capital..." From this notion of capital, he believes, we can proceed to Marx's complicated notion of capital as a social relation, a notion that opens the way, by the way, to Michel Foucault's Nietzschean social physics of power. But in a world that believes that capital is mostly immaterial, and often otherworldly (Earth is owned by Mars), or orbits our planet like satellites, it is very amazing to hear an economist talk about capital in such hard terms. Capital in the mind of this finance minister is about metal, meat, and bones. Meet me tonight, and let's talk about this.