Indonesia 77%, I know one of them is you.





Maybe there’s another way of looking at the ancap vs ancom debate.

  • Ancaps live in the world of classical economics, where the big question is how to allocate scarce resources in the face of unlimited wants.
  • Ancoms live in the world of welfare economics, where the big question is how to achieve and sustain abundance.

Each has an ethical grounding which is inseparable from the question their economic thinking addresses.

  • Ancoms are worried about people being cut out of prosperity and opportunity in a world which can be made to provide for all.

The dividing line which determines which offers the more just and practical ideas depends on whether we think of ourselves as primarily facing scarcity or abundance.

I don’t think so! Ancoms believe that what a person makes is not the maker’s property and can rightfully be taken.

Maybe. The moment someone develops a 3D Star Trek replicator, I’ll switch sides. Until then, Capitalism and property rights will have to do.

Austrian economics denies the idea of limited resources, Review it. So what you say about ancaps and the reason of stealing is wrong. I am just saying that you conclude things from false principles, the argument of having or not limited resources is not what i am talking about.

The owner of capital can earn without working. The essential human function of exchange of effort for income can become the abstracted manipulation of money for more money. This is most obvious in the case of the absentee owner of an industrial enterprise. It does not make any difference whether he owns the whole enterprise, or only a share of it. In each case he makes a profit from his capital and from the work of others without having to make any effort himself. There have been many pious justifications for this state of affairs. It has been said that the profits were a payment for the risk he takes in his investment, or for his self-depriving effort to save, which enabled him to accumulate the capital he can invest.

But it is hardly necessary to prove that these marginal factors do not alter the elementary fact that Capitalism permits the making of profits without personal effort and productive function.

But even as far as those who do work and perform services, their income is not in any reasonable correlation to the effort they make.

A schoolteacher’s earnings are but a fraction of those of a physician, in spite of the fact that her social function is of equal importance and her personal effort hardly less. The miner earns a fraction of the income of the manager of the mine, though his personal effort is greater if we consider the dangers and discomforts connected with his work

The worker, or rather his labor, was a commodity to be bought by the owner of capital, not essentially different from any other commodity on the market, and it was used to its fullest capacity by the buyer.

Since it had been bought for its proper price on the labor market, there was no sense of reciprocity, or of any obligation on the part of the owner of capital, beyond that of paying the wages.

If hundreds of thousands of workers were without work and on the point of starvation, that was their bad luck, the result of their inferior talents, or simply a social and natural law, which could not be changed. Exploitation was not personal any more, but it had become anonymous, as it were. It was the law of the market that condemned a man to work for starvation wages, rather than the intention or greed of any one individual. Nobody was responsible or guilty, nobody could change conditions either. One was dealing with the iron laws of society, or so it seemed

If a worker of a factory, that’s on a verge of a collapse gets evacuated, and sees what’s going on (every day), and they ask them to get back to work the next day, or they won’t pay, if he does go to work – isn’t he simply valuing his money more than his life? I mean, in such a case, you can’t just say someone pushed them to risk their life. It’s like if I go run across a highway and die hit by a car, the car and the driver are to blame? I’m sorry but the whole idea of capitalism and freedom is that you get to choose but also you get to pay for your choices. Those workers decided to risk their lives for… money. Apparently those money were worth more than a life without them. And that’s obviously sad, but isn’t the problem rather the fact that their country doesn’t have laws and capitalism and freedom? Because in such, they could sue their employer? As for big companies and shareholders – they always choke to death on that business model. It never ever works. So, in the end capitalism solves its own problems.

A libertarian world would not function the way libertarians fantasize it would, I doubt it would function much at all. Libertarians are nearly as delusional as theists. And saying the internet was useless before the image tag just makes you look pathetic. All those caps, your getting shriller and shriller, probably sputtering and spewing cheeto crumbs all over the keyboard, mom’s gonna be pissed. Get back with me in a couple of decades when maybe you won’t be such a howling immature, ignorant prick. Me, i’m gonna go dig lint out of my navel, a far more intellectually stimulating activity than typing at the mewling anencephalics.

I don’t think of myself as a liberal, I’m more of a realist, which is why I’m not a libertarian, though that is closer to my leanings than liberal. Libertarian ideas are so incoherent and delusional it’s amazing so many intelligent folk fall into that cesspool. I’m terrible at math and statistics, that’s why I kept getting all those A’s and a few B’s in the numerous engineering and economics courses I took at university.

It isn’t business that creates wealth, it is technological advancement. If trading created wealth, why didnt it do so until we invented steam engines? They traded in the middle ages, they traded in china. Hell, we had the first multinational made in the Netherlands in the 1700’s, decades before the industrial revolution. Why didn’t that cause a massive increase in wealth? Simple, because your productivity per person depends on two things, resources and technological assistance.

Remember, leftist who actually have a grasp of economics and politics don’t oppose corporations and industry, they oppose the exploitation of workers by the “owners of the means of production”. Hence, they support socialism, which is the theory that the workers should own the means of production. Simply put, at the end of the month, you get an equal share of the profits, regardless of it you are the engineer, the mechanic or the janitor. This is similar to employee-owned stores.

I also don’t think resource equality is the answer, because individuals are driven by competition, and competition drives ingenuity, thus incentivation for ability and performance would have to exist.

A basic living allowance would be required that was not negatively subtracted as you found ways to produce more. In general people enjoy working and being part of a community of people if their basic needs have been met.

The US welfare system is a negative gain system, where assistance starts off too low to survive, and is then adjusted downward for every income step upwards that a person takes.

This deicentivizes them from personal ingenuity and work. So It can’t be a negative gain system, it must be a stable pay model, that allows for a person to maintain the same standard living wage while obtaining other sources of monetary gain.

There is a theoretical model (Maslov’s Hierarchy of Needs) that conceptualizes the basic needs a human requires before higher level functions can take place. For example: If someone is starving they will try to eat their clothing such as leather shoes and belts (this has been found in multiple historical accounts, e.g. Pizaro, Peru expedition), thus food is the most basic need, with clothing and shelter comming next. After these, comes social contacts, friendships, intimacy.

The final step is self realization: Once higher level social bonding has developed, and physical needs are consistently maintained, a person is able to expand into self realization, which ultimately leads to the natural desire to contribute and be a part of the community – this is where raw skills and abilities are identified and honed in order to make marketable and desired things by the community. This is where the expression of genius can best take place. This is also one reason why crime and poverty walk hand in hand.

Such as the socioeconomic status (SES) that a person is born into. Currently, those with a higher SES are much more likely to get a better education and have the base social contacts necessary for upward mobility. It will most likely be these people who will be making the robots and AI chips that will lead to the dismantling of current job markets and the permanent loss of the sum total jobs contained in those markets.

