George Reisman discusses Piketty's misconceived notion of capital and expounds his own view of the matter. The article is long, difficult, but a must-read, I am afraid. I couldn't say, I'm yet in a position to extemporise an account of Reisman's full argument. However, I am sure, trying to come to grips with it is a worthwhile exercise.
Over the course of several generations, the US government has taxed away trillions upon trillions of dollars that otherwise would have been saved and invested and thereby added to the capital of the American economy. Capital is the wealth owned by business firms, which is used for the purpose of earning sales revenues and profits. It consists of farms, mines, factories, machines, tools, materials, components, semi-manufactures, means of transportation, warehouses, stores, merchandize of all kinds, and more. It includes the funds used to pay wages to the employees of business firms, and the funds used to finance the purchase of expensive consumers’ goods, such as houses, automobiles, and major appliances. The trillions have been taken away through the progressive personal income tax, the corporate income tax, the estate tax, the capital gains tax, and the social security system and its taxes. In addition, the US government has diverted trillions of dollars of savings away from investment, and into its coffers, in order to finance its chronic budget deficits. And its policies of chronic inflation and credit expansion have caused the waste of a substantial portion of the greatly reduced supply of capital that remains.
Make sure to read the rest at the source.
Anyone looking for immediate as well as long-term reward in reading a book on economics that helps you to understand both the big picture and its vital components, read Free Market Economics. An Introduction to the General Reader by Steven Kates, my favouritre economist.