Capital in the Twenty-First Century
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The Illusion of Marginal Productivity
The Takeoff of the Supermanagers: A Powerful Force for Divergence
10. Inequality of Capital Ownership
Hyperconcentrated Wealth: Europe and America
France: An Observatory of Private Wealth
The Metamorphoses of a Patrimonial Society
Inequality of Capital in Belle Époque Europe
The Emergence of the Patrimonial Middle Class
Inequality of Wealth in America
The Mechanism of Wealth Divergence: r versus g in History
Why Is the Return on Capital Greater Than the Growth Rate?
The Question of Time Preference
Is There an Equilibrium Distribution?
The Civil Code and the Illusion of the French Revolution
Pareto and the Illusion of Stable Inequality
Why Inequality of Wealth Has Not Returned to the Levels of the Past
Some Partial Explanations: Time, Taxes, and Growth
The Twenty-First Century: Even More Inegalitarian Than the Nineteenth?
11. Merit and Inheritance in the Long Run
Inheritance Flows over the Long Run
Fiscal Flow and Economic Flow
The Three Forces: The Illusion of an End of Inheritance
Mortality over the Long Run
Wealth Ages with Population: The μ × m Effect
Wealth of the Dead, Wealth of the Living
The Fifties and the Eighties: Age and Fortune in the Belle Époque
The Rejuvenation of Wealth Owing to War
How Will Inheritance Flows Evolve in the Twenty-First Century?
From the Annual Inheritance Flow to the Stock of Inherited Wealth
Back to Vautrin’s Lecture
Rastignac’s Dilemma
The Basic Arithmetic of Rentiers and Managers
The Classic Patrimonial Society: The World of Balzac and Austen
Extreme Inequality of Wealth: A Condition of Civilization in a Poor Society?
Meritocratic Extremism in Wealthy Societies
The Society of Petits Rentiers
The Rentier, Enemy of Democracy
The Return of Inherited Wealth: A European or Global Phenomenon?
12. Global Inequality of Wealth in the Twenty-First Century
The Inequality of Returns on Capital
The Evolution of Global Wealth Rankings
From Rankings of Billionaires to “Global Wealth Reports”
Heirs and Entrepreneurs in the Wealth Rankings
The Moral Hierarchy of Wealth
The Pure Return on University Endowments
What Is the Effect of Inflation on Inequality of Returns to Capital?
The Return on Sovereign Wealth Funds: Capital and Politics
Will Sovereign Wealth Funds Own the World?
Will China Own the World?
International Divergence, Oligarchic Divergence
Are the Rich Countries Really Poor?
Part Four: Regulating Capital in the Twenty-First Century
13. A Social State for the Twenty-First Century
The Crisis of 2008 and the Return of the State
The Growth of the Social State in the Twentieth Century
Modern Redistribution: A Logic of Rights
Modernizing Rather Than Dismantling the Social State
Do Educational Institutions Foster Social Mobility?
The Future of Retirement: Pay-As-You-Go and Low Growth
The Social State in Poor and Emerging Countries
14. Rethinking the Progressive Income Tax
The Question of Progressive Taxation
The Progressive Tax in the Twentieth Century: An Ephemeral Product of Chaos
The Progressive Tax in the Third Republic
Confiscatory Taxation of Excessive Incomes: An American Invention
The Explosion of Executive Salaries: The Role of Taxation
Rethinking the Question of the Top Marginal Rate
15. A Global Tax on Capital
A Global Tax on Capital: A Useful Utopia
Democratic and Financial Transparency
A Simple Solution: Automatic Transmission of Banking Information
What Is the Purpose of a Tax on Capital?
A Blueprint for a European Wealth Tax
Capital Taxation in Historical Perspective
Alternative Forms of Regulation: Protectionism and Capital Controls
The Mystery of Chinese Capital Regulation
The Redistribution of Petroleum Rents
Redistribution through Immigration
16. The Question of the Public Debt
Reducing Public Debt: Tax on Capital, Inflation, and Austerity
Does Inflation Redistribute Wealth?
What Do Central Banks Do?
The Cyprus Crisis: When the Capital Tax and Banking Regulation Come Together
The Euro: A Stateless Currency for the Twenty-First Century?
