Capital in the Twenty-First Century

by Thomas Piketty

  Book vs. market value, 189–­191

  Borgerhoff Mulder, Monique, 597n33

  Bourdieu, Jérôme, 612nn4,9

  Bourdieu, Pierre, 486

  Bourguignon, François, 585n20

  Boutmy, Emile, 487

  Bouvier, Jean, 225, 582n34

  Bowley, Arthur, 219, 599nn19, 20

  Bozio, Antoine, 633n46

  Brady, H., 640n52

  Britain: data from, 28, 56–­57; national income and, 68–­69; growth in, 98–­99, 174–­175, 510–­511; monetary system of, 105, 589–­590nn28,29; per capita income in, 106, 122, 590–­591n8,9; inflation in, 107, 133, 142, 149; capital in, 116–­127, 148–­149; foreign capital/assets and, 117–­119, 148, 191–­192, 590n7; public debt of, 124–­126, 127, 129–­131, 133, 591n10, 591n12; public assets in, 136, 138; Canada and, 157–­158; savings in, 177–­178; capital-­labor split in, 200–­201, 204, 205, 206–­208, 216, 224–­225, 229; taxation and, 338, 498–­499, 501, 505, 507–­512, 636n16, 638nn33,34,35; wealth distribution in, 343–­344, 346; inheritances in, 426–­427; taxes as share of national income in, 475–­476, 629n6; social state in, 477–­478, 629n12, 631n25

  Brown, Frederick, 219–­220

  Bubbles, 172, 193, 596n27, 597n30; beyond, 173–­183

  Buffet, Warren, 624n14

  Bush, George W., 309

  Cagé, Julia, 633n48

  Caillaux, Joseph, 637n24

  Campion, H., 591n19

  Canada, 66; in US-­Canada bloc, 62–­63; capital in, 140, 157–­158; foreign capital/assets in, 157–­158; growth rate of, 174; savings in, 177–­178

  “Capabilities” approach, 480

  Capital: human and nonhuman, 21–­22, 42, 46–­47; types of, 42, 46; depreciation and, 43–­44; defined, 45–­47, 123; private vs. public, 46–­47; and wealth, 47–­50; economic functions of, 48; domestic vs. foreign, 49, 118–­119; immaterial, 49; residential vs. productive, 51–­52; rents and, 423–­424; reproduction of itself, 440. See also Foreign capital/assets; National wealth/capital; Private wealth/capital; Public wealth/capital; Rate of return on capital

  Capital (Marx), 9, 225, 229

  Capital, income from, 18, 21, 53; reduction in, 271–­275, 336–­337; in twenty-­first century, 277–­278, 301–­302; top decile and, 279–­281, 290, 295, 301, 604–­605n12; underestimation of, 281–­284, 294, 606n26; taxation on, 507–­508. See also In­e­qual­ity of capital own­ership

  Capital, metamorphoses of: nature of wealth and, 113–­116; in Britain and France, 113–­139; asset structure (private) and, 116–­120, 122–­123; foreign capital and, 120–­123; public and private wealth and, 123–­129; public debt and, 129–­134; Ricardian equivalence and, 134–­135; public assets and, 135–­139; in Germany, 140–­146; twentieth century shocks and, 146–­150; in the United States, 150–­156, 158–­163; in Canada, 157–­158

  Capital accumulation, golden rule of, 563–­567

  Capital controls, 515–­516, 534–­536

  Capital gains: treatment of, 283, 295, 609n13; United States and, 293, 295, 296

  Capital/income ratio, 19, 25–­26, 164–­199; evolution of, 42; defined, 50–­52; fundamental laws of capitalism and, 52–­55, 166–­170; in Britain and France, 117–­118, 126; collapse and recovery of, 146–­150, 275; in the United States, 150–­155; capital’s comeback and, 170–­173, 290; beyond bubbles and, 173–­183; privatization and, 183–­187; rebound of asset prices and, 187–­191; national capital and net foreign assets and, 191–­194; land values and, 196–­198; capital-­labor split and, 199–­203, 232–­233; falling rate of profit and, 229; flow of inheritances and, 383–­384; world, 460–­461

