Contents
Acknowledgements
Introduction
Part
One: Income and Capital
- Income and Output
- Growth: Illusions and Realities
Part
Two: The Dynamics of the Capital/Income Ratio
- The Metamorphoses of Capital
- From Old Europe to the
- The Capital/Income Ratio over the Long Run
- The Capital/Labor
Part
Three: The structure of Inequality
- Inequality and Concentration: Preliminary Bearings
- Two Worlds
- Inequality of labor Income
- Inequality of capital Ownership
- Merit and Inheritance in the Long Run
- Global Inequality of Wealth in Twenty-First Century
Part
Four: Regulating Capital in the Twenty-First Century
- A
- Rethinking the Progressive income Tax
- A Global Tax on Capital
- The Question of Public Debt
Conclusion
Introduction
“Social distinctions can be based only
on common utility.”
-Declaration
of the Rights of a Man and the Citizen, article 1, 1789
The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition and technological progress lead in the later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge to for the century now under way?
These are questions I attempt to answer in this book. 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 twenty centuries, 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 of capital exceeds the rate of growth of output and income, as it did in nineteenth century, and seemed quite likely to do the same in the twenty-first, 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 and nationalist reactions. The policy recommendations I propose later in the book tend in this direction. They are based on lessons derived from historical experience, of which what follows is essentially a narrative.
A Debate
without Data?
Intellectual and political debate about the distribution of wealth has long been based on an abundance of prejudice and a paucity of fact.
To be sure, it
would be a mistake to underestimate the importance of the intuitive knowledge
that everyone acquires about contemporary wealth and income levels, even in the
absence of any theoretical framework or statistical analysis. Film and
literature, nineteenth- century novels especially, are full of detailed
information about the relative wealth and living standards, of different social
groups, and especially about the deep structure of inequality, the way it is
justified, and its impact of individual lives. Indeed, the novels of Jane
Austin and Honore de Balzac paint striking portraits of the distribution of
wealth in
Indeed, the distribution of wealth is too important an issue to be left to economists, sociologist, historians and philosophers. It is of interest to everyone, and that is a good thing. The concrete, physical reality of inequality is visible to the naked eye and naturally inspires sharp but contradictory political judgments. Peasant and noble, worker and factory owner, waiter and banker: each has his or her own unique vantage point and sees important aspects of how other people live and what relations of power and domination exist between social groups, and these observations shape each person’s judgment of what is or not just. Hence there will always be a fundamentally subjective and psychological dimensions to inequality, which inevitably gives rise to political conflict that no purportedly scientific analysis can alleviate. Democracy will never be supplanted by a republic of experts – and this is a very good thing.
Nevertheless, the distribution question also deserves to be studied in a systematic and methodical fashion. Without precisely defined sources, methods, and concepts, it is possible to see everything and its opposite. Some people believe that inequality is naturally decreasing, or that harmony comes about automatically, and that in any case nothing should be done that might risk disturbing this happy equilibrium. Given this dialogue of the deaf, in which each camp justifies its own intellectual laziness by pointing the laziness of the other, there is a role for research that is at least systematic and methodical if not fully scientific. Expert analysis will never put an end to the violent political conflict that inequality inevitably instigates. Social scientific research is and always will be tentative and imperfect. It does not claim to transform economics, sociology, and history into exact sciences. But by patiently searching for facts and patterns, and calmly analyzing the economic, social and political mechanisms that might explain them, it can inform democratic debate and focus attention on the right questions. It can help to redefine the terms of debate, unmask certain preconceived or fraudulent notions, and subject all positions to constant critical scrutiny. In my view, this is the tole that intellectuals, including social scientists, should play, as citizens like any other, but with the good fortune to have more time than others to devote themselves to study (and even to be paid for it – a signal privilege).
There is no escaping the fact, however, that social science research on the distribution of wealth was for a long time based on a relatively limited set of firmly established facts together with a wide variety of purely theoretical speculations. Before turning in greater deal to the sources I tried to assemble in preparation for writing this book, I want to give a quick historical overview of previous thinking about these questions.
Malthus,
Young, and the French Revolution
…
(Thomas Piketty: “Capital in the Twenty-First Century”; The Belknap Press of Harvard University Press/ Cambridge, Massachusetts London, England 2014)