The Question of European Unification
Government and Capital Accumulation in the Twenty-First Century
Law and Politics
Climate Change and Public Capital
Economic Transparency and Democratic Control of Capital
Conclusion
The Central Contradiction of Capitalism: r > g
For a Political and Historical Economics
The Interests of the Least Well-Off
Notes
Contents in Detail
List of Tables and Illustrations
Index
Tables and Illustrations
Tables
Table 1.1. Distribution of world GDP, 2012
Table 2.1. World growth since the Industrial Revolution
Table 2.2. The law of cumulated growth
Table 2.3. Demographic growth since the Industrial Revolution
Table 2.4. Employment by sector in France and the United States, 1800–2012
Table 2.5. Per capita output growth since the Industrial Revolution
Table 3.1. Public wealth and private wealth in France in 2012
Table 5.1. Growth rates and saving rates in rich countries, 1970–2010
Table 5.2. Private saving in rich countries, 1970–2010
Table 5.3. Gross and net saving in rich countries, 1970–2010
Table 5.4. Private and public saving in rich countries, 1970–2010
Table 7.1. Inequality of labor income across time and space
Table 7.2. Inequality of capital ownership across time and space
Table 7.3. Inequality of total income (labor and capital) across time and space
Table 10.1. The composition of Parisian portfolios, 1872–1912
Table 11.1. The age-wealth profile in France, 1820–2010
Table 12.1. The growth rate of top global wealth, 1987–2013
Table 12.2. The return on the capital endowments of US universities, 1980–2010
Illustrations
Figure I.1. Income inequality in the United States, 1910–2010
Figure I.2. The capital/income ratio in Europe, 1870–2010
Figure 1.1. The distribution of world output, 1700–2012
Figure 1.2. The distribution of world population, 1700–2012
Figure 1.3. Global inequality 1700–2012: divergence then convergence?
Figure 1.4. Exchange rate and purchasing power parity: euro/dollar
Figure 1.5. Exchange rate and purchasing power parity: euro/yuan
Figure 2.1. The growth of world population, 1700–2012
Figure 2.2. The growth rate of world population from Antiquity to 2100
Figure 2.3. The growth rate of per capita output since the Industrial Revolution
Figure 2.4. The growth rate of world per capita output from Antiquity to 2100
Figure 2.5. The growth rate of world output from Antiquity to 2100
Figure 2.6. Inflation since the Industrial Revolution
Figure 3.1. Capital in Britain, 1700–2010
Figu
re 3.2. Capital in France, 1700–2010
Figure 3.3. Public wealth in Britain, 1700–2010
Figure 3.4. Public wealth in France, 1700–2010
Figure 3.5. Private and public capital in Britain, 1700–2010
Figure 3.6. Private and public capital in France, 1700–2010
Figure 4.1. Capital in Germany, 1870–2010
Figure 4.2. Public wealth in Germany, 1870–2010
Figure 4.3. Private and public capital in Germany, 1870–2010
Figure 4.4. Private and public capital in Europe, 1870–2010
Figure 4.5. National capital in Europe, 1870–2010
Figure 4.6. Capital in the United States, 1770–2010
Figure 4.7. Public wealth in the United States, 1770–2010
Figure 4.8. Private and public capital in the United States, 1770–2010
Figure 4.9. Capital in Canada, 1860–2010
Figure 4.10. Capital and slavery in the United States
Figure 4.11. Capital around 1770–1810: Old and New World
Figure 5.1. Private and public capital: Europe and America, 1870–2010
Figure 5.2. National capital in Europe and America, 1870–2010
Figure 5.3. Private capital in rich countries, 1970–2010
Figure 5.4. Private capital measured in years of disposable income
Figure 5.5. Private and public capital in rich countries, 1970–2010
Figure 5.6. Market value and book value of corporations
