A review of Capital in the 21st Century would have to be a book in itself, so let this be a mere reflection on some of Thomas Picketty’s abundant material. And there is no better place to start than with his initial demonstration of how little the ownership structure of wealth changes, barring war. Furthermore, his demonstration that things are returning to “normal” after the twin conflicts of the 20th century World Wars could, unless tempered by resigned realism, easily lead to depression in the reader. Thomas Picketty’s book should be required reading for anyone, certainly anyone British, who benefited from the social mobility available in the 1950s to 1970s. We have tended to blame the 1944 Education Act for providing the abnormal conditions that led to a measurable, albeit temporary, decline in inequality. But Thomas Picketty sets the record straight that it was simply the result of the aberrations of war, which for a few decades weakened the power of capital. Normal service has since resumed.

Picketty describes how unequally capital is distributed, especially in developed societies. Typically, half the population owns nothing, while the top ten percent own about half the wealth. For Picketty, capital means fixed assets that could potentially be traded, the property of which can be bought and sold. It includes fixed assets, property, shares, or cash, and excludes all forms of human capital, which may be an asset and have value, but, he argues, its ownership can only be traded in slave societies, which now do not exist. However, she considers the distribution of capital and the distribution of income separately, so at least one element of human capital is represented in the latter. He notes that income is always more evenly distributed than fixed capital, with the top ten percent receiving only 25 to 30 percent of total income. Consequently, if there has been any change in the identity of the capital-owning elite in recent decades, it has occurred, at least in large part, as a result of the sky-high pay available for certain professions at the top of the economy. . the income scale. The phenomenon has also translated into an increase in inequality observed in developed societies in recent decades, especially in the US and the UK. Inequality continues to rise.

One of Picketty’s fundamental laws is that capital always grows faster than the economy as a whole. Thus, success through purchasing power inevitably leads to graduation into the rentier class, a transformation that is needed if the newly acquired status is to be consolidated. Furthermore, if the inequality that capital growth is greater than economic growth is true, this implies that even the advantages of growth in the general economy will eventually accrue to the owners of capital.

Historically, economic growth has been strongly associated with population growth. Without the demographic element, economies have consistently achieved no more than about two percent growth. Two percent is still a significant rate if it holds up. But spurts of growth are accompanied by spurts of population. The reverse is also likely to be true, which in itself allows some facets of today’s global economy to be seen in a more informative light. However, population surges produce economic increases, and this is not surprising. What is somewhat surprising is Picketty’s assertion, perhaps supposition, that since France experienced population growth earlier than other developed societies, then we must all regard France as the international economic agenda setter, the historical standard, if you will, that others followed. .

Another historical reality that appears very clearly in your data is the effect of foreign gains throughout the 19th century and during World War I. These “invisibles”, as they have sometimes been called, were simply the profits of colonialism and slavery. They financed deficits, loans and consumption at the heart of the empires from which they came. In the modern world, he points out, there may be a greater degree of foreign ownership of capital than ever before, but profits and capital transfers are two-way, just like profits, and therefore net transfers are small.

This story is illustrated in economic data. He cites a number of cases in which an imperial power, having accumulated large debts after periods of conflict or recession, managed to derive five percent or more of its national income from invisibles, thus allowing the country in question to pay off debts otherwise they would have had. been paralyzing. In the modern world, crucially, this get out of jail card may no longer be available.

One aspect of Picketty’s analysis surprises us. Throughout the book, she uses fiction as a source of illustration, a source that will make many academic readers of the text stop and wonder. Picketty often cites examples from Balzac, Austen, and others to illustrate general points about the behavior of capital. The process, although very selective and, it must be said, apocryphal, ends up convincing, but it is the novelists who end up shining, not the economic model. Her argument, which she claims is so clearly illustrated in 19th century fiction, is that capital is always more likely to be inherited or indeed married rather than earned. The endless machinations associated with the search for a suitable marriage partner for eligible women in 19th century fiction is a mere acknowledgment that it is easier to marry money than to earn it, growth of capital always being less than economic growth.

If Capital in the Twenty-First Century can be criticized, then it is in its rather scant, even dismissive, coverage of human capital. Yes, this is absorbed into the revenue data. But the author does maintain that “democratic modernity is founded on the belief that inequalities based on talent and individual effort are more justified than other inequalities, or at least we hope to go in that direction.” He contrasts this belief with a Balzac character who gives up the opportunity to study law to seek marriage and a fortune, and then asks who would do such a thing today.

Now, if the credentials and skills obtained by education participants build human capital, even if this is only reflected in higher earnings, then access to high-quality education is needed before these skills and credentials are achievable. . It could even be argued that educational experience is now not only sufficient for the advancement of capital but also necessary, since even the opportunity to marry capital may depend on the achievement or not of the educational levels that are preconditions for entering that market. in particular.

And so, if education has become just another commodity offered through a market, then the cost of accessing the more developed and effective delivery systems will increase, as these are the most effective means of ensuring access. to capital, either through earnings or marriage. Such costs will also increase as, by becoming a market, the demand for education will be greater for those who need to protect their current capital property and have the resources to pay for what they need. Education thus becomes a means of confirming and reaffirming wealth, rather than a potential avenue for social mobility. Perhaps today it is still easier to marry wealth than to earn it. Except that today the choice of marriage may be determined by an educational credential that can be more effectively secured by existing access to wealth.

This argument, it seems, comes full circle and illustrates how, even in a materialistic society, capital will always grow faster than the economy as a whole and why inequality will not only persist, but increase.

No book review should focus on what a book is not. So, as a final note, let me describe Thomas Picketty’s book as essential reading for anyone with a brain. If you can refute your analysis empirically, rather than simply deny its importance on ideological grounds, present your data. If you can’t, then join the call for policies that will try to address the destructive imbalances that result in growing inequality. It must be remembered that, to support Capital in the 21st Century it is necessary to examine whether a certain text called Capital in the 19th Century contained a grain of truth in stating that eventually the capitalist system would collapse under the pressure of its own inevitable imbalances. The conclusion seems to have been demonstrated, and thus the rereading of that other book is justified.