  Capitalism, 1; misery of, 7–­8, 446–­447; Marx on, 7–­11, 227–­230, 565; author’s view of, 31; first fundamental law of, 52–­55, 199; second fundamental law of, 55, 166–­170; financial, 58, 515; key aspects of, 116–­118; without capitalists, 135–­139; Rhenish, 140–­146, 191, 511; patrimonial, 154–­155, 173, 237, 471; illusion of end of, 350, 381, 397; crisis of 2008 and, 472–­474; control of, 518, 523, 532–­537, 562, 570; central contradiction of, 571–­573

  Capital-­labor split, 8, 39–­45, 199–­234; capital/income ratio and, 199–­203, 232–­233; return on capital and, 199–­217; flows and, 203–­204; real and nominal assets and, 209–­212; marginal productivity of capital and, 212–­217; elasticity of substitution and, 216–­224; stability of, 217–­220, 231–­232; human capital and, 223–­224; medium-­term changes in, 224–­227, 288; falling rate of profit and, 227–­230; “two Cambridges” and, 230–­232; capital’s comeback and, 232–­233, 290–­291; technology and, 234

  Capital stock, 50–­51, 113, 119; first fundamental law of capitalism and, 52–­55, 199; accumulation of, 166–­170; too much, 212, 215–­217, 223, 227–­230; inherited wealth and, 401–­404, 410

  Capital tax. See Global tax on capital; Taxation, on capital

  Carbon tax, 654n55

  Carpentier, Vincent, 632n34

  Card, David, 313, 608n10

  Castel, Robert, 608n9

  Categorical or schedular tax, 501

  Centile, upper/top, 251, 252–­254, 259–­264, 267, 301; in twentieth century, 272, 275, 284–­286; in twenty-­first century, 277–­278; world of, 278–­281; underestimation of, 281–­284; wages and, 290–­292, 296, 298–­300, 314–­315, 618n29; cohabitation in, 300–­303; evolution of by country and region, 315–­322, 326–­327, 329, 609–­610nn13,14,15,16,17,18,19, 610nn22,23,25; wealth distribution and, 339–­346, 348–­349, 365–­366, 438–­439, 509, 643n25; work vs. inheritance and, 408–­411; return on capital and, 431; oligarchic divergence and, 463; taxation and, 496

  Centiles, mea­sure­ment and, 252–­255, 269–­270, 286

  Central banks, 472–­473, 648n20, 649n22; Cyprus crisis and, 519, 553–­556; financial stability and, 547–­553, 555–­556

  César Birotteau (Balzac), 115, 207, 214, 412–­413

  Chabert, A., 600n29

  Challenges wealth rankings, 442, 624n18

  Charles X, 613n21

  Chavagneux, Christian, 628n56

  China: income and, 62–­64, 66; growth in, 82, 99, 329, 429; income in­e­qual­ity in, 326–­327, 610n27, 646n42; assets of, 463, 627–­628n50; taxes in, 491, 492; regulation in, 535–­536

  Civil Code, 362–­366, 614n23

  Clark, Gregory, 591n15

  Class designations, 250–­252

  Climate change, 567–­569

  Clinton, Bill, 309

  Cobb, Charles, 599n18

  Cobb-­Douglas production function, 217–­220, 599n17, 600n25

  Cole, Adam, 607n42

  Colonial empires, 120–­121

  Colonial era, 44–­45

  Colqhoun, Patrick, 230

  Colson, Clément, 57, 591n19, 617n10

  Columbia, 327, 329

  “Common utility,” 480, 630n20

  Communist Manifesto, The (Marx), 8–­9, 225

  Communist movements, 8, 10

  Competition: pure and perfect, 30, 212, 214, 312–­313, 332, 639–­640n48; fiscal, 208, 221, 355–­356, 373, 375, 422, 496, 562; inheritance and unrestricted, 423–­424

