Capital, Piketty’s tome, originally written in French as Le Capital au XXI siecle, is an intimidating 577 pages. Just to demonstrate the astounding level of scholarship Piketty has engaged, consider that the endnotes consume 76 pages of small font. Yet this book is a must-read. Piketty will explain how wealth is composed of income from labor and income from capital, and then he will take a turn far away from most economic analyses that I read. He believes strongly in detail, and he eschews glib rolled-up approximations like the Gini coefficient for inequality in favor of precise, temporal detail. He thrives on collecting, cleaning, presenting and interpreting data over time, from the way capital ownership has changed in the upper centile of France’s residents since 1700 on through last year. You read that right: he tracks trends and tradeoffs not over ten years or a hundred, but rather over several hundred years. And this depth of hindsight yields breathtaking results. You learn just how unbelievably unequal our society is today, and just how more divergent and unequal the United States has become over the past thirty years, even as compared to the entire, remaining first world. You learn how dangerous accumulation of capital is in the hands of the few- how it can spiral out of control, generating more unequal wealth at an ever-accelerating pace. You will also see that overall national and global growth has no chance, over the long run, of offsetting the vaporization of job categories as human labor converts to wealthy capital thanks to: drum roll…..robotics! Okay, that last part is not explicit in his analysis, but it is exactly the lens through which I encourage you to read and understand his characterization of the dynamics of wealth around the globe. Piketty has a general proposed salve for our ills, and it all depends on a global tax on all capital ownership. Of course you, Piketty and I know just how likely it is for international, broad-reaching consensus on new global taxes.Hah. But he argues convincingly that this is one of the only chances we have to save ourselves from our own economic dynamics.
The book is very dense and very long, and I have a specific recommended reading program- not something I have ever published before. Here we go:
- Introduction: read it all to learn how the data source he has helped to create, the World Top Incomes Database, is invaluable in enabling us to really track what’s happening.
- Chapter 5: The Capital Income Ratio
- Chapter 7: Inequality & Concentration
- Chapter 9: Inequality of Labor Income
- Chapter 12: Global Inequality of Wealth
Read these five chapters and you will be able to hold very strong in any dinner conversation about just where our economy has been and where it’s headed. Add a little spice by imagining gradual conversion of labor to capital via robotic automation, as I talk about in Robot Futures, and you have the beginnings of a vivid nightmare.