This spotlight is written in memory of Professor Samih Antoine Azar, a remarkable economist and an excellent contributor to the Blog.
In his seminal book, Capital in the 21st Century, Thomas Piketty postulated a ‘golden rule’ for the 21st century: r>g, where r is the real rate of interest and g is the real growth of GDP or income. An important corollary of this rule is that there will be a tendency for inequality to rise as capital income will tend to increase at the rate of interest, r, while national income will increase at the rate g. And as such the share of capital income will rise at the expense of the share of labor. According to Piketty, this has not always been the case. For mostly ‘Western’ economies, the capital share increased from at least the French revolution in 1789, but then it fell from about 1914 to the early 1980s, but to rise again since then and hence into the 21st century. We will not go through the reasons behind these movements for the capital income share, as our focus is on Lebanon, but suffice it to say that Piketty’s conception of capital is comprehensive, constituting all non-human wealth that includes real capital, financial capital, and property, which in turn earn respectively profits, interest, and rent.
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