A review of Capital in the 21st Century would have to be a book itself, so make it a mere reflection on Thomas Picketty’s wealth of material. And there is no better place to start than his astonishing demonstration of how small changes in the ownership structure of wealth, unless war intervenes. Furthermore, his demonstration that things are returning to “normal” after the two conflicting crashes of the twentieth century world wars could, unless tempered with resigned realism, easily lead to depression in the reader. Thomas Picketty’s book should be a must-read for anyone, certainly anyone British, who benefited from the social mobility available in the 1950s and 1970s. We have tended to blame the Education Act of 1944 for providing the abnormal conditions that led to a measurable, albeit temporary, decrease in inequality. But Thomas Picketty clears things up by clarifying that it was simply the result of the aberrations of war, which for some decades weakened the power of capital. Normal service has since resumed.

Picketty describes the uneven distribution of capital, especially in developed societies. Generally, half the population owns nothing, while the richest ten percent have about half the wealth. For Picketty, equity means fixed assets that could potentially be traded, whose property can be bought and sold. It includes fixed assets, property, equity or cash capital, and excludes all forms of human capital, which can be an asset and can have value, but, he argues, its property can only be traded in slave societies, which now do not exist. However, it considers the distribution of capital and the distribution of income separately, so that at least one element of human capital is represented in the latter. Notice that income is always more evenly distributed than fixed capital, with the top ten percent receiving only 25 to 30 percent of total income. As a consequence, if there has been any change in the identity of the capital-owning elite in recent decades, then this has occurred, at least in large part, as a result of the very high pay available to certain professions at the top of the line. economy. the income scale. The phenomenon has also resulted in an increase in inequality observed in developed societies in recent decades, especially in the United States and the United Kingdom. Inequality continues to rise.

One of Picketty’s fundamental laws is that capital always grows faster than the general economy. Therefore, success through purchasing power inevitably leads to graduation into the rentier class, a transformation that is necessary if the newly acquired status is to be consolidated. Furthermore, if the inequality that indicates that capital growth is greater than economic growth is true, it implies that even the benefits of growth in the general economy will also eventually reach the owners of capital.

Historically, economic growth has been strongly associated with population growth. Without the demographic element, economies have not consistently achieved growth of more than two percent. Two percent is still a significant rate if it holds. But growth surges come with population surges. The reverse is also likely to be true, which in itself allows some facets of today’s world economy to be seen with more information. However, population surges produce economic surges, and this is no surprise. What is somewhat surprising is Picketty’s claim, perhaps the assumption, that since France experienced population growth earlier than other developed societies, we must all regard France as the creator of the international economic agenda, the Historical standard, if you will, that others followed. .

Another historical reality that is very clearly shown in their data is the effect of foreign earnings throughout the 19th century and during the First World War. These “invisible”, as they have sometimes been labeled, were simply the benefits 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, as are profits, and thus net transfers are small.

This story is illustrated in economic data. He cites a series of cases in which an imperial power, having accumulated large debts after periods of conflict or recession, managed to obtain five percent or more of its national income from invisibles, which allowed the country in question to pay debts that of otherwise they would have had to pay. It has been paralyzing. Most importantly, in the modern world, this release card may no longer be available.

One aspect of Picketty’s analysis does surprise us. Throughout the book, he uses fiction as a source for illustration, a source that will make many academic readers of the text pause 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, finally convinces, but it is the novelists who finally shine, not the economic model. His argument, which he 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 finding a suitable spouse for eligible women in 19th century fiction are a mere recognition that money is easier to marry than to earn, since capital growth is always less than economic growth.

If Capital in the 21st Century can be criticized, it is in its rather scant, even dismissive, coverage of human capital. Yes, this is absorbed into the revenue data. But the author does argue that “democratic modernity is based on the belief that inequalities based on individual talent and effort are more justified than other inequalities, or at least we hope to move in that direction.” He contrasts this belief with a character in Balzac who gives up the opportunity to study law to seek marriage with a fortune, and then asks who would do such a thing today?

Now, if credentials, as well as skills gained by participants in education, develop human capital, even if this is only reflected in increased earnings, then access to high-quality education is needed before these skills and credentials are achievable. It could even be argued that now the educational experience is 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.

So if education has become a more offered product through a market, then the cost of accessing the most developed and effective delivery systems will increase, as these are the most effective means of ensuring access to capital, either through income or marriage. Such costs will also increase as, by becoming a market, the educational demand will be greater from those who need to protect their current ownership of capital 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 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, closes the 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, it will 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 disprove your analysis empirically, rather than simply denying its importance on ideological grounds, present your data. If you can’t, join the call for policies that will attempt to address the destructive imbalances that result in growing inequality. It should be remembered that, behind Capital in the 21st Century, it is necessary to examine whether a certain text called Capital in the 19th Century contained a shred 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 proven, and so the case is made to re-read that other book.

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