Capital in the Twenty-First Century

Piketty will look at the history and nature of wealth inequality and ask whether it is likely to grow or diminish in the future. This will be done, he says, using more thorough and complete historical data than has been available to previous researchers. Indeed, this data will cover over twenty nations and three hundred years. Before saying more about this new data and summarising his conclusions, Piketty gives an overview of what earlier thinkers have said on the topic.

Past thinking on wealth inequality falls into two broad and divergent camps: the “apocalyptic” and the “idealistic”. Among the former are 18th century economist David Ricardo and the philosopher Karl Marx. Ricardo believed that as populations grow, land, which is finite, becomes an increasingly scarce resource. As such, “The law of supply and demand then implies that the price of land will rise continuously, as will the rents paid to land-lords” (6). This means that the owners of land become increasingly wealthy relative to the rest of the population. Eventually they come to own virtually all of a nation’s resources, laying the ground for social unrest. In the end, says Piketty, this nightmare scenario did not come to pass because the advent and expansion of industry reduced the relative value of land.