From independence to interdependence, from redistribution to institutional transformation: comparing Piketty’s solution and cooperativism to the r > g problem

This article analyses and compares two distinct systemic approaches to addressing the long-term divergence between the rate of return on capital (r) and the rate of economic growth (g). Whereas Thomas Piketty’s redistributive approach seeks to mitigate the consequences of this divergence through progressive taxation of capital, the model of cooperativism proposes a transformation of the economy’s institutional architecture. The central hypothesis is that a transition to cooperativism may transform the historically relatively independent parameters r and g into more closely interdependent ones. It is argued that sovereign money, broader democratic capital ownership centred on cooperatives, and public-sector cooperation with democratic enterprises create conditions under which capital returns gradually converge towards the marginal productivity of the real economy—the natural market rate of interest. Unlike redistributive approaches, which require extensive international coordination and administrative oversight, cooperativism represents a predistributive institutional solution based on the decentralisation of economic power, seeking to establish a more automatic link between returns to capital and the productive performance of the economy. The article proposes a new analytical perspective by suggesting that the institutional architecture of the economy may determine not only the levels of r and g but also the nature of their relationship.