Thomas Picketti's book "Capital in the 21st Century": essence, main points

How and under what laws is the capital distributed? Why do some always remain poor, while others - regardless of anything - rich? The author of the popular book "Capital in the 21st Century" Thomas Picketti conducted his research and came to interesting conclusions. In his opinion, in 1914-1980 the gap between the layers of society was minimal.

Fundamental contradictions

Life in modern society is subject to its laws. One of them is equality, that is, from the economic point of view, the opportunity to ensure their well-being only at the expense of their own abilities and desires. But professor of the Paris School of Economics Thomas Piketti ("Capital in the XXI Century" - his best seller) argues that the dependence between personal success of a person and the financial situation and relations of his family is increasingly observed. Of course, this contradicts the notion of equal opportunities.

Hardly appeared, the book made a lot of noise, because the author put in her many questions about the correctness of the postulates of a market economy. He does not exclude the correctness of Karl Marx, who asserted the imminent death of capitalism.

Myths and Reality

If in the XIX century no one was surprised that a small group of people "owns the world", in modern conditions this fact constantly raises controversies and doubts. Countries such as the United States, based on the proclamation of equal rights for all citizens without exception, require serious explanations for the gap between the rich and the poor.

For a long time, economists have argued that overall economic growth brings prosperity to all. A lot of books ("Capital in the XXI century" - an exception) tell us that individual efforts and workaholism allow people to achieve unprecedented heights. And that society no longer holds on ties and inherited property. However, even the most primitive observations indicate the opposite.

If during the nineteenth and twentieth centuries the ratio of private capital to national income remained approximately the same (irrespective of the structure - first land, then industrial assets and finally now - finance), then from the 1970s onwards the first prevails. Over the past 50 years, this gap exceeds 600%, that is, the national income is 6 times less than private capital.

Is this a reasonable and logical explanation? Certainly. A high level of savings yields a decent rent; The level of economic growth is rather small, and the privatization of state assets makes it possible to further increase the size of private capital. In the territory of the former USSR, denationalization has allowed a small number of citizens to significantly enrich themselves.

Historical reference

The growth of the economy at all times was below the return on capital, says Thomas Picketti. Capital in the 21st century, based on the inheritance received, only increases this gap. The fact is that by the beginning of the 20th century 90% of the national wealth belonged to 10% of people. The rest, regardless of mental abilities and efforts, did not have property. Consequently, and they had nothing to earn.

Proclamation of equality, permission to take part in voting and other achievements of a democratic society did not change the economic laws and concentration of private capital from a "small group of people".

It sounds horrible, but it was two world wars and the need for restoration that created an unprecedented situation when the income from savings turned out to be lower than economic growth. In the period 1914-1950, wealth only increased by 1-1.5% per year. In addition, the introduction of progressive taxation allowed to increase the growth rate of the economy. But capital in the 21st century again becomes more important than innovation and development of industry.

Middle class

It was in the post-war period that the so-called middle class appeared in Europe. Again, this was due to economic and political upheavals, and not at the expense of equality of opportunity. But the enthusiasm did not last long. By 1970, progressive specialists had fixed a new growth in property inequality.

In his book "The Capital of the 21st Century," Thomas Picketti (in Russian, the book has already been published) says that, despite the emergence of the middle class, the poorest segments of the population do not feel economic development at all. The gap between the layers of society only grows.

However, since the 1980s, the scientist says, historically the trends are coming back. If in the mid-60's it was really possible to break out to the top of the economic pyramid at the expense of their abilities, then by the end of the 20th century this path was closed. All his arguments Thomas Picketti confirms by numbers. He cites the example of salaries of senior employees and average employees. If the top management increased its income by 8% a year, then all the rest - only by 0.5%.

The lucky ones

American economists have explained such injustice of wages by special skills, experience, education and productivity of the company's senior executives. However, economic literature confirms that in fact it is not so. And even more than that, the salary of the top manager does not depend on the quality of his decisions. Here there is a so-called "pay for luck" phenomenon: if the company dynamically develops under the influence of external factors, bonuses to employees are automatically raised.

Legacy or earnings

Capital in the XXI century for the first time in the history of mankind could be accumulated at the expense of his mind and efforts. The author of this book deduced this postulate with the proviso that such a possibility was only among people born in the period from 1910 to 1960.

Realization of their talents allowed people to believe that the inequality of origin (and, hence, economic well-being) is far from the past. However, modern research confirms the opposite: the size of inherited capital is much higher than that received during the redistribution of income from labor. In support of his words, the author cites statistical data that includes not only economic, but also demographic indicators.

The book "Capital in the XXI Century", unfortunately, does not inspire optimism for those who aspire on their own to earn wealth. The author studied the data for three centuries of the development of society and came to the conclusion that such economic inequality is the norm for mankind.