It’s hard to think of a work of economics—certainly not one published in the past 30 years or so—that has had as extraordinary and instantaneous an impact outside the guild of professional economists as Thomas Piketty’s “Capital in the Twenty-First Century”. An early review of Piketty’s book—which was published in his native language, French, in 2013, and appeared in a luminous translation by Arthur Goldhammer in March this year—declared it to be “one of the best books in economics written in the past several decades”. Robert Skidelsky, reviewing it for Prospect, called it a “timely intervention in the current debate about inequality and its causes”, while the Nobel laureate Paul Krugman asserted that “Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”
Although the book is voluminous (it’s nearly 700 pages long), data-heavy and densely researched, its thesis is easy to summarise: capitalist economies have a natural tendency to incubate highly unequal distributions of income and wealth. And the period stretching roughly from 1913 to 1975, in which inequality went into a relatively steep decline, turns out to have been a historical anomaly that was the product of external factors—specifically, two world wars, the Great Depression, the power of organised labour and progressive taxation. Over the past 30 years or so, that decline has gone into reverse. In the early 21st century, private fortunes, Piketty writes, “seem to be on the verge” of returning to levels last seen in the late 19th century, the heyday of “rentier” capitalism.
That, in itself, is not an original conclusion, of course. What is unusual about Piketty’s book, however, is the empirical basis he offers for that conclusion. Working with a number of colleagues, notably Anthony Atkinson and Emmanuel Saez, Piketty has assembled copious data measuring inequality of both income and wealth in all the major world economies over almost two centuries. “Capital”, therefore, is both a tour de force of empirical research and a reminder to Piketty’s colleagues in the economics profession of the value of history and “collaboration with the other social sciences.”
I spoke to Piketty on the phone last week from Paris, where he is a professor at the Paris School of Economics.
JD: I’d like to start where your book ends. You…