  Concentration effects vs. volume effects, 410

  Condorcet, marquis de, 363, 654n56

  Confiscatory tax rates, 473; executive income and, 505–­508; fiscal progressivity and, 512–­514

  Conservative revolution, 98, 138–­139, 333, 511, 549

  Consumption taxes, 494, 496, 651n37

  Continental blocs, 59–­61, 68

  Contributive justification, 524–­525

  Convergence, 21–­22, 27, 571; forces favoring, 69–­71; global, 72

  Corporations, 156, 203, 332; taxation on profits of, 560–­561, 650–­651n33, 651n36

  Creative accounting, 214

  Crédit Suisse, 437, 623n10

  Cross-­investments, 194

  Crouzet, François, 591n11

  Cumulative growth
, law of, 74–­77

  Cumulative returns, law of, 75, 77

  Cyprus banking crisis, 519, 553–­556

  Damages (TV series), 419

  Data: importance of, 2–­3; national income as, 11–­13, 56–­59, 584n18; on income, 16–­17; on wealth, 17–­20; geo­graph­i­cal and historical boundaries of, 27–­30; developing countries and, 58–­59

  Daumond, Adeline, 582n33

  Davies, James B., 638n8

  Debreu, Claude, 654n56

  Debt. See Public debt

  Decile, upper/top, 251–­253, 256–­260, 261–­264; in twentieth century, 271–­273, 275–­276, 284–­286, 288; world of, 278–­281; underestimation of, 281–­284, 294–­295; wages and, 290–­294, 296–­299, 314–­315; wealth distribution and, 322–­324, 339–­346, 348–­349, 365–­366, 438–­439; return on capital and, 431

  Deciles, mea­sure­ment and, 251–­255, 601n5, 602n20; interdecile ratios and, 267–­269, 603nn23,24

  Declaration of In­de­pen­dence (US) (1776), 479

  Declaration of the Rights of Man and the Citizen (1789), 479–­480

  Defensive nationalism, 539

  Deflation, 285

  De Foville, Alfred, 57, 617n10

  De Gaulle, Charles, 289

  Delalande, Nicolas, 635n13

  Dell, Fabien, 17, 615n38, 645n37

  Democracy: challenge to, 21, 26–­27; rentiers and, 422–­424; transparency and, 518–­521; control of capital and, 569–­570, 573

  Demographic growth, 72–­75, 174; stages of, 77–­80; negative, 80–­83; bell curve of global, 99, 589n24; decreased, 166–­168

  Demographic transition, 3–­4, 29–­30, 78–­79, 81–­82

  Denmark, 495

  Depreciation, 43, 178

  Deregulation movement, 138–­139

  Di Bartolomeo, G., 637n26

  “Difference principle” (Rawls), 480

  Dirty Sexy Money (TV series), 419

  Disposable income, 180–­182

  Distribution, equilibrium, 361–­366

  Distribution of wealth: factorial vs. individual, 40, 583n3; national accounting and, 55–­59; global, 59–­69; regional blocs and, 61–­64; upper centiles and deciles and, 322–­324, 339–­346, 348–­349, 365–­366; in France, 337–­343, 346, 364–­366; in Britain, 343–­344, 346; in Eu­rope, 343–­345, 350; in Sweden, 344–­345, 346–­347; in the United States, 347–­350; return on capital and unequal, 361, 571–­572. See also Global in­e­qual­ity of wealth; Inheritance, dynamics of

  Distribution of wealth debate: data and, 2–­3, 11–­13, 16–­19, 27–­30; classical po­liti­cal economy and, 3–­5; scarcity principle and, 5–­7; infinite accumulation principle and, 7–­11; postwar optimism and, 11–­15; in economic analysis, 15–­16; historical sources and, 19–­20; results of current study in, 20–­22; forces of convergence and divergence and, 22–­27; theoretical and conceptual framework and, 30–­33

  Distribution tables, 267, 269–­270

  Divergence, 22–­27, 424, 571; Eu­rope and North America and, 59–­61; supermanagers and, 333–­335; mechanism of wealth, 350–­353, 431; global, 438–­439, 461–­463; oligarchic, 463–­465, 627n49

