Capital in the Twenty First Century after Capital in the Twenty First Century
DOI:
https://doi.org/10.25071/1874-6322.40635Keywords:
Capital, Wealth, Piketty, Wealth-Income ratioAbstract
Thomas Piketty’s Capital in the Twenty-First Century stands as a landmark in economic literature, deservedly lauded for its engaging narrative on inequality. I argue that one of the important features of this book was the use of a simple result in economic theory as a rhetorical device to explain the history of wealth accumulation and concentration. Piketty reformulates it as the “second fundamental law of capitalism” and explains differences in wealth-income ratios (β) in rich countries using variation in growth rates. I use a larger sample of countries, whose data appeared after the publication of Capital, to show that this law is not generalizable. This result is driven by the fact that despite structural differences in per-capita growth, wealth-income ratios are large in many big economies.
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