Those born to lower SES families will be more likely to be displaced in these events. The proportion of people that will move up from the SES they were born into (upward mobility) is currently lower than it has ever been in the US. Which means that with out a change in the status quo, we can already predict largely who these people will be. Even wolves share their food.

The tougher will take more, but they will only take what they need and allow the others to have the rest. Our current state of affairs with technological evolution and proprietary ownership of the technological advancements is akin to a wolf having the ability to kill all the deer in a given forest without help, and then not allowing any of the other wolves to share in the spoils.

All of the forests have hundreds of wolves, but now there are only one or two who can kill in this way. Either we learn to share in days of plenty, or we let all of the other wolves in the forest die.

The ability to create the device that can take away jobs from thousands of workers is not due to divine providence or genetic superiority, and the inheritance of these assets certainly isn’t. So do we remain conservative and maintain the status quo or do we question ourselves and our current paradigm of resource distribution in order to find a better way to progress into this new century.

Capital in the Twenty-First Century : Thomas Piketty


Sambutan publik, sejauh ini, terhadap kedua karya ekonom tersebut tidak semeriah ketika Capital terbit (dalam Bahasa Inggris). Berbicara mengenai isu yang sama, karya Piketty ini dalam sekejap menyita perhatian ekonom, pembuat kebijakan, pelaku pasar, maupun think-thankers. Ketika orang masih mencari penjelasan yang memuaskan apa dinamika besar yang menggerakkan akumulasi dan distribusi kapital, Piketty menawarkan jawaban yang lebih mendasar.

Isu sentral karya Piketty ini adalah ketimpangan pendapatan yang disebabkan oleh konsentrasi kapital pada sedikit orang. Konsentrasi kapital yang kian meningkat di tangan sedikit orang, kata Piketty, telah mendorong pemiliknya untuk memperlakukan kapital sebagai sumber daya langka, dan karena itu bernilai sangat tinggi. Kaum pemilik modal (kapitalis) menuntut pengembalian yang tinggi.

Sambutan publik, sejauh ini, terhadap kedua karya ekonom tersebut tidak semeriah ketika Capital terbit (dalam Bahasa Inggris). Berbicara mengenai isu yang sama, karya Piketty ini dalam sekejap menyita perhatian ekonom, pembuat kebijakan, pelaku pasar, maupun think-thankers. Ketika orang masih mencari penjelasan yang memuaskan apa dinamika besar yang menggerakkan akumulasi dan distribusi kapital, Piketty menawarkan jawaban yang lebih mendasar.

Isu sentral karya Piketty ini adalah ketimpangan pendapatan yang disebabkan oleh konsentrasi kapital pada sedikit orang. Konsentrasi kapital yang kian meningkat di tangan sedikit orang, kata Piketty, telah mendorong pemiliknya untuk memperlakukan kapital sebagai sumber daya langka, dan karena itu bernilai sangat tinggi. Kaum pemilik modal (kapitalis) menuntut pengembalian yang tinggi.

Pandangan ini membantah keyakinan bahwa kesenjangan merupakan distorsi yang akan dipulihkan oleh mekanisme pasar. Piketty membantah pandangan bahwa pasar yang terbebas dari efek distorsi dan intervensi pemerintah akan ‘mendistribusikan buah kemajuan ekonomi’ kepada semua orang. Tesis Piketty tentang kelemahan inheren kapitalisme ini menyengat banyak pihak dan ia dituding sebagai Karl Marx baru—tudingan yang salah tempat, sebab Piketty berbicara ihwal distribusi kekayaan dan ketimpangan pendapatan, sedangkan Marx berbicara tentang faktor produksi dan pertentangan kelas.

Sebaliknya, kata Piketty, meningkatnya ketimpangan mencerminkan bahwa pasar bekerja seperti yang seharusnya. “Semakin sempurna pasar kapital, semakin tinggi ‘tingkat return on capital’ dibandingkan dengan tingkat pertumbuhan ekonomi. Semakin tinggi rasio ini, semakin besar ketimpangannya,” kata Piketty. Tidak ada mekanisme natural yang dapat merintangi kecenderungan itu, kecuali krisis seperti perang, depresi ekonomi, atau intervensi politik. Piketty menawarkan jalan keluar yang memancing perdebatan dan membikin gerah sebagian orang: pengenaan pajak progresif terhadap kapital.

Capital bertumpu pada riset 15 tahun (1998-2013) yang dilakukan Piketty bersama sejawatnya, ekonom Prancis Emmanuel Saez yang mengajar di Berkeley dan Anthony B. Atkinson, pionir studi ketimpangan di era modern dari Oxford. Dukungan Atkinson terutama pada karya awal Piketty tentang orang-orang berpenghasilan sangat tinggi di Prancis (2001). Sedangkan Saez berkontribusi pada studi tentang pertumbuhan pendapatan populasi 1 persen di AS sejak 1970an hingga 1980an.

Gagasan Piketty memiliki kedalaman historis berkat himpunan data sepanjang dua abad yang mencakup lebih dari 20 negara. Potret sosial yang ditangkap Jane Austen, Henry James, dan Honoré de Balzac memperkaya pemahaman Piketty tentang situasi sosiologis dan psikologis di era mereka. Piketty memandang ekonomi sebagai sub-disiplin ilmu-ilmu sosial, berdampingan dengan sejarah, sosiologi, antropologi, dan ilmu politik—inilah yang membedakannya dari ekonom umumnya.

Sebagai orang Prancis, Piketty sering kali mengingatkan bahwa kesenjangan yang semakin melebar dan bertumpuknya akumulasi modal dapat saja menyebabkan kerusuhan yang dahsyat seperti yang terjadi pada revolusi Prancis di masa lalu.

Terlebih, Piketty menggambarkan bahwa pada abad ini patrimonial capitalism telah muncul kembali. Dimana kesejahteraan terjadi bukan karena masyarakat telah berusaha dan berbakat, tetapi karena didominasi pula oleh adanya inherited wealth.

Sebagai contohnya, dengan menggunakan data orang terkaya yang diterbitkan oleh majalah Forbes, Piketty menyimpulkan bahwa Liliane Bettencourt, ahli waris perusahaan kosmetik L’Oreal, yang tidak pernah bekerja seumur hidupnya, memiliki kekayaan yang tumbuh lebih cepat dibandingkan seorang Bill Gates yang menemukan Microsoft dan menjadi pemimpin dunia dalam sistem operasi komputer.

Hal lain yang membuat buku Capital in the 21st Century layak dibaca ialah argumentasi Piketty daridata historis yang mematahkan pendapat Simon Kusznets dan Robert Solow.