  Divisia, François, 591n19

  Django Unchained (film), 163

  Domar, Evsey, 230–­231

  Domestic capital, 49; in Britain and France, 117–­119; in Germany, 141, 143; in the United States, 150–­151, 155; in Canada, 157; slavery and, 158–­163, 593n16

  Domestic output/production, 44–­45, 598n3

  Douglas, Paul, 599n18

  Dowries, 392, 418

  Duflo, Esther, 634n49

  Duncan, G., 632n30

  Dunoyer, Charles, 85

  Dupin, Jean, 591n19

  Durable goods and valuables, 179–­180, 594n13

  Durkheim, Emile, 422, 621n55

  Duval, Guillaume, 592n6

  Earned and unearned income: inheritances and, 377–­379, 390; taxation and, 507–­508

  Eastern bloc countries, privatization in, 186–­187

  ECB (Eu­ro­pe­an Central Bank), 530, 545, 550–­552, 553, 557–­558, 649n26

  “Ecological stimulus,” 568

  Economic determinism, 20

  Economic flows, 381–­383

  Economic growth, 72–­74, 84, 93–­94; stages of, 86–­87; in postwar period, 96; social order and, 96. See also Per capita output growth

  Economics, 3, 10, 32–­33, 573–­577

  Economies of scale, portfolio management and, 431, 440, 450–­451

  Educational system: convergence and, 22, 71; technology and, 304–­307; in­e­qual­ity and, 313, 314–­315, 419–­420, 608–­609n12, 632n36; public spending in, 477, 482, 629n14; social mobility and, 484–­487

  Egypt, 538

  Elasticity of substitution, 216–­224, 600n32

  Emerging economies: in­e­qual­ity of labor income and, 326–­330; inheritances in, 428–­429; social state in, 490–­492, 633n49

  Engels, Friedrich, 9, 579n4

  En­glish Revolution, 30

  Entails, 362–­363, 451

  Entrepreneurial income, 204

  Entrepreneurial labor, 41

  Entrepreneurs in wealth rankings, 439–­443

  Equalization and growth, 83–­85. See also Convergence

  Equations: r > g, 25–­27, 353–­358, 361, 365–­366, 375–­376, 395–­396, 424, 563–­564, 571–­572, 614n26; β = s / g, 33, 50–­55, 166–­170, 187, 228, 230–­232; α = r × β, 33, 52–­55, 168–­169, 199, 213, 216–­217; g = s / β, 230–­231; r − g, 364–­366, 431, 451; by = μ × m × β, 383; r = g, 563; α = s and α > s, 563–­564

  Equilibrium distribution, 361–­366

  Equipartition, 362–­363, 365

  Erreygers, G., 637n29

  Estate devolution, rate of, 389, 617n10

  Estate tax, 337–­339, 355, 497; returns as source of data, 18–­19; accumulation of wealth and, 374–­375; progressive, 502–­505, 507

  Eu­ro­pe­an Aeronautic, Defense, and Space Co. (EADS), 445

  Eu­ro­pe­an Central Bank. See ECB (Eu­ro­pe­an Central Bank)

  Eu­ro­pe­an Commission, 553

  Eu­ro­pe­an Constitutional Treaty, 650n30

  Eu­ro­pe­an Parliament, 559

  Eu­ro­pe­an wealth tax, 527–­530

  Eu­rope/Eu­ro­pe­an ­Union: global production and, 59–­61; as regional bloc, 61–­66, 68–­69, 585n22; demographic growth in, 78–­79, 81–­82; economic growth of, 86–­87, 93–­95, 96–­98, 99, 174, 595n20; inequalities in capital own­ership in, 243–­345; income inequalities in, 247–­250, 255, 321–­323; wealth distribution in, 343–­345, 350, 643nn24,25; inheritances and, 424–­427; net assets of, 463–­464, 627n50; taxes in, 475–­476, 490; social state in, 477–­478, 630n17; social model of, 481; directive on foreign savings of, 522–­524; public debt and, 556–­562; bud­getary parliament for, 559–­560, 650n28; mutualizing public debt in, 650n31. See also Belle Époque

