Capital in The Twenty First Century is the magnum opus of French economist Thomas Pikketty and charts the nature of how capital and labour have evolved across modern market economies from the eighteenth century to the present day.
Capital is a detailed and lucid overview of the nature of wealth.
Looking at reams of quantitative data and interpreting the changing nature of wealth in the USA, France, Britain, Germany, Japan and many other countries, Thomas Pikketty draws a number of conclusions and recommendations to inform government policy in the coming century.
Below are some of the key insights from the book.
- Prior to industrialisation, land and rentier profits constituted a significant proportion of overall wealth in Britain, France and many other nations.
- The predictability of this wealth is referenced extensively in the works of Balzac and Jane Austen, such is the rigidity of money, lack of inflation and self evidence of the 4-5% return on capital.
- In present day literature/film, the protagonists are typically characterised by social capital and education rather than inherited wealth.
- On the eve of 1914, Britain and France had accumulated vast stores of capital by owning foreign assets – never since repeated in the post-colonial era.
- The story of the 20th century is one of shocks (WW1, WWII) that disrupted the makeup of the economy ensuring that labour and income became more important factors in the makeup of economic wealth.
- Since the 1980s, income from capital has returned to the fore with lower top rate income taxes linked to an explosion in pay scales for the top 10%, 1% and 0.1% in proportion.
- In many eras, including today, the rate of growth of capital outpaces the overall rate of growth in national income which results in ever increasing inequality. This is what Marx correctly identifies as capitalism sowing the seeds of its own demise.
- Looking at the current situation and projecting forward into the future, it seems that without coordinated government action, income from capital will again become by far the most important factor in national wealth.