Book Talk: Game-changer or Marx revisited? A new tale of capital

Tue May 13, 2014 11:33am EDT
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By Mark John

PARIS (Reuters) - "Capital in the Twenty-First Century" by French economist Thomas Piketty has attracted praise and invective alike on its way to the top of the books best-seller list.

New York Times' columnist Paul Krugman called its findings on wealth dating back to the 18th Century a game-changer that demolishes the myth that "great wealth is earned and deserved".

Time Magazine's latest edition features a picture of "le hot hand author" under the headline "Thomas Piketty: Marx 2.0" - a reference to the co-author of the 1848 Communist Manifesto whose later "Das Kapital" sought to explain how capitalism worked.

The scope of Piketty's 696-page inquiry is vast, taking in the deadly clashes between police and striking miners in South Africa two years ago, the world wars of the last century and even how the fictional heroes of 19th Century novelists Jane Austen and Honore de Balzac amassed and lost their fortunes.

For Piketty, the statement "r > g" - where the rate of return on capital ("r") outpaces economic growth ("g") - is the "fundamental inequality" underpinning much of the work.

In his tiny, book-lined office at the French School for Advanced Studies in the Social Sciences (EHESS), the 43-year-old academic explains why wealth taxes and increased financial transparency could prevent an "endless inegalitarian spiral".

Q: Briefly, why does r tend to be greater than g?   Continued...

Thomas Piketty, French economist behind Socialist party candidate Francois Hollande's plan to tax all income over one million euros ($1.3 million) per year at 75 percent, poses in his office in Paris April 11, 2012.  REUTERS/Charles Platiau