  Eurozone, 108, 544–­545, 554–­562; deficits debate in, 565–­567, 653n47

  Exchange rates, 64–­67, 585–­586n25

  Executives: compensation of, 331–­335, 639n47, 640n49; confiscatory tax on income of, 505–­512. See also Managers

  Fack, Gabrielle, 626n34

  Factorial distribution, 40, 583n3

  Family fortunes: shocks and, 362, 364, 369; taxation and, 374; desire to perpetuate, 391–­392, 400

  Farmland, as capital: in Britain and France, 117, 119, 122–­123, 590n1; in Germany, 141; in America, 150–­152, 155; pure value of, 197

  Favre, P., 633n42

  Federal Reserve, 474, 548–­552, 557

  Fertility. See Birth rates

  Financial assets, 209, 627n43; prices of, 171–­172, 187–­191, 452–­453

  Financial crisis (2008), 296–­298, 472–­474, 549–­550, 558

  Financial globalization, 193–­194, 355, 430

  Finan
cial intermediation, 205, 214, 233, 430–­431, 453, 541

  Financial legal structures, 451–­452

  Financial markets, 49, 58, 476

  Financial professions, 303

  Fiscal flows, 381–­382

  Fiscal pressure, 208

  Fiscal transactions tax, 651n38

  Fisher, Irving, 506

  Fitoussi, Jean-­Paul, 603n25

  Flat tax, 495, 500–­501

  Fleurbaey, Marc, 631n23

  Flows: capital-­labor split and, 203–­204; of annual inheritances, 379–­382

  Fogel, Robert, 159

  Forbes, Steve, 442, 624n19

  Forbes wealth rankings, 432–­434, 439–­443, 458, 518, 625n23

  Foreign Account Tax Compliance Act (FATCA), 522–­524

  Foreign capital/assets, 49–­50; convergence and, 69–­71; in Britain and France, 117–­119, 148, 590n7; rise and fall of, 120–­123, 369–­370; in Germany, 141–­142, 596n25; in the United States, 151, 155–­156; New World and, 155–­157; in Canada, 157–­158; national capital and, 191–­194; convergence and, 587n36

  Foundations, as private wealth/capital, 182–­183, 451–­452, 626nn32,33

  Fourquet, François, 585n19

  France: growth in, 4, 81–­82, 98, 174; estate tax in, 18–­19, 337–­339; data from, 28–­30, 56–­57, 604n8; national income and, 68–­69; purchasing power and, 88–­89; employment by sector in, 91; monetary system of, 104, 589n27, 590n29; per capita income in, 106, 122, 590n31, 590–­591n8,9; inflation in, 107–­108, 133, 149, 545, 546; capital in, 116–­127, 148–­149; foreign capital/assets and, 117–­119, 148, 191–­192, 590n7, 596n29; public debt of, 124–­126, 127, 129, 132–­133, 591nn13,14, 592n8; taxation in, 129, 275, 365, 370, 496, 498–­505, 507, 605n16, 634n5, 635–­636n15, 635n11; capitalism without capitalists in, 135–­139; public assets in, 136–­139, 184; savings in, 177–­178; capital-­labor split in, 201, 204, 205, 206–­208, 216, 225–­227; in­e­qual­ity in, 271–­281, 284–­291; wealth distribution in, 337–­343, 346, 364–­366; inheritances in, 379–­382, 385–­396, 399, 402–­409, 418, 420–­421, 427; mortality rate in, 385–­388, 616n9; voting rights in, 424, 622n58; taxes as share of national income in, 475–­476, 629n6; social state and, 478, 495, 630n16; wealth tax in, 533, 643–­644n26, 645n38

  France Telecom, 139

  French Revolution: data and, 29–­30, 56; inflation and, 104; wealth distribution and, 341–­342, 362–­363; Civil Code and, 364–­366; progressivity and, 532