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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
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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