Capital in the Twenty-First Century

November 3, 2014
The rich get richer, through no faultâor virtueâof their own, according to this sweeping study of wealth in the modern world. Economist Piketty's formula "r > g" expresses the simple but profound insight that because the returns on capitalâinterest on savings, stock dividends and appreciation, rent from a farm or apartment buildingâusually exceed the economy's growth rate, wealth (especially inherited wealth) tends to grow faster than wages and become more concentrated at the top of the income scale, and the economy increasingly caters to rich elites instead of ordinary workers. (The best antidote to this inexorable tendency, he argues, is a direct progressive tax on wealth.) Piketty makes his case with three centuries' worth of economic data from around the world organized in a trove of detailed but lucid tables and graphs. This is a serious, meaty economic treatise, but Piketty's prose (in Goldhammer's deft translation) is wonderfully readable and engaging, and illuminates the human reality behind the econometric statsâespecially in his explorations of the role of capital in the novels of Jane Austen and Balzac. Full of insights but free of dogma, this is a seminal examination of how entrenched wealth and intractable inequality continue to shape the economy.