The critique of capital in the twenty first century : in search of the macroeconomic foundations of inequality

Thomas Piketty’s Capital in the Twenty-First Century proposes a critical analysis of the dynamics of capital accumulation. The book has several objectives: to present the historical dynamics of capital and its distribution up to the early twenty-first century; to offer a prospective analysis of these dynamics up to the end of this century; and, finally, to discuss policy measures that would make it possible to avoid the future it lays out. This book is undoubtedly the key treatise on political economy from the first part of this century. The author revives an obsolete format, as academic economists generally prefer publications in scholarly journals while reserving the book format for popularization. He reveals the mechanisms pushing towards convergence or divergence in the distribution of wealth, and emphasizes the widely underestimated power of divergence: if the return on capital (??) exceeds economic growth (??), which has almost always been the case historically, then it is virtually inevitable that inherited wealth will dominate built-up wealth and the concentration of capital will reach extremely high levels. Thomas Piketty thus seeks the foundations of inequality (??>??) in macroeconomics, whereas the usual suspects are found at the micro-economic level. As we shall see, this macro-foundation of the micro-economy is not entirely convincing, and the facts described by Thomas Piketty can be interpreted with a different causality in which it is extra-economic constraints and scarcity rent that explain the dynamics of inequality, and hence the relationship ??>??. This different interpretation of the same phenomena has consequences for public policy. According to our interpretation, an ex post capital tax, if necessary, can only be a second-order choice: first the constraints of scarcity have to be removed and property rights and the respective rights of owners and non-owners must be redefined.