Figure 5.7. National capital in rich countries, 1970–2010
Figure 5.8. The world capital/income ratio, 1870–2100
Figure 6.1. The capital-labor split in Britain, 1770–2010
Figure 6.2. The capital-labor split in France, 1820–2010
Figure 6.3. The pure rate of return on capital in Britain, 1770–2010
Figure 6.4. The pure rate of return on capital in France, 1820–2010
Figure 6.5. The capital share in rich countries, 1975–2010
Figure 6.6. The profit share in the value added of corporations in France, 1900–2010
Figure 6.7. The share of housing rent in national income in France, 1900–2010
Figure 6.8. The capital share in national income in France, 1900–2010
Figure 8.1. Income inequality in France, 1910–2010
Figure 8.2. The fall of rentiers in France, 1910–2010
Figure 8.3. The composition of top incomes in France in 1932
Figure 8.4. The composition of top incomes in France in 2005
Figure 8.5. Income inequality in the United States, 1910–2010
Figure 8.6. Decomposition of the top decile, United States, 1910–2010
Figure 8.7. High incomes and high wages in the United States, 1910–2010
Figure 8.8. The transformation of the top 1 percent in the United States
Figure 8.9. The composition of top incomes in the United States in 1929
Figure 8.10. The composition of top incomes in the United States, 2007
Figure 9.1. Minimum wage in France and the United States, 1950–2013
Figure 9.2. Income inequality in Anglo-Saxon countries, 1910–2010
Figure 9.3. Income inequality in Continental Europe and Japan, 1910–2010
Figure 9.4. Income inequality in Northern and Southern Europe, 1910–2010
Figure 9.5. The top decile income share in Anglo-Saxon countries, 1910–2010
Figure 9.6. The top decile income share in Continental Europe and Japan, 1910–2010
Figure 9.7. The top decile income share in Europe and the United States, 1900–2010
Figure 9.8. Income inequality in Europe versus the United States, 1900–2010
Figure 9.9. Income inequality in emerging countries, 1910–2010
Figure 10.1. Wealth inequality in France, 1810–2010
Figure 10.2. Wealth inequality in Paris versus France, 1810–2010
Figure 10.3. Wealth inequality in Britain, 1810–2010
Figure 10.4. Wealth inequality in Sweden, 1810–2010
Figure 10.5. Wealth inequality in the United States, 1810–2010
Figure 10.6. Wealth inequality in Europe versus the United States, 1810–2010
Figure 10.7. Return to capital and growth: France, 1820–1913
Figure 10.8. Capital share and saving rate: France, 1820–1913
Figure 10.9. Rate of return versus growth rate at the world level, from Antiquity until 2100
Figure 10.10. After tax rate of return versus growth rate at the world level, from Antiquity until 2100
Figure 10.11. After tax rate of return versus growth rate at the world level, from Antiquity until 2200
Figure 11.1. The annual inheritance flow as a fraction of national income, France, 1820–2010
Figure 11.2. The mortality rate in France, 1820–2100
Figure 11.3. Average age of decedents and inheritors: France, 1820–2100
Figure 11.4. Inheritance flow versus mortality rate: France, 1820–2010
Figure 11.5. The ratio between average wealth at death and average wealth of the living: France, 1820–2010
Figure 11.6. Observed and simulated inheritance flow: France, 1820–2100
Figure 11.7. The share of inherited wealth in total wealth: France, 1850–2100
Figure 11.8. The annual inheritance flow as a fraction of household disposable income: France, 1820–2010
Figure 11.9. The share of inheritance in the total resources (inheritance and work) of cohorts born in 1790–2030
Figure 11.10. The dilemma of Rastignac for cohorts born in 1790–2030
Figure 11.11. Which fraction of a cohort receives in inheritance the equivalent of a lifetime labor income?
