Capital In The Twenty-First Century

by Thomas Piketty, 2014

Review is copyright 2016 by Wil C. Fry. All Rights Reserved.

Published: 2016.12.29

Copyright 2015 by Wil C. Fry.
Some rights reserved.
Full Title: Capital In The Twenty-First Century
Author: Thomas Piketty
Translator: Arthur Goldhammer
Year: 2013 (translated to English in 2014)
Genre: Nonfiction, Economics
Publisher: The Belknap Press of Harvard University Press
ISBN 978-0-674-43000-0
View It On Amazon
Wikipedia Page


Capital In The Twenty-First Century is “the most important economics book of the year — and maybe of the decade”, according to New York Times columnist (and distinguished economist) Paul Krugman, who calls author Thomas Piketty “arguably the world's leading expert on income and wealth inequality”.

In The New Yorker, esteemed reviewer John Cassidy said it’s “a book that nobody interested in a defining issue of our era can afford to ignore.”

Piketty, who earned his PhD in economics at age 22 and later won the Best Young Economist Of France Award, has spent the past few decades studying global wealth inequality, using massive databases of tax, wealth, and income information previously ignored, or — at best — understudied. In this book, he argues that inequality is a central feature of capitalism, but that it must be artificially corralled in order to prevent a return to patrimonial capitalism and oligarchy. His proposed solution: a global progressive tax on wealth.

He concedes in the book that such a solution is “no doubt a utopian ideal” (pg. 471).
“The history of the progressive tax over the course of the twentieth century suggests that the risk of a drift toward oligarchy is real and gives little reason for optimism about where the United States is headed... it also seems that U.S. politicians of both parties are much wealthier than their European counterparts and in a totally different category from the average American, which might explain why they tend to confuse their own private interest with the general interest... The egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verge of becoming the Old Europe of the twenty-first century’s globalized economy.”

— pg. 514

Piketty begins by defining terms, explaining economic basics, listing statistics, and providing a broad stack of historical details. Methodically and systematically, he builds his case, showing the deep wealth inequalities that have always existed — broken only by the massive outlier case of the mid-20th Century: two World Wars followed by drastically progressive taxes on wealth. And he shows how the inequality is returning to a historical norm, now that the two wars are receding into history and those 1950s-era taxes have mostly been repealed.

He acknowledges today’s globalization the problem it poses: any nation that taxes wealth or income will see it backfire when those with wealth simply move it elsewhere. This is how he eventually comes to the idea of a global tax on wealth.

What I Liked Least About It

This is the densest book I have ever read. I needed four months to read it — contrast that with the few weeks it took me to read Hawking’s A Brief History Of Time. It didn’t help that many of the terms and theories, and much of the history, of economics is outside my wheelhouse. Despite its popularity, I can’t imagine that the majority of this book’s readership breezed through it and grasped it readily.

An example of the density:
“In the short run, variations (capital gains or losses) of relative asset prices (i.e., of asset prices relative to consumer prices) are often quite a bit larger than volume effects (i.e., effects linked to new savings). If we assume, however, that price variations balance out over the long run, then the law =s/g is necessarily valid, regardless of the reasons why the country in question chooses to save a proportion ‘s’ of its national income.”

— pg. 169

I think what I liked least, though, was how Piketty often makes his points in plodding, laborious ways, making it difficult to quote axiomatic snippets or underline just the good bits. Typically, it was obvious why he did this — because the point he was making isn’t easily or contritely described — and I sympathize with him because my own writing often takes that form as I labor around the point I hope to make without error.

What I Liked Most About It

Most of all, I liked that the author didn’t assume that the reader is an expert on economics. Early on, Piketty very clearly defines what he means by the terms “wealth”, “capital”, “income”, and others. He laid out the basic formulas that inform his work, including the simple rule that governed his conclusions: r > g — which basically means that the rate of return on capital is always going to be greater than the growth of the economy.

I liked that he explained his sources, and how he developed his information databases.

And perhaps most of all, I like that he made it clear — with statistics, figures, and historical proof — that wealth most often comes from older wealth, not from anything the owner did to deserve it. This has long been obvious to many people, but many others continue to deny it with the claim that “the wealthy worked hard for what they have”. While it might be true of some, it is certainly not true of the majority of capital ownership.

Additional Notes

Piketty also draws a clear line of distinction between wage inequality and wealth inequality, and points out that many of the world’s wealthiest don’t even draw a wage.
“The ‘1 percent’ who earn the most are not the same as the ‘1 percent’ who own the most.”
I underlined hundreds of passages in the book for later perusal, and hope to get back to them someday.

Favorite Quotations

Despite Piketty’s sometimes laborious language, which often spreads his salient points across several pages, there are many quotable sections. As I flip through the book again, I hope to add some of those quotations below. Page numbers listed are from my edition, and might not match up with other editions.
“To be sure, there is something astonishing about the notion that capital yields rent, or income that the owner of capital obtains without working. There is something in this notion that is an affront to common sense and that has in fact perturbed any number of civilizations...”

— pg. 423

“It seems fairly clear that inherited wealth accounts for more than half of the total amount of the largest fortunes worldwide...

“No matter how justified inequalities of wealth may be initially, fortunes can grow and perpetuate themselves beyond all reasonable limits and beyond any possible rational justification in terms of social utility.”

— pg. 443

“Taxation is neither good nor bad in itself. Everything depends on how taxes are collected and what they are used for.”

— pg. 481


Unlike most of the other books I’ve read recently, I wouldn’t recommend this one to just anyone. You need a serious interest (which I am currently developing) in economics in order to forge through this massive tome.

However, I do recommend using a search engine to find some of the discussion about it online, mostly in 2014, which will cover the same topics, albeit in much abbreviated form.

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