The Return of “Patrimonial Capitalism”: A Review of Thomas Piketty's Capital in the Twenty-First Century

Branko Milanovic

doi:10.1257/jel.52.2.519

Abstract

Capital in the Twenty-First Century by Thomas Piketty provides a unified theory of the functioning of the capitalist economy by linking theories of economic growth and functional and personal income distributions. It argues, based on the long-run historical data series, that the forces of economic divergence (including rising income inequality) tend to dominate in capitalism. It regards the twentieth century as an exception to this rule and proposes policies that would make capitalism sustainable in the twenty-first century. (JEL D31, D33, E25, N10, N30, P16)

Highlights

I am hesitant to call Thomas Piketty’s new book Capital in the 21st century (Le capital au XXIe siècle in the French original) one of the best books in economics written in the past several decades
His book Les hauts revenus en France au XXe siècle: Inegalités et redistribution published in 2001 was the basis for several influential papers published in the leading American economic journals
The rise in the political importance of inequality, exemplified in the US by political activism associated with the Occupy movement, 99% vs. 1% slogan, and John Edwards’ political rhetoric of “two Americas”, had its empirical basis in the work done by Thomas Piketty and Emmanuel Saez (2003)

Summary

Introduction

I am hesitant to call Thomas Piketty’s new book Capital in the 21st century (Le capital au XXIe siècle in the French original) one of the best books in economics written in the past several decades. A reader who knows Thomas Piketty from this previous work would naturally expect Capital in the 21st century to focus on income concentration.

Results

Conclusion