By Jonathan Derbyshire
Prospect / April 14, 2014
It’s hard to think of a work of economics—certainly not one
published in the past 30 years or so—that has had as extraordinary and
instantaneous an impact outside the guild of professional economists as
Thomas Piketty’s “Capital in the Twenty-First Century“. An early review of Piketty’s book—which was published in his native language, French,
in 2013, and appeared in a luminous translation by Arthur Goldhammer in
March this year—declared it to be “one of the best books in economics
written in the past several decades”. Robert Skidelsky, reviewing it for Prospect,
called it a “timely intervention in the current debate about inequality
and its causes”, while the Nobel laureate Paul Krugman asserted that “Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”
Although the book is voluminous (it’s nearly 700 pages long),
data-heavy and densely researched, its thesis is easy to summarise:
capitalist economies have a natural tendency to incubate highly unequal
distributions of income and wealth. And capitalism’s “Golden Age”,
stretching roughly from 1913 to 1975, in which inequality went into a
relatively steep decline, turns out to have been a historical anomaly
that was the product of external factors—specifically,two world wars,
the Great Depression, the power of organised labour and progressive
taxation. Over the past 30 years or so, that decline has gone into
reverse. In the early 21st century, private fortunes, Piketty writes,
“seem to be on the verge” of returning to levels last seen in the late
19th century, the heyday of “rentier” capitalism.
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