Capital in the Twenty-First Century, by Thomas Piketty, translated by Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014), 696 pp. $39.95 (hardcover).

Thomas Piketty’s Capital in the Twenty-First Century makes an important contribution to the economic history of industrialization since the early 18th century. His collection of data on the distribution of income and wealth around the globe, drawn mainly from tax records, surveys, and national reports, is rigorous and comprehensive; no one before has collected such credible material in this important sub-field of economics. Piketty is also to be credited for presenting the data in scores of easy-to-interpret graphs and for making it available online for those wishing to verify the presentation and/or investigate alternative empirical patterns.

Capital has five main parts: empirical history, financial-economic relationships in algebraic form, predictions for the century ahead, a defense of political economy, and policy advice. The book title is misleading, for Piketty doesn’t truly examine “capital in the twenty-first century” (other than predicting that “potentially” capital will “over-accumulate” if “under-taxed”). Rather, he examines shifts in inequalities of income and wealth during the 19th and 20th centuries, selecting five nations rich enough to warrant study (and where reliable data exist): Britain, France, Germany, the United States, and Japan.

Capital purports to show that unrestrained capitalism leads to ever-increasing income inequality and to the destruction of the liberal political order, and that the only solution is for government to engage in far more intensive efforts to forcibly seize the wealth of people who have “too much.” Piketty tries to provide an empirical-scientific justification for the egalitarian, welfare-statist aims that have been pushed with increasing intensity in recent decades (in reaction to the Reagan-Thatcher policies of the 1980s and 1990s). Piketty’s assertions echo the sympathies long felt by left-wing academics, reflect the Pope’s claim that economic inequality is “the root of social evil,”1 and dovetail with Barack Obama’s insistence that economic inequality constitutes “the defining challenge of our time.”2

The vast compilation of historical data in Capital does not explain why it sold eighty thousand copies in its first two months;3 nor why, in the words of the Economist, it is “the economics book taking the world by storm”;4 nor why scores of publications have released reviews by so many writers who haven’t read the book.5 Capital was an instant best seller and is being widely touted because it affirms prevailing biases against unequal wealth in particular and capitalism generally, especially among leftist intellectuals (and even a few conservatives), many of whom praise the book glowingly while interpreting it superficially.

Piketty makes it easy for cursory reviewers to comment quickly and superficially on his long, quantitatively dense book, by summarizing its assertions in an introduction loaded with sweeping, easily digestible verbiage. Many reviewers can be found importing these summations, almost verbatim, into their text. Surely, a book of such influence deserves, instead, a thorough, objective analysis.

Although many people from various political perspectives have reviewed the book, few have questioned Piketty’s assertion that economic inequality is unjust. Marxist David Harvey complains that Capital doesn’t adhere closely enough to Marxian doctrines, but he is pleased that Piketty “demolishes the widely-held view that free market capitalism spreads the wealth around.”6 Keynesian Nobel Laureate and New York Times essayist Paul Krugman calls it “a magnificent, sweeping meditation on inequality,” “truly superb,” and “awesome.”7 Academia’s top newspaper had Capital reviewed by an English professor (an unlikely expert in economics) who eagerly declared that Piketty’s data set “allows him to deliver a devastating blow to the confidence of many economists that capitalism is a tide that gradually lifts all boats.”8 Professor Tyler Cowen of the market-friendly George Mason University sympathizes with the book’s anticapitalist tilt, admires how it “attempts something grander than a mere diagnosis of capitalism’s ill effects,” yet wishes Piketty had offered “a more sensible and practicable policy agenda for reducing inequality.”9 Many of today’s “bleeding heart” conservatives and libertarians, who suspect that inequality of income and wealth is somehow unjust, merely quibble about Piketty’s sources, definitions, math, and tangential literary references,10 and debate whether his call for massive new tax hikes on those with large incomes or net worth would actually help society’s “least advantaged.”

