Capital in the Twenty-First Century

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Authors: Thomas Piketty
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income is equal to the product
     of the return on capital and the capital/income ratio), or β = s / g (which says that the capital/income ratio is equal in the long run to the savings
     rate divided by the growth rate). I ask readers not well versed in mathematics to
     be patient and not immediately close the book: these are elementary equations, which
     can be explained in a simple, intuitive way and can be understood without any specialized
     technical knowledge. Above all, I try to show that this minimal theoretical framework
     is sufficient to give a clear account of what everyone will recognize as important
     historical developments.
Outline of the Book
    The remainder of the book consists of sixteen chapters divided into four parts. Part One , titled “Income and Capital,” contains two chapters and introduces basic ideas that
     are used repeatedly in the remainder of the book. Specifically, Chapter 1 presents the concepts of national income, capital, and the capital/income ratio and
     then describes in broad brushstrokes how the global distribution of income and output
     has evolved. Chapter 2 gives a more detailed analysis of how the growth rates of population and output have
     evolved since the Industrial Revolution. This first part of the book contains nothing
     really new, and the reader familiar with these ideas and with the history of global
     growth since the eighteenth century may wish to skip directly to Part Two .
    The purpose of Part Two , titled “The Dynamics of the Capital/Income Ratio,” which consists of four chapters,
     is to examine the prospects for the long-run evolution of the capital/income ratio
     and the global division of national income between labor and capital in the twenty-first
     century. Chapter 3 looks at the metamorphoses of capital since the eighteenth century, starting with
     the British and French cases, about which we possess the most data over the long run. Chapter 4 introduces the German and US cases. Chapters 5 and 6 extend the geographical range of the analysis to the entire planet, insofar as the
     sources allow, and seek to draw the lessons from all of these historical experiences
     that can enable us to anticipate the possible evolution of the capital/income ratio
     and the relative shares of capital and labor in the decades to come.
    Part Three , titled “The Structure of Inequality,” consists of six chapters. Chapter 7 familiarizes the reader with the orders of magnitude of inequality attained in practice
     by the distribution of income from labor on the one hand and of capital ownership
     and income from capital on the other. Chapter 8 then analyzes the historical dynamics of these inequalities, starting with a comparison
     of France and the United States. Chapters 9 and 10 extend the analysis to all the countries for which we have historical data (in the
     WTID), looking separately at inequalities related to labor and capital, respectively. Chapter 11 studies the changing importance of inherited wealth over the long run. Finally, Chapter 12 looks at the prospects for the global distribution of wealth over the first few decades
     of the twenty-first century.
    The purpose of Part Four , titled “Regulating Capital in the Twenty-First Century” and consisting of four chapters,
     is to draw normative and policy lessons from the previous three parts, whose purpose
     is primarily to establish the facts and understand the reasons for the observed changes. Chapter 13 examines what a “social state” suited to present conditions might look like. Chapter 14 proposes a rethinking of the progressive income tax based on past experience and
     recent trends. Chapter 15 describes what a progressive tax on capital adapted to twenty-first century conditions
     might look like and compares this idealized tool to other types of regulation that
     might emerge from the political process, ranging from a wealth tax in Europe to capital
     controls in China, immigration reform in the

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