Dimana Simon Kuznets berpendapat hubungan antara pertumbuhan ekonomi dan pemerataan seperti huruf-U terbalik, dimana pada awal pembangunan pertumbuhan tinggi akan membawa kesenjangan, tapi pada tingkat pendapatan tertentu, trade-off antara pertumbuhan ekonomi dan pemerataan akan hilang dan pertumbuhan ekonomi akan selaras dengan pemerataan. Sedangkan Robert Solow sangat optimis bahwa growth trajectory yang berhubungan dengan semua variabel (output, pendapatan, keuntungan, gaji, modal, harga asset, dsb) akan tumbuh dalam tahapan yang sama sehingga semua kelompok masyarakat akan mendapatkan manfaat yang sama dari pertumbuhan ekonomi.

Baik Kusznets maupun Solow, kedua pendapatnya kemudian sangat mengilhami kalangan ekonom mainstream. Sehingga, ketika pendapat mereka terbantahkan oleh argumentasi dan paparan Piketty, tidak sedikit ekonom mainstream yang ‘kebakaran jenggot’ hingga menjadikan buku ini menjadi salah satu referensi dalam perdebatan akademis.

Diakhir bukunya, Piketty juga mengajak seluruh pembaca, baik masyarakat maupun politisi dan ekonom, untuk merenungi kembali hakikat ilmu ekonomi. Menurutnya, ilmu ekonomi adalah ilmu antar disiplin dari social science yang seharusnya berdampingan dengan ilmu sejarah, sosiologi, antropologi, dan political science. Sehingga seharusnya Ilmu ekonomi lebih cocok disebut sebagai political economy, bukan economic science yang arogan karena merasa lebih ilmiah dengan ungkapan simbol-simbol permodelan dan statistik yang jauh dari moral, norma, dan politik.

  • Apakah memang sudah tak terhindarkan lagi bahwa akumulasi kapital  akan berujung pada penumpukan kekayaan pada segelintir orang saja seperti yang diperkirakan oleh Karl Marx pada abad 19? (Halaman : 22 “This is the basis of Marx’s prediction of an apocalyptic end to capitalism: either the rate of return on capital would steadily diminish (thereby killing the engine of accumulation and leading to violent conflict among capitalists), or capital’s share of national income would increase indefinitely (which sooner or later would unite the workers in revolt). In either case, no stable socioeconomic or political equilibrium was possible.”)
  • Ataukah, gaya-gaya penyeimbang dari pertumbuhan, kompetisi dan kemajuan teknologi mampu menurunkan kesenjangan dan meningkatkan harmoni antar kelas, seperti pemikiran Kuznets pada abad 20?

Ketika Rate of Return on Capital : lebih besar daripada tingkat pertumbuhan produksi dan pendapatan (growth rate) atau r > g, seperti pernah terjadi pada abad 19 dan tampaknya terjadi lagi pada abd 21 ini, kapitalisme dengan sendirinya akan menyebabkan kesenjangan sosial yang secara radikal melemahkan nilai-nilai masyarakat demokratis. (Halaman 10 : “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”)

Return saham menjadi dua jenis yaitu return realisasi (realized return) dan return ekspektasi (expected return). Return realisasi merupakan return yang telah terjadi dan dihitung berdasarkan data historis. Return realisasi penting sebagai dasar pengukuran kinerja perusahaan, serta sebagai dasar penentuan return ekspektasi dan resiko di masa mendatang.

Sedangkan return ekspektasi merupakan return yang diharapkan terjadi di masa mendatang dan bersifat tidak pasti (belum terjadi).

Rate of Return (ROR) adalah tingkat pengembalian saham atas investasi yang dilakukan oleh investor. Komposisi penghitungan rate of return (return total) adalah capital gain (loss) dan yield. Capital gain (loss) merupakan selisih laba/rugi karena perbedaan harga sekarang yang lebih tinggi atau lebih rendah bila dibandingkan dengan harga periode waktu sebelumnya.

Sedangkan yield merupakan persentase penerimaan kas secara periodik terhadap harga investasi periode tertentu dari sebuah investasi. Untuk saham, yield merupakan persentase dividen terhadap harga saham periode sebelumnya. Untuk obligasi, yield merupakan prosentase bunga pinjaman yang diperoleh terhadap harga obligasi sebelumnya

Konklusi Marx biasa dikenal sebagai ‘principle of infinite accumulation’, yaitu kecenderungan tak terhindarkan terjadinya akumulasi kapital tanpa batas dan terkonsentrasi pada hanya segelintir tangan saja. Basis prediksi Marx tentang kiamat kapitalisme adalah:

  • rate of return on capital akan terus menurun sehingga mematikan mesin akumulasi dan berujung pada konflik antar kapitalis, atau
  • proporsi pendapatan nasional dari kepemilikan kapital akan terus meningkat tanpa batas (upah = 0) hingga pada akhirnya menyebabkan revolusi. Dengan kata lain, tidak mungkin ada kestabilan sosioekonomi atau keseimbangan politik.

Income on which tax has to be paid and accumulated wealth, are two different things. Nevertheless, wealth cannot be built unless an income is earned. And if an income is being earned, some tax needs to be paid on it.

For Marx, the central mechanism by which “the bourgeoisie digs its own grave” corresponded to what I referred to in the Introduction as “the principle of infinite accumulation”: capitalists accumulate ever increasing quantities of capital, which ultimately leads inexorably to a falling rate of profit (i.e., return on capital) and eventually to their own downfall. Marx did not use mathematical models, and his prose was not always limpid, so it is difficult to be sure what he had in mind

When Marx says “Accumulate, Accumulate! That is Moses and the prophets” [Capital I c. 24, section 3]. He means that the wealth accumulated is to be reinvested in production because capital must expand itself continuously or perish. By reinvesting the capital, people are put to work, the economy expands and more accumulation is generated to do it all over again (until a crisis due to capitalism’s contradictions.) Marx is still important because this movement of capital is still going on and still creating crises (we are in one now) and the spectre haunting Europe has not been exorcised.

We are often told that what drives capitalism is greed – the endless desire to accumulate more and more wealth. A capitalist is indifferent to the actual use value of what is produced. What matters is not the usefulness of any product or service but the capacity to make more money out of it. Therefore surplus value that is squeezed out of workers is reinvested in further production. 

They constantly aim to invest in new technology. By making production as efficient as possible and minimising the costs they hope not to go out of business. By constantly attempting to maximise their profits, a capitalist will be faced by two powerful obstacles: workers and other capitalists. Workers will resist efforts to squeeze profits out of them. By doing so, they can limit the productivity and profitability of the firm. Other capitalists will try to increase their share of the market, thereby reducing that of their rivals. Both of those constraints mean that capitalists are forced to continually invest in new technologies. 

