It’s nearly 700 pages. It covers dense economic theory. And it’s written by a French guy you’ve probably never heard of.
So why is “Capital in the Twenty-First Century,” Thomas Piketty’s far-reaching economic analysis of global inequality, flying off the shelves faster than a new Beyoncé album?
OK, maybe not quite that fast. But still, the recently published English translation of the text has generated tremendous buzz, topping bestseller lists and prompting a renewed debate on the root causes — and solutions — of economic inequality. The book, which examines the history of income and wealth accumulation over the past two centuries, presents a unique narrative on the evolution of inequality in capitalist economies.
Although generally lambasted by conservatives, “Capital” has received effusive praise from the left, and some believe it could potentially influence a shift in global economic policy.
Piketty’s central premise is fairly simple: in a capitalist economy, wealth generally grows a lot faster than economic output. He illustrates this with a basic equation:
r > g (where r is the rate of return on wealth and g is the economic growth rate).
In other words, it’s a lot easier to make money if you have a lot to start with. Those lucky enough to inherit wealth will likely grow richer and richer over the course of their lives (as long as they don’t piss it away). But for the vast majority of the population, financial well-being is more tied to the growth of the economy, which is generally pretty sluggish and unpredictable.
Aside from the few self-made Mark Zuckerbergs out there, most income-earners will stay in roughly the same position on the economic ladder. Piketty argues that capitalism, more often than not, gives the wealthy an upper hand. And with the exception of major disruptions like depressions and wars, which can lead to firstname.lastname@example.org booms, capitalist systems have historically resulted in higher levels of inequality, not the other way around as many economists argue. As more wealth is concentrated at the very top, Piketty suggests, the gap between the few have’s and the many have-nots gets wider and wider.
To counter what he considers this unfair advantage, Piketty implores governments to help level the playing field by imposing a global tax on wealth and significantly raising income tax rates to as high as 80 percent.
In providing a cohesive historical narrative of inequality, “Capital” has become particularly popular among those eager to reinvigorate the momentum of the Occupy movement, hoping the book will be a public wake-up call; a reminder that the system hasn’t changed much since the financial crisis hit six years ago.
As Julia Ott, a history professor at the New School, told the NY Times:
“People are looking for a bible of sorts … He’s speaking to a real feeling out there that things haven’t been fixed, that we need to take stock, that we need big ideas, big proposals, big global solutions.”Related