Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper recasts Piketty’s Capital in the Twenty-First Century in light of Acs’ Why Philanthropy Matters: How the Wealthy Give and What It Means for Our Economic Well-Being. Philanthropy matters in this debate because, as moral capital, philanthropy offers an alternative solution to the Piketty conundrum, and it does so without relying exclusively on a wealth tax and government intervention. Moral capital over the centuries strengthened both capitalism and democracy by investing in opportunity (slavery, suffrage and civil rights), which in turn leads to long-term economic growth and greater equality. By focusing on university research—which is critical in promoting technological innovation, economic equality, and economic security—that creates a large, well-functioning middle class (The Economist, March 2015), moral capital represents the missing link in the theory of capitalism development.

Keywords: philanthropy; competition; education; opportunity; entrepreneurship; innovation; inequality; Piketty

JEL-codes: J24; L26; O20; P16

44 pages, August 10, 2015

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