Economics book have taken the world by storm.
Capital in the Twenty-First Century, written
by the French economist Thomas Piketty. It
prompted a broad and energetic debate on the
book’s subject. Here are some interesting
facts from the book:
One.
In the 18th and 19th centuries western European
society was highly unequal. Private wealth
dwarfed national income and was concentrated
in the hands of the rich families who sat
atop a relatively rigid class structure. This
system persisted even as industrialization
slowly contributed to rising wages for workers.
Two.
The chaos of the first and second world wars
and the Depression disrupted this pattern.
High taxes, inflation, bankruptcies and the
growth of sprawling welfare states caused
wealth to shrink dramatically, and ushered
in a period in which both income and wealth
were distributed in relatively egalitarian
fashion. But the shocks of the early 20th
century have faded and wealth is now reasserting
itself.
Three.
Piketty derives a grand theory of capital
and inequality. As a general rule wealth grows
faster than economic output, he explains,
a concept he captures in the expression r
> g (where r is the rate of return to wealth
and g is the economic growth rate). Other
things being equal, faster economic growth
will diminish the importance of wealth in
a society, whereas slower growth will increase
it.
Four.
There is much more to be said about how wealth
is distributed than the idea that the owners
of capital reinvest all their profits and
the spendthrift workers consume all their
wages.
Five.
Piketty closes the book by recommending that
governments step in now, by adopting a global
tax on wealth, to prevent soaring inequality
contributing to economic or political instability
down the road.
The book has unsurprisingly attracted plenty
of criticism. Some wonder whether Piketty
is right to think that the future will look
like the past. Want to find it out for yourself?
Click down below and get the summary and analysis
of Capital in the Twenty-First Century.