The drive to accumulate is at the heart of capitalism. Marx wrote that “the development of capitalist production makes it constantly necessary to keep increasing the amount of capital laid out…To fulfil their role as a capitalist, they must accumulate.”

As workers are the sole source of profit, the need by capitalists to buy into new technologies ends up undermining the rate of profit. Whether it is the small corner shop or a big multinational, mechanisation is crucial to speed up production and to reduce the price of goods

Dalam buku ini, Piketty tidak hanya fokus pada tingkat kesenjangan ekonomi saja, namun juga menyangkut pada struktur dari kesenjangan itu sendiri, yaitu penyebab asal kesenjangan pendapatan dan kekayaan diantara kelompok-kelompok sosial dari berbagai sistem ekonomi, sosial, moral dan politik yang berbeda. Hasil utama studi Piketty dari data sejarah di atas adalah:

  • Pertama, gejala ekonomi menyangkut kesenjangan antara kekayaan dan pendapatan perlu menjadi perhatian penting. Sejarah distribusi kekayaan selalu menunjukkan adanya kaitan politik yang sangat dalam, dan tidak bisa direduksi hanya murni masalah ekonomi saja.
  • Kedua, dinamika distribusi kekayaan menghasilkan mekanisme yang kuat untuk mendorong terjadinya konvergensi (setara) dan divergensi (kesenjangan).

Optimisme tumbuhnya produktifitas dan penurunan kesenjangan dalam negeri, juga antar negara, akan terjadi karena dipicu oleh

  1. Tumbuhnya kekuatan pengetahuan dan keahlian, atau tumbuhnya ‘human capital’. China dan beberapa negara sedang berkembang telah menunjukkan gejala ini. Jelas bahwa kurangnya investasi yang masif dalam pendidikan dan pelatihan akan menyebabkan pertumbuhan ekonomi hanya akan dinikmati sebagian kelompok sosial saja. Upaya keras negara untuk terlibat dalam meningkatkan pendidikan dan pelatihan sangat dibutuhkan.
  2. Perubahan dari ‘class warfare’ (perang antar kelas) ke ‘generational warfare’ (perang antar generasi). Tidak lagi perselisihan yang terjadi karena perbedaan kepemilikan modal, tetapi antara dinasti pemilik modal vs profesional (human capital).

HR = Hire to Retire, sedangkan

HC = Hire to be competitive, to be competent, to be contributive Teamwork.

HC memandang karyawan bukan sebagai sumber daya belaka tetapi asset yg melainkan berguna bagi institusi atau organisasi. Karena itu kemudian muncullah istilah baru di luar H.R. (Human Resources), yaitu H.C. atau Human Capital. Di sini SDM dilihat bukan sekadar sebagai aset utama, tetapi aset yang bernilai dan dapat dilipatgandakan, dikembangkan (bandingkan dengan portfolio investasi) dan juga bukan sebaliknya sebagai liability (beban, cost)

Sedangkan Human Capital memberikan pemahaman bahwa manusia (people) sebagai aset organisasi yang dapat dikembangkan sebagai portofolio organisasi. Human Capital didefinisikan sebagai sekumpulan pengetahuan, keahlian, dan kapabilitas yang dimiliki pegawai untuk memberikan solusi (the knowledge, skill and capability of individual employees to provide solutions)


What I want to do in this video is to create a simple spreadsheet to help us understand why if R is greater than G, why that might lead to more and more of national income going to the owners of capital as opposed to labor. So let’s just say R is 3%, and we can change that assumption later, so that’s the return on capital that we’re assuming.

We’re assuming it’s just going to be fixed at that constant rate. And let’s say that economic growth is 2%. So we’re assuming a scenario where R is greater than G.

Now this column, let me write the year. So this is year one, year two, and then maybe we can go, let’s see, maybe we can go up to year, let’s go to year 15 just for good measure. Now we can think about what our national capital is, or should I say total capital. So the capital in our economy.

Now we’d also want to think about the national income. So we could do this as the output of the economy, national income. And now we can think about the split of the income between capital and labor.

So income to capital, and income to labor. And now let’s just think about percentage of total.

So capital as percent of total. So let’s come up with some assumptions right over here.

So let’s say that our aggregate capital and I’m just going to throw out a random number here, let’s say it’s 4000. And if we’re talking about millions of dollars then this would be 4 trillion dollars.

But I’m being currency agnostic right over here. So let’s just say it’s 4000. If this was in millions it would be 4 trillion. But let’s just say 4000 for now. And let’s say our national income is 1000, and we’ve seen charts already, at least for the U.S., that national capital as a percentage of national income has been about 400 or 500%. It’s kind of oscillated in that range.

So it’s been about four or five times national income. So this is kind of a not unreasonable ratio. And now what’s the income to the owners of capital? Well, we’re saying that the return on capital is 3%. So this is going to be equal to this 3%. I’m going to press F4 to put those dollar signs and we’ll see why that’s valuable to make sure that we stay referenced to that cell as we drag this down later on.

It’s going to be that times the amount of capital that we have in the economy.

So it’s going to be 120. And notice, I had the dollar signs in the B1, because I always want to refer to this, but I didn’t put the dollar signs in the B5, because as I drag this down, I always want this cell, say when I drag it down here, I want it to refer to that same 3%. That’s why I kind of anchored it there with the dollar sign. But I want it to be times the capital in that row.

So we’ll see how that happens in a second. Now what’s the income to labor?

Well, it’s going to be what’s left over. National income minus the income to capital, and then capital is a percentage of total, the income to capital is a percentage of total income. Well that’s just going to be equal to, I can select income to capital, D5, divided by national income. And so it’s 12%. And we’re also going to assume that every year that income to capital all gets re-invested as capital. So it doesn’t get consumed in some way. So the year two, the capital that we start off with, is going to be capital from last year plus the new income to capital. That income to capital is going to get re-invested as capital. That’s just going to be my assumption there. And national income, well we know it’s growth. It’s going to be the previous year’s national income plus I guess we could say times one plus this number, plus our economic growth. So there, and I’ll press F4 because I want to stay referencing that. And so notice we grew by 2%. And then these two over here, actually all three of these over here, we can just drag down. And now hopefully you see the value of what I did when I put the dollar signs here.

Because now when I dragged it down, this is still referring to B1, because it has the dollar signs there. It’s just taking the 3% times B6. So B6 is this. It’s looking at the B column, but in its row now. And that’s one of the really useful things about spreadsheets. And actually this column, let me make this a percentage. Just so it becomes a little bit cleaner. Okay, there you go. And then we can just keep on going. So let’s just keep on going down. And what do we get? And actually let me get rid of some of the decimal places here. It’s making it a little bit messy. So there you go. That actually makes it a little bit cleaner. And so what do we have going on over here?

