Intensifying Accumulation of Wealth and a Deepening Gap, or the “Teething troubles” of Capitalism
Assistant Auditor, State Audit Office of Hungary
Published in: Public Finance Quarterly 2015/3 (p. 396-405.)
SUMMARY: Capital in the Twenty-First Century is an analysis that draws on the synergies arising from the integration of the collected historical data series and the applied economics methods and attempts to best understand the correlations among capital accumulation, economic growth, and increasing income and wealth inequalities, and the underlying drivers determining these. After a review and analysis of the relevant historical data series, Thomas Piketty concludes that what ultimately plays a key role in the growth of wealth inequalities is that in the long run the rate of return on capital is higher than economic growth, hence wealth accumulated in the past grows at a higher pace than the growth of the economy (or the proportional growth of labour incomes). The author suggests the possibility of progressive wealth taxes to be implemented at global level in order to resolve the problems described in the book. Piketty, however, admits that for the time being this is no more than a utopian idea which has little to do with reality. This article sets out to provide a critical overview of Thomas Piketty’s book, as well as some articles and analyses of interest that have been published in this respect, focusing on the study of the problematics of rising wealth inequalities.
KEYWORDS: income inequalities, wealth inequalities, capital/income ratio, capital accumulation, global progressive property tax
JOURNAL OF ECONOMIC LITERATURE (JEL) KÓD: D31, D33, E25, N30, P16