Figure 11.12. The inheritance flow in Europe, 1900–2010
Figure 12.1. The world’s billionaires according to Forbes, 1987–2013
Figure 12.2. Billionaires as a fraction of global population and wealth, 1987–2013
Figure 12.3. The share of top wealth fractiles in world wealth, 1987–2013
Figure 12.4. The world capital/income ratio, 1870–2100
Figure 12.5. The distribution of world capital, 1870–2100
Figure 12.6. The net foreign asset position of rich countries
Figure 13.1. Tax revenues in rich countries, 1870–2010
Figure 14.1. Top income tax rates, 1900–2013
Figure 14.2. Top inheritance tax rates, 1900–2013
Index
Abu Dhabi Investment Authority, 456–457
Accounting: national, 55–59, 92, 230, 269; corporate, 203
Accumulation of wealth. See Wealth accumulation
Accumulation principle, infinite, 7–11, 228
Acemoglu, Daron, 624n20, 639nn45,48
Africa: production in, 60–61; income and, 63–64, 66, 68–69, 586nn33,34; growth in, 75, 78–79, 94, 388; capital/income ratio in, 195, 461–462; taxes and, 491; capital outflow from, 539. See also North Africa; South Africa; Sub-Saharan Africa
Age-wealth profile, 393–399
Agricultural land: in Britain and France, 117, 119; in Germany, 141; in America, 151–152; elasticity of substitution and, 222–223
Albert, Michel, 592n5
Allais, Maurice, 642n17, 641n40
Allen, Robert, 224–225, 580n5, 598n4
Alternative investments, 449–450, 454, 456
Althusser, Louis, 655n2
Alvaredo, Facundo, 17
America: income and, 63, 68; birth rate and, 79; growth in, 93; capital in, 140, 150–158; structure of inequality in, 152. See also North America
“American exceptionalism,” 484
American Revolution, 30, 493
Ancien Régime, 104, 106; public debt and,
127, 129, 183; inequality and, 251, 263–264, 341–342, 480; taxation and, 493, 501
Anderson, Gosta Esping, 587n5
Andrieu, Claire, 591n18
“Annuitized wealth,” 384, 391–392
&n
bsp; Aristocats, The (cartoon), 365–366
Arnault, Bernard, 626n33
Arrow, Kenneth, 654n56
Asia: income and, 63, 66, 68, 585n24, 586n34; investment in, 70–71; growth in, 78–79, 82, 94, 99; capital/income ratio in, 195; financial crisis in, 535
Assets: public, 135–139; prices of, 169–172, 187–191, 452–453, 626n31; financial, 209, 627n43; real and nominal, 209–212, 598n11; size effects of, 453–454; taxation of, 518. See also Net asset positions; Wealth
Asset structure, twenty-first vs. eighteenth century, 118–120, 122–123
Atkinson, Anthony, 17, 18, 343, 581nn21,23, 582n36, 606n33, 610n26, 614n32, 622n60, 638n35
Austen, Jane, fiction of, 2, 53–54, 105–106, 241, 411–412, 415–516, 619n36, 620n40, 621n52; Sense and Sensibility, 113, 362, 413–414; Mansfield Park, 115, 120–121, 207; Persuasion, 362
Austerity, public debt and, 541, 545–546
Australia, 174, 177–178
Autrer, Matthieu, 641n4
Badiou, Alain, 655n2
Bagnall, Roger S., 612n10
Bakija, Jon, 607n42
Balassa-Samuelson model, 586n28
Balzac, Honoré de, fiction of, 2, 53–54, 207, 411, 415–416, 601n2, 619n36; Père Goriot, 104, 106, 113–115, 238–240, 343, 412, 440, 590n3, 620n43; César Birotteau, 115, 207, 214, 412–413, 590nn2,3, 615n34, 624n15
Banerjeee, Abhijit, 17, 611n32, 634n49
Banking information: automatic transmission of, 516, 520, 521–524, 529; Cyprus crisis and, 554–555
Bank of England, 551–552, 557
Bank of Japan, 551, 557, 649n22
Banks, central. See Central banks
Banque de France, 649n25
Barro, Robert, 135
Barry, Redmond, 620n40
Baudelot, Christian, 605n20
Bebchuk, Lucian, 611n35
Becker, Gary, 385, 616n7, 621n55
Beckert, Jens, 614n22, 616n6, 637n25, 638n33
Béguin, K., 598n7
Belle Époque, 106, 127, 132; capital/income ratio and, 148, 152, 154, 196; income inequality in, 263–264, 266–267, 272, 282, 322; inequality of capital ownership in, 339, 342–345, 369–370; age and fortune in, 393–396
Bernstein, Eduard, 219
Bettencourt, Liliane, 440–441, 525, 642n14
Bill and Melinda Gates Foundation, 626n32
Billionaires, 433–434, 444–446, 458–459, 463, 623n7, 624n13
Birth rates, 78–83, 587n4, 588n7
Bjorklund, Anders, 631n26
Blank, Rebecca, 608n12, 640n53
Boisguillebert, Pierre le Pesant sieur de, 56, 590n1