Capital question

By Thomas Piketty

The distribution of wealth is one of today’s most-widely-discussed and controversial issues…. Let me say at once that the answers contained herein are imperfect and incomplete.

But they are based on much more extensive historical and comparative data than were available to previous researchers, data covering three centuries and more than 20 countries, as well as on a new theoretical framework that affords a deeper understanding of the underlying mechanisms.

Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modified the deep structures of capital and inequality — or in any case not as much as one might have imagined in the optimistic decades following World War II.

When the rate of return on capital exceeds the rate of growth of output and income, as it did in the 19th century and seems likely to do again in the 21st, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.

There are nevertheless ways democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist reactions. My policy recommendations tend in this direction. They are based on lessons derived from historical experience…

From “Capital in the Twenty-First Century”