Capital in the Twenty-First Century

Several conclusions can be drawn from the first three parts of the book. First, it was the shocks of the world wars and their aftermath, especially in terms of government policies, that temporarily reduced inequality in the world. However, from the 1980s onwards inequality has grown again, and in the 21st century it has equalled and is looking likely to surpass the inequalities of the past. As such, Piketty asks whether those concerned with reducing inequality are condemned to wait around for another world war. Or, alternatively, “can we imagine political institutions that might regulate today’s patrimonial capitalism justly as well as efficiently” (597)? His answer is that the latter is possible through a progressive international tax on capital. However, before exploring this idea in more detail, he looks at a broader preliminary question: What role should the state have in the 21st century economy?

Piketty points out, in addressing this question, that the role of the state has been thrust centre stage by the financial crisis of 2007-2008. That this crisis did not descend into an economic depression on the scale of 1929 was due to state intervention to prevent the collapse of banks. However, there was also frustration that the underlying structural issues which caused the crisis were not addressed.