Well we see that when R is a fixed rate of return on capital that is greater than growth, we see that capital, the income going to capital as a percentage of the total national income is increasing. Now this could be used as a proxy for inequality because as we’ve said before, capital does tend to be concentrated amongst the upper percentile, decile, qauartile, however you want to define it. But once again, this is just a proxy. And the other thing you have to keep in mind is inequality is a natural byproduct of a capitalistic market economy. And even though more and more of the income is going to the owners of capital, the labor, the income going to labor is also increasing.

Now that by itself doesn’t necessarily say it’s a good thing. For example, if the population were increasing faster than this, then the income to labor divided by the population which would be kind of a per capita income to labor or kind of a proxy for how much the individual person working is making, then even if this is going up and the population is growing faster than that, that might not be a good thing. Because that means per capita income might not be where it needs to be. But if we assume the population is stable or it’s not growing as fast as this, even though we see inequality, or at least this measure of inequality going up, more and more of the income is going to capital, these people still might be better off in this reality. But to kind of test the sensitivity of this model that we’ve created, we can actually try different things.

So if the return on capital is much larger, say it’s 5%, we see the disparity becomes much, much more significant. And let’s say if it was 10%. Now you see a situation that could get not so pleasant. Because in this situation, this is a fairly extreme situation we have right over here, now all of a sudden the income to labor, and not even on per capita terms, is actually decreasing. So it really does matter a lot where these two numbers are.

But of course if economic growth was also pretty robust, now all of a sudden this is still decreasing, but if economic growth was 9%, now all of a sudden this could be a pretty good scenario for everyone involved. You do have, at least this is kind of a proxy for increased income to capital which could be a proxy for inequality, but maybe the economy is growing fast enough that everyone is benefiting. So I encourage you to either build a model like this or I’ll give you the link to this model as well, and play with these numbers and just try to get a better understanding for if we assumed R and G were constant, and we made some assumptions about starting capital and national income, how that ends up breaking down as we go further and further into the future.

*The government has some limited controls on R; in the USA, there is a Capital Gains tax. Increasing this tax would decrease R, but may also decrease G. Generally, the primary goal of fiscal/monetary policy is to maximize G, though there are many differing approaches to that end.

What is ‘Return Of Capital’

Return of capital is a payment received from an investment that is not considered a taxable event and is not taxed as income. Instead, return of capital occurs when an investor receives a portion of his original investment, and these payments are not considered income or capital gains from the investment.

Bila RORC (Rate Of Return on Capital, r) masih lebih tinggi secara signifikan daripada Pertumbuhan ekonomi (pendapatan dan produksi, g) dalam kurun waktu yang lama, maka resiko terjadinya divergensi (kesenjangan) dalam distribusi kekayaan akan semakin tinggi. Artinya, seperti halnya pada abad 19 yang cenderung akan terjadi lagi pada abad ini, kekayaan yang diperoleh dari warisan akan tumbuh lebih cepat daripada pendapatan dan produksi.

Dalam situasi seperti ini, hampir tak terelakkan bahwa warisan kekayaan akan jauh melebihi total pendapatan yang telah dikumpulkan oleh kaum pekerja selama hidupnya, dan konsentrasi capital akan semakin jauh melejit hingga pada posisi yang secara potensial tidak akan dapat dicapai dengan prestasi kerja sebaik apapun walaupun dibarengi dengan nilai-nilai meritokratik dan prinsip-prinsip fundamental masyarakat berkeadilan sosial dan demokratis.

Bila terjadi konflik sosial yang tinggi akibat pembagian yang tidak adil antara pemilik kapital dan pekerja, maka ini seringkali dipicu oleh adanya konsentrasi kepemilikan kapital yang berlebihan.

Kesenjangan akibat tingginya kekayaan, sebagai konsekwensi pendapatan hasil dari kapital, jelas selalu lebih besar daripada kesenjangan yang disebabkan oleh pendapatan pekerja (r>g).

Piketty tidaklah sepesimis Marx yang menganggap akan terjadi kiamat sosial dengan pemikirannya ‘principle of infinite accumulation’ dan ‘perpetual divergence’ yang didasarkan pada asumsi mandegnya pertumbuhan ekonomi dalam kurun waktu yang lama.

Divergensi tidaklah abadi, melainkan hanyalah bagian dari berbagai kemungkinan arah distribusi kekayaan di masa depan. Perlu juga diperhatikan bahwa kesenjangan fundamental r > g, sebagai faktor utama penyebab divergensi, tidaklah berkaitan dengan tidak sempurnanya pasar. Bahkan bila pasar semakin sempurna, maka ‘r’ semakin besar dibanding ‘g’.


Penyajian permasalahan dalam buku ini, Piketty membaginya menjadi 4 bab dengan 16 sub-bab di dalamnya.

Pada Bab 1 yang berjudul Income and Capital menjelaskan ide-ide dasar yang akan terus ditemui hingga akhir buku, khususnya konsep-konsep national income, capital, dan capital/income ratio.

Bab 2, The Dynamics of the Capital/Income Ratio menjelaskan pengkajian prospek masa depan dari capital/income ratio dan pembagian pandapatan nasional antara kerja (labor) dan capital dalam proses evolusi yang berlangsung lama pada abad 21.

Bab 3, The Structure of Inequality membahas besarnya kesenjangan antara distribusi pendapatan yang diperoleh pekerja di satu sisi dengan pendapatan dari hasil capital di sisi lainnya.

Bab 4, Regulating Capital in the 21st Century merupakan proposal kebijakan normatif untuk mengurangi kesenjangan ekonomi berdasar kajian tiga bab sebelumnya.

National Income= C+I+G+(X-M)+(R-P)

C= consumption
I= income
G= government charges
X= exports
M= imports
R= receipts
P= payments

Bab 1 Income and Capital :


Capital adalah jumlah total asset yang bisa dimiliki dan dapat diperjual-belikan di pasar secara permanen, termasuk di dalamnya adalah segala bentuk properti (perumahan), juga finansial dan capital profesional (perkebunan, infeastruktur, permesinan, hak paten, dll.) yang dipergunakan oleh perusahaan dan pemerintahan.

Human Capital tidak dianggap Piketty sebagai Capital karena tidak dapat dimiliki oleh pihak lain atau diperjual-belikan secara permanen.

