Inequality now.

• Author: Rothschild, Matthew
• Position: Capital in the Twenty-First Century - Book review

Capital in the Twenty-First Century

By Thomas Piketty

Harvard University Press. 685 pages. $39.95.

I admit it: I came to the Thomas Piketty book with some skepticism. I've read a lot of books and magazine articles over the last couple of decades about increasing inequality and about the stagnation of our current stage of capitalism. Hell, Monthly Review has been dedicated to this subject for the past forty years. Plus, I'm always a little suspicious of a book that has gotten so much publicity so fast. I don't like fads. And when I hoisted this tome, weighing in at a chunky 576 pages, not counting the 109 pages of notes and index, it wasn't exactly inviting.

But Page 1 offered instant relief. "Capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based," the French economist writes.

I won't bore you with the data or the charts or the equations that he produces to substantiate this claim, but he's got three centuries' worth here from more than twenty countries. His conclusion is grim, but hardly a surprise to those of us on the left--or anyone who has fallen out of the middle class: "There is no natural, spontaneous process to prevent destabilizing, inegalitarian forces from prevailing permanently."

Periods where income inequality went down, he claims, are historical flukes, brought on by world wars and their consequences. Overall, the pattern of inequality is inescapable, he says, and is likely to return us to an aristocracy.

"Inherited wealth comes close to being as decisive at the beginning of the twenty-first century as it was in the age of Balzac's Pere Goriot," he writes. Worse still, he warns, we may be headed toward "levels of inequality never before seen, as well as to a radically new structure of inequality."

That's cheery!

Two forces are driving inequality today, he says.

The first is that "top earners can quickly separate themselves from the rest by a wide margin," as we've seen in the United States lately, with the top 1 percent and, even more so the top 0.1 percent, galloping ahead. This is due, he says, to top managers having "the power to set their remuneration, in some cases without limit and in many cases without any clear relation to their individual productivity." That's not a particularly new observation.

The second is his theory that the concentration of wealth accelerates whenever the return on capital exceeds the...