About the book
French economist Thomas Piketty studies how wealth and income have been distributed across Europe and the United States from the 1700s onward, drawing on data from twenty countries. His central claim is that when the return on capital (r) outpaces economic growth (g) over long periods, wealth concentrates and threatens social and economic stability. Piketty argues that the world wars and the Great Depression destroyed enough wealth to reverse this trend between 1930 and 1975, but that the world is now returning to patrimonial capitalism dominated by inherited wealth. He uses novels by Jane Austen, Balzac and Henry James to illustrate older class structures, and proposes a global progressive tax on wealth. A documentary adaptation was later released.
Bill Gates said he had concerns about some secondary points but shared its main conclusions that inequality is growing and that governments should help reduce it, and David Heinemeier Hansson called it a dense look at the historical data on wealth, income and growth.
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This book has 3 recommendations
Bill Gates (CEO/Microsoft)
Capital sparked a fantastic global discussion this year about inequality. Piketty kindly spent an hour discussing his work with me before I finished my review. As I told him, although I have concerns about some of his secondary points and policy prescriptions, I agree with his most important conclusions: inequality is a growing problem and that governments should play a role in reducing it. I admire his work and hope it draws in more smart people to study the causes of, and cures for, inequality.
Recommended by Lucas Morales (Founder & CEO/Zeall.us)
Source: Lucas Morales, Founder & CEO of Zeall.us, Gave Entrepreneurship Its First Shot at the Age of 14
David Heinemeier Hansson (Co-Founder/Basecamp)
This is the book that was catapulted by its conclusion: r > g. That the rate of return on capital is greater than the growth rate of the economy. Which means that capital, and the people who own it, will end up with a larger and larger share of all wealth and income in the economy as time goes on.
It’s a dense dive into the historical data on wealth, income, and economic growth from the optic of inequality. It’s fascinating to realize just how little economic growth there was before the industrial revolution (<0.1% at times). Centuries would pass where societies got almost no more productive, and thus saw no per-capita growth.
In the past few decades, we’ve moved closer to the historical norm. Real growth through productivity improvements is down a lot since that former golden period, most western societies aren’t growing their population as rapidly as they were, and thus hereditary wealth and privileges are coming back as prime determinants of inequality.
Despite the dense approach, the book isn’t in anyway unapproachable. It’s well told and easily read. And it’s about as timely as it gets. Highly recommend it so far.
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