Capital juga dimaksudkan Piketty sebagai bentuk akumulasi kekayaan (wealth)

National wealth atau national capital adalah total net nilai pasar yang dimiliki penduduk (private capital) dan pemerintah (public capital) suatu negara dalam suatu waktu, yang dapat diperjual-belikan.

National wealth = private wealth + public wealth National wealth = national capital = domestic capital + net foreign capital

National Income didefinisikan sebagai jumlah seluruh pendapatan penduduk dari suatu negara  dalam satu tahun. Bila GDP – Depresiasi = net domestic product atau domestic output atau domestic production, maka Piketty memaknai National Income Domestic Output Net Income Abroad

National capital = farmland + housing + other domestic capital + net foreign capital

Other domestic capital: kapital dari perusahaan dan organisasi pemerintah (bangunan, tanah, mesin, paten, peralatan kantor, dsb.)

Kesenjangan Pendapatan Hasil Kerja

Ada dua hipotesa tentang perhitungan besarnya Gaji (income from labor), yaitu bergantung pada:

  1. jumlah produksi
  2. supply/demand tenaga kerja berdasar Keahlian

Kedua hipotesa tersebut sangat bergantung pada pihak-pihak yang punya otoritas. Faktor jumlah produksi cukup sulit diterapkan terhadap individu karena sangat berhubungan dengan kelompok lain dalam rantai industri. Demikian juga dengan faktor keahlian yang sangat bergantung pada kebijakan pemerintah terhadap pendidikan dan kemajuan teknologi serta penerapannya.

Democratic and Financial Transparancy

Perpajakan bukanlah tentang masalah teknis, namun lebih pada masalah kemauan politik. Tanpa adanya pajak, maka akan semakin tidak jelas nasib masyarakatnya. Perlu juga dipahami bahwa pajak bukanlah berarti hanya sekedar memungut sebagian dari pendapatan, namun lebih pada pemberlakuan norma hukum pada setiap aktifitas ekonomi. Maksud utama dari pajak kapital adalah bukan untuk membiayai kebutuhan sosial masyarakat, tetapi untuk mengatur kapitalisme dengan tujuan:

  1. untuk menghentikan peningkatan kesenjangan kekayaan tanpa batas
  2. untuk meningkatkan regulasi yang efektif terhadap sektor finansial dan sistem perbankan sehingga tidak lagi terjadi krisis finansial.

Perubahan Iklim

Piketty hanya menyinggung sedikit tentang Perubahan Iklim, yang intinya, kebutuhan mendesak saat ini adalah meningkatkan kapital pendidikan dan mencegah degradasi kapital sumberdaya alam. Ini merupakan hal serius dan tantangan yang penting, mengingat Perubahan Iklim tidak dapat diatasi dengan tindakan sekejap saja.

Kesimpulan Piketty

Dari analisa data yang terkumpul sejak lebih dari 300 tahun yang lalu, Piketty menyimpulkan bahwa ekonomi pasar yang didasarkan pada kepemilikan pribadi tanpa kontrol, akan mendorong kearah tumbuhnya pengetahuan dan keahlian; namun di sisi lain juga akan menjadi ancaman terhadap demokrasi dan keadilan sosial.

Prinsip daya destabilisasi ditunjukkan dengan kenyataan bahwa RORC (rate of return on capital), r, secara signifikan akan lebih besar daripada pertumbuhan pendapatan dan produksi, g. Kesenjangan r>g berimplikasi pada semakin tumbuhnya penumpukan kekayaan sejak masa lalu, lebih cepat daripada pertumbuhan pendapatan.

Kesenjangan ini menunjukkan akan adanya kontradiksi logis yang sangat fundamental. Tak terhindarkan bahwa pengusaha cenderung terus mengejar keuntungan yang lebih besar dan  semakin dominan dibanding para buruh yang hanya mengandalkan kemampuan kerjanya.

Namun bila dikenakan pajak kapital yang sangat berat untuk maksud mengurangi return in capital supaya menjadi lebih rendah daripada pertumbuhan pendapatan, maka akan beresiko mematikan mesin penggerak akumulasi yang berujung pada penurunan pendapatan juga. Solusi akhir adalah pajak progresif kapital tahunan, yang akan menghindarkan kenaikan kesenjangan tanpa akhir. Ini membutuhkan kerjasama internasional tingkat tinggi dan integrasi politik regional.

Kompetisi yang sempurna tidak dapat mengubah r>g, yang sebetulnya bukanlah akibat dari ketidak-sempurnaan pasar. Bila bermaksud untuk mengkontrol kapitalisme, kita harus yakin bahwa semuanya berada pada jalur yang demokratis, dan hanya dengan melakukan integrasi politik regional maka akan dapat dihasilkan regulasi yang efektif terhadap kapitalisme global abad 21.

Hal penting yang perlu digarisbawahi dari buku ini adalah:

  1. kesenjangan ekonomi, r>g, akan terus terjadi dan cenderung meningkat
  2. Pertumbuhan penduduk dan ekonomi yang tinggi akan mengurangi tumbuhnya kekayaan dari hasil warisan. Hal ini tidak terjadi dengan sendirinya, namun perlu campur tangan pemerintah untuk mempercepatnya
  3. Pendidikan dan keahlian serta teknologi akan memperlambat kesenjangan dan meningkatkan mobilitas, namun tidak akan mengubah arah r>g
  4. Konflik sosial karena kesenjangan antara super manager vs lower level dibidang profesional akan meningkat, menggantikan konflik antar kelas di abad 19.

Piketty langsung menyebut, “aku tak peduli siapa Karl Marx, walaupun dia dianggap besar – bukunya tidak melampirkan bukti-bukti empirikal untuk menyokong dakwaan beliau.”

Sekalipun Piketty bersikap sinis terhadap Marx, dia setuju tentang satu perkara. Marx ada persamaan dengan dirinya yang percaya bahawa free market capitalism menyebabkan kesenjangan ekonomi. Sistem pasaran harus ada batas dan kawalan supaya jangan orang kaya bertambah kaya, orang miskin bertambah miskin.

Bagi Indonesia, karya ini penting dan relevan untuk memahami kecenderungan meningkatnya kesenjangan pendapatan di sini—serupa dengan negara maju yang dibahas Piketty. Di tengah pujian dunia atas pertumbuhan ekonomi yang tinggi dan masuknya Indonesia ke dalam 10 besar ekonomi dunia, terdapat fakta lain yang sangat mengusik: indeks Gini Indonesia terus meningkat dari 0,30 pada tahun 2000 menjadi 0,413 pada tahun 2013—angka tertinggi dalam sejarah Indonesia merdeka.

