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Capital in the Twenty-First Century Author: Thomas Piketty Publisher: CITIC Press
Capital in the Twenty-First Century Author: Thomas Piketty Publisher: CITIC Press
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Description
Introduction · · · · · ·
Capital in the Twenty-First Century analyzes wealth distribution data from the Industrial Revolution in the 18th century to the present day, arguing that unrestrained capitalism has led to the aggravation of wealth inequality, and that the free market economy cannot completely solve the problem of unequal wealth distribution. Piketty suggests that capitalism should be constrained through a democratic system, which can effectively reduce wealth inequality.
Piketty divides the world economy into two basic elements: capital and labor, both of which are used to produce and share the benefits of output. The difference between capital and labor is that capital can be bought, sold, owned, and theoretically can be accumulated infinitely, while labor is the use of personal ability, which can be paid but cannot be owned by others. Piketty believes that since the rate of return on capital always tends to be higher than the rate of economic growth, the gap between the rich and the poor is an inherent phenomenon of capitalism. He therefore predicts that the gap between the rich and the poor in developed countries will continue to widen and recommends the imposition of a global wealth tax.
In his book, Piketty makes a detailed exploration of wage wealth over the past 300 years and lists a large amount of income distribution data on many countries, aiming to prove that inequality has widened in recent decades and will soon become more serious. In the observable data of about 300 years, the return on investment has remained at an average of 4%-5% per year, while GDP has grown by an average of 1%-2% per year. A 5% return on investment means that wealth can double every 14 years, while a 2% economic growth means that it takes 35 years for wealth to double. In a hundred years, the wealth of those with capital has increased sevenfold, 128 times the starting point, while the overall economic scale is only eight times larger than it was 100 years ago. Although both those with and without capital have become richer, the gap between the rich and the poor has become very large.
Promoting growth is not Piketty’s concern, he does not see it as an economic event, nor does he think it solves broader problems of distributive justice. He sees the economy as a static zero-sum game; if one group’s income increases, another group inevitably becomes poorer. He sees equality of outcome as the ultimate goal and the only reason. Alternatives are rarely mentioned—for example, maximizing society’s overall wealth, or increasing economic freedom, or seeking the best possible equality of opportunity, or, in the vein of John Rawls, ensuring that the welfare of the poorest is maximized.
The book puts forward a series of simple suggestions: levy a 15% capital tax (total wealth), raise the income tax of the highest-income group to around 80%, force banks to improve transparency, increase inflation, etc. But Piketty also pointed out that he thinks these measures are unlikely to be achieved, because the elites who control capitalist society may rather see the system collapse than be willing to give in.
About the Author · · · · · ·
Born in 1971, Piketty was admitted to the Ecole Normale Supérieure in Paris at the age of 18, and received his doctorate from the Ecole des Hautes Études Supérieures Sociales in Paris and the London School of Economics at the age of 22. His doctoral dissertation was on the distribution of wealth. Since then, Piketty has been studying the phenomenon of wealth inequality and has written many books on wealth distribution in France and the world. In 2002, he won the French Young Economist Award.
In 2005, then French Prime Minister Dominique de Villepin commissioned Piketty, who was only 34 years old, to establish the Paris School of Economics in order to rival the London School of Economics. In 2006, Piketty became the first dean of the Paris School of Economics as a founder. Two years later, he resigned from administrative work to concentrate on teaching and research. In 2013, Piketty won the biennial ILJ Johnson Prize in Economics.
