Readers who have been following the often-heated debate on Capital in the Twenty-First Century are likely to be astonished by the mildness of the author’s tone, and by his relaxed rhetorical manner. Indeed, Professor Piketty’s book owes nothing to its famous namesake beyond its title, as well as, more substantially, its grounding assumption that economics is as much an historical discipline as it is a scientific one. Unlike Karl Marx, Thomas Piketty is an enemy neither of capital nor of inequality per se, but of monopoly (or, as he puts it, “divergent” capitalism, which, he argues, must end in destroying capital itself) and “unjustifiable” equality based on no rational or utilitarian principle.
Piketty’s thesis, based on the formula r>g, stating that the average annual rate of return on capital is greater than the rate of growth of a capitalist economy, holds that,
When the return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism generates arbitrary and unsustainable inequalities.
This argument, and what M. Piketty introduces as “two fundamental laws of capitalism,” have been challenged by a number of contemporary economists, while earlier ones have apparently shown that r>g does...