Peningkatan indeks Gini menandakan bahwa kekayaan kelompok atas meningkat jauh lebih cepat dibandingkan dengan kekayaan masyarakat kelas bawah. Pada tahun 2005, kelas terbawah (sebanyak 40% dari total populasi) menerima manfaat dari pertumbuhan ekonomi sebesar 21% dari PDB, namun pada 2013 menurun menjadi 16,9%. Untuk kelas atas (20% dari populasi), pada 2005 menerima 40% dan meningkat menjadi 49% pada 2013. Dalam konteks peringatan Piketty, Indonesia bukan pengecualian.

Sumber :



Hello. I remember, when I was three years old, back in my nursery class, we were singing this song, or at least, trying to sing a song. Some of you might have heard of it actually.

It’s about a wise man who builds his house upon the rock, and a foolish man who builds his house upon the sand. When the rains came down, and the floods came up, it was the house on the rock that stood firm. Looking back now,

I see there’s a clear message to this song. And that is that the best way to allow all of us to flourish as much as possible is to provide us with firm foundations from which to build our lives. In the song, these foundations were a physical rock from which the wise man built his house. Now I see these foundations as financial.

That is, enough money to cover our basic necessities; a roof over our head, food on our table, heat and light for our home, before we earn extra money through paid employment. That’s the idea I want to share with you today: that we shouldn’t have to work just to survive. I know what you’re thinking. It was emphatically articulated by a so-called “social media troll” last time we did this, back in November, and that is, “Why should I listen to some posh bloke, with a ridiculous double-barreled name, and a center parting in his hair, tell me about why we shouldn’t have to work to survive?” Well, they were right. That haircut? Absolutely terrible. (Laughter)

But for those of you who are skeptical about this idea, I invite you to consider this with me. Because if work is just about survival, just about putting food on our table, just about getting a roof over our head, or even just about struggling to make it to the end of the month, week, or even day then it’s very difficult for any of us to look beyond that. For it is only when we can look past the question of, “What do I need to do today to survive?” that we can ask ourselves, “What do I want to do to live?” This isn’t my idea. It’s not something I’ve read in a book, or a theory, or anything like that. The benefits of it can be seen all around us. Take this university, right here. Hundreds of thousands of students, many of you will be sitting in this room today, a part of a vibrant community of student-led organizations; societies, social enterprises, start-ups, voluntary organizations, all kinds of things. TEDx University of Edinburgh being one example.

Another example, as Alistair said earlier, is The Buchanan Institute, Edinburgh’s first student-led think-tank, which I, and a few others, helped to set up back in January. None of us do these things because we have to, but because we love doing them. And for many of us, they almost become like full-time jobs. People ask us, “Do you get paid to do it?”

We don’t, for the most part. And I speak for myself, but I also did it because I could. You see, I was lucky. I had enough money through a combination of student loans and allowances to cover my basic necessities so that I didn’t need to work. I stress this because in reality, if I was having to work 30 hours, 20 hours, even 15 hours a week, on top of my studies to cover my basic necessities of being here, then there’s no way I would have had the time and energy necessary to set up The Buchanan Institute.

Many people will say, “That’s all well and good these voluntary student organizations, they’re very nice, but where’s the money going to come from? Who’s going to make the money so that we can pay for this situation where nobody needs to work to survive?” Well, the most entrepreneurial and innovative people in our society also benefited from a situation where they didn’t need to work just to survive.

Take for example, Steve Jobs. Back in 1976, he co-founded Apple whilst working with his friend Steve Wozniak in his parents’ garage. Job’s wasn’t rich. But he had a roof over his head, he had food on his table, he had all the appliances and tools he needed so that he could focus his time and energy on creating the first Apple prototype in 1976. You see, if Steve Jobs had to work in a minimum wage job, 50 hours, 40 hours a week, just to pay for his basic necessities, then he wouldn’t have been the founder of Apple. We may never have heard of iPhones or iPods.

But let me take you to the Namibian village of Otjivero, Omitara. For it is here where an organization called, “The Basic Income Earth Network” conducted a simple yet groundbreaking experiment.

They provided every single Namibian villager in this village with a basic income, enough to cover their basic subsistence. The skeptical among us – and I was talking to a few today – would say, “These Namibians! if they’re given enough to survive on, then they’re going to be lazy. They’re not going to work. They’ll sit on their asses all day.”

Well actually, the opposite happened. The percentage of those involved in income generating activities rose in that year from 44% to 55%. This is what happened: freed from reliance on low-paid labor, just to cover their survival, the villagers could choose what they did with their lives and decide how they earned extra money for themselves and their families. For many, this was starting up their own small businesses.

Becoming dressmakers, brick makers, or bread bakers. People have said, “That’s all well and good, but that’s Namibia. That’s a developing country. The west is different; it won’t work.” Well for them we can say, “Canada”. In 1976, the Canadian government conducted a similar experiment in the town of Dauphin, Manitoba.

Every single person who lived in that town no longer had to work just to survive. It was called, “The town without poverty”. Once again, people didn’t stop working. The only groups of people who worked slightly less in that year were mothers, and some fathers, with newborn babies. And some teenagers who relieved from the pressures of earning money for their families, could now go back to school. But something else happened. Relieved from the daily mental and physical stresses of having to work to survive, the ‘town without poverty’ became a healthier one. They actually, in that year, saved 13% on their overall healthcare costs. Something in the UK, with strains on NHS budgets, we could perhaps think about. So what about the UK? Could we try something similar here?

Well actually, yes! An organization called “The Citizen’s Income Trust” have shown that by simply reorganizing our existing tax and benefits system, we could provide every single UK adult with nearly 3,700 pounds a year. This is without hardly spending an extra penny. How? Well first of all, this basic income would replace means-tested benefits that we would no longer need, whilst ensuring that no-one was worse off. But also it would replace the personal tax allowance that we get to a certain level of our income.

So rather than paying tax and then getting money back in a personal tax allowance from the government, you would have this tax-free cash lump sum called, “a basic income” in it’s place. Then what if people say, “Well what if the rich get it? The rich don’t need it. It wouldn’t work.” Then we can say, “In this country we have something called ‘the basic state pension’ for all pensioners. “The basic state income” is the same thing, but for all adults. And the Swiss? Well, they could go further. Much further. In 2016, they will hold a popular referendum to decide whether to introduce a basic annual income to every Swiss citizen of nearly 21,000 pounds a year. Fully-funded, fully-costed.

Sounds good. So, I want to ask you. Let’s imagine that you woke up in Switzerland the morning after that referendum passed and you found yourself with a guarantee of 21,000 pounds a year. Put your hands up, how many of you, would stop working completely? There’s actually nobody. Not one person. It’s not actually surprising. Some of you might work a bit less. Spend more time with the family, spend more time doing leisure. Some of you might realise that you hate your job, and you’re going to use that basic income as a platform to go and do something that you really want to do. It isn’t surprising because as many of us know, work doesn’t have to be just about surviving. It can be about following our passions, fulfilling out dreams, or, as I have been so lucky to do during this whole TEDx process, meet, and work with, and build lifelong friendships.

