Piketty, Thomas (2013) Capital in the Twenty-first Century. Cambridge, MA: Harvard University Press. 696 pp.

ISBN: 978-0674430006​

Kristian Skrede Gleditsch

University of Essex and Peace Research Institute Oslo

​This book reviews the evolution of wealth and inequality in the developed world since the early 1700s. The core thesis is that since the return on capital (r) tends to exceed economic growth rates (g), capitalist economies have an inherent tendency towards increasing inequality and greater wealth concentration, with wealth large extent determined by inheritance rather than production. Using an impressive original dataset, Piketty demonstrates a remarkably stable capital to income ratio up to WWI, followed by a dramatic decline until the 1950s. Piketty attributes the decline in inequality to state interventionism and active redistribution through taxation, promoted by challenges and pressures for reform driven by circumstances such as international war and economic depression. However, income inequality has been increasing since the mid-1970s, following the greater emphasis on markets and non-intervention, and further exacerbated by an ageing population and declining fertility. Piketty advocates more progressive income taxation as well as an annual global wealth tax to reduce inequality. Although he suggests that inequality can undermine democracy and be destabilizing, the book has few details on likely consequences of inequality for conflict or political institutions. It also has little to say about developing societies, nor does it discuss whether less benign forms of state intervention leaning towards nepotism and rent-seeking could exacerbate inequality over and beyond market outcomes. The prose is sometimes flowery and verbose, and the main points could arguably be made more effectively in fewer pages. Still, the formal model of the origins of inequality and exemplary efforts to construct long-run economic data make this impressive book a promising starting point for researchers interested in addressing these issues.