About six months ago, I was at the hospital, just after my sister had given birth to her son and my nephew called Raffi. I remember, standing there, holding this little thing in my arms and thinking, “Don’t drop him.”

(Laughter) Then I thought, these questions about the future, and how to be OK in the future, and what kind of society we can live in in the future, aren’t just for our generation sitting here. They’re for the ones behind us. The ones being born or yet to be born. And when he grows up and if he ever gets around to and wants to ask his uncle for advice about work and life, – which is wishful thinking- I’d like to tell him, and be that uncle that tells him something similar to what you might tell your kids and probably do. “Raffi, don’t just work because you need to.

Do it so that every day, you wake up doing something you are really passionate about, with the people that you love.” My nephew will probably have the opportunity to do this. He may never have to work just to survive. And people have said to me, “So Johnny, in that case, why do you care? Why do you care whether or not people should have to work to survive? Because it’s not enough. It’s not enough that my nephew has this opportunity. It’s not enough that I had this opportunity. It’s not enough that many people I know, and many of us in this room, probably had this opportunity. In fact, it’s not enough until every single person, every single one of us in this room, in this country, or even in this world, can at least wake up every single morning and genuinely ask themselves, not “What do I need to do today just to survive?”, but “What do I want to do to live?” Thank you very much. Have a great day and enjoy the rest of the talks. (Applause)

You are simply wrong. How can you say he wants handouts when he is arguing for giving out handouts?

He is doing this because he is the one with the opportunity to do so. And he is doing so to help those without the opportunities he has and has had. You did not invent the computer or internet, you are using someone else’s hard work, every technology you use is likely not anything you had any hand in creating. You are arguing that no one should share their hard work so the person who invented the computer should have simply kept it to himself correct?

We should all just be left to fend for ourselves is what you are arguing for but by that logic you would not have a computer unless you could build one yourself and without any starting materials as no one is going to share a single thing with you, material or knowledge, by your logic no one should give up anything they worked to create. Oh but you say it is different because you paid for your computer right? Paid for how? With money you earned working a job? In other words money you earned via the mere fact you had the opportunity to be born in a place with access to a paying job and without any disabilities to performing that job.

Lucky you. Not everyone has those opportunities thus not everyone can afford not just a computer but even the basic things necessary for survival like food and shelter. He is arguing that everyone should have the opportunity to do what they want not just what they need to do to survive.

Example, if you are living on the street it is very hard to take the time to find a job when all your time is spent finding food for the day or a place to sleep for the night and how do you even get to a job interview with no transportation? Again you can’t just hop on the bus because you need to find something to eat first you haven’t eaten in 24 hours and the last thing you ate was scraps from the garbage, you need to find more not sit around on a bus and in a job interview and besides you were digging in the trash who is going to hire you when you smell and look like garbage? You would need to clean up first but then you don’t have any time for that cause oh you found some food but you still need to find a place to sleep for the night.

Maybe you’ll sit on the corner and ask for handouts so you can afford something other than garbage to eat, cause you know there is some food in that trashcan nearby if you don’t get enough money for some food, but you cant hop on the bus to your job interview and come back to find the trash empty or eaten by some other homeless person and not have gotten the job and now its too late to sit out asking for hand outs its cold outside and you don’t have much to keep warm so you need to go inside with no food for the day and you didn’t get the job cause your clothes are dirty and you smell like garbage and why would you even bother attempting to get a job in that situation?

They just don’t have the opportunities as someone in a stable household. It has nothing to do with laziness or even drugs or alcohol because addiction is the same problem, an addicts life revolves around their addiction the same way a homeless persons life revolves around daily survival, there is just no time for any improvements to be made on themselves.



In medieval Europe feudalism was a political and economic system during the middle ages from around the 8th century to the 15th century AD so it was a system that lasted for many hundreds of years feudalism involved four levels of society the king was at the top as he was a leader of the entire kingdom, beneath him with a feudal lords also known as Nobles or barons and these were the world these landowners.

Following the lords and knights or vessels and their roles of the fighting warrior who usually battled on horseback finally on the bottom of society where the peasants or service peasants or farmers who worked the land painting the crops and animals they were the poorest members of many of the world made up the biggest majority of the population.

In these for social levels feudalism worked through an exchange of land for protection money or food let’s have a look at this in more detail in the early Middle Ages Europe was very unstable due two wars and invasions the Kings were quite weak and struggled to rule their entire kingdom by themselves the system of feudalism arose as a matter of security for these European kings who decided it would be best to divide their land.

So that they do not have to look after such a large area alone if i strengthen my kingdom it would then be harder for foreign people to invade in the feudal system the King would keep share the land for himself this would be used for his talents and hunting forest for example the rest of the kingdom was divided between nobleman who have been loyal to the king the size of the land they received will depend on their personal ties with the king and the status of their family.

Those Lords would then keep some of the land of themselves and divide the rest up between lots of their choosing in turn the knights would give some of their portion of the kingdom to peasants who became serves to retire to the land and were not free to leave of course.

These Kings nobles and knights we’re not giving away their land for no reason as I said earlier feudalism was based on an exchange of land for protection, money and food looking at this flow chart you can see on the right hand side the granting of land to people of a lower social status as I’ve just explained but on the left hand side you can see what is being exchanged for this giving a land on the very bottom of society the peasants will work great food and tending to animals they were the background of society as all the food they grew was not just for themselves and their families who would actually feed the entire kingdom.

So the Knights would give land to peasants, so that I had farming area to grow the food in return the knights would protect the peasants this was the exchange of land for labor next up on the scale we can see that knights we give a land by the nobles on the condition that the Knights would be loyal to the Lord in fighting battles were needed this again was an exchange of land for labor on the top of the scale the nobles were given land by the king.

So that they would provide these knights to the king the role of the nobles was to build up an army be loyal give money to the king and this is what they had to do an exchange for their land so the feudal system is quite beneficial to the king of the top all he had to do was share some of his land and in return he would receive food military protection money and knights at this strength in the kingdom and allowed him to remain in power to summarize what we have learned Europe in the early Middle Ages was weak and under threat from foreign invasion teams needed to share their lens among their people to lessen their responsibilities and so the feudal system was established the order of society was the king of the top than the nobility followed by the Knights than the peasants on the bottom the system was based on an exchange of land for money loyalty and protection and food this helped to secure Europe.