The nearly critique-free reception for Capital resembles that of an earlier, highly praised tome by the late John Rawls of Harvard (A Theory of Justice, 1971), which asserts that inequality of wealth and opportunity is never morally justifiable unless it benefits society’s poor or “least advantaged.” Not coincidentally, Piketty relies explicitly on Rawls’s illiberal, egalitarian premises (pp. 480, 575), and seeks to do in economics what Rawls sought to do in politics: to put forth an argument that refutes capitalism on principle. Piketty knows that Rawls’s egalitarian standard (the “difference principle”) must permit some economic inequality, in part because one can always class groups as “poor” and “least advantaged” in relative terms even if all people generally grow richer. And, like Rawls, Piketty embraces a political ideal necessitating a coercive redistribution of wealth.

Addressing Distribution while Ignoring Production

Despite its better elements, Piketty’s work is profoundly flawed, in that neither his data nor his logic supports his economic, political, or ethical claims. . . .


1. Emma Green, “The Pope Tweeted That ‘Inequality Is the Root of Social Evil’: Big Deal?,” Atlantic, April 29, 2011,

2. “Remarks by the President on Economic Mobility,” White House, December 4, 2013,

3. Marc Tracy, “Piketty’s ‘Capital’: A Hit That Was, Wasn’t, Then Was Again,” New Republic, April 24, 2014,

4. “Thomas Piketty’s ‘Capital’ Summarized in Four Paragraphs,” Economist, May 4, 2014,

5. Jordan Ellenberg, “The Summer’s Most Unread Book Is . . . ,” Wall Street Journal, July 3, 2014,

6. David Harvey, “Afterthoughts on Piketty’s Capital,” Socialist Worker, May 18, 2014, available at

7. Paul Krugman, “Why We’re in a New Gilded Age,” New York Review of Books, May 6, 2014, See also Branko Milanovic, “The Return of ‘Patrimonial Capitalism’: A Review of Thomas Piketty’s Capital in the Twenty First Century,” Journal of Economic Literature, June 2014, vol. 52, no. 2,

8. Michael W. Clune, “Piketty Envy,” Chronicle of Higher Education, August 18, 2014,

9. Tyler Cowen, “Capital Punishment: Why a Global Tax on Wealth Won’t End Inequality,” Foreign Affairs, May/June 2014,

10. See Alan Reynolds, “Why Piketty’s Wealth Data are Worthless,” Wall Street Journal, July 9, 2014,; Martin Feldstein, “Piketty’s Numbers Don’t Add Up,” Wall Street Journal, May 15, 2014,; and Sarah Skwire, “Thomas Piketty’s Literary Offenses,” Bleeding Heart, September 11, 2014,

11. For an accurate account of the relationships between production, distribution, and consumption of wealth, see Jean-Baptiste Say, A Treatise on Political Economy [6th ed., 1821), available at

12. Maxim Pinkovskiy and Xavier Sala-i-Martin, “Parametric Estimations of the World Distribution of Income,” National Bureau of Economic Research, October 2009, p. 65,

13. “Fiscal Policy and Income Inequality,” International Monetary Fund, January 23, 2014, p. 4,

14. “Fiscal Policy and Income Inequality,” p. 4.

15. The most common measure of inequality of income or wealth used by economists is the Gini coefficient, which can be between zero (perfect equality) and one (maximal inequality). Gini numbers are generally much larger for poor nations and poor eras. See “World Development Indicators: Distribution of Income or Consumption (2014),” See also Alberto Chilosi, “Poverty, Population, Inequality, and Development: The Historical Perspective,” The European Journal of Comparative Economics, vol. 7, no. 2, pp. 469–501. Piketty’s book omits GINI data, perhaps because they don’t support his thesis.

16. As noted above, poorer nations have greater inequality, which is associated with lesser mobility. See Dan Andrews and Andrew Leigh, “More Inequality, Less Social Mobility,” Applied Economics Letters, vol. 16 (2009), pp. 1489–92. Also, according to Lawrence Summers, ex-secretary of the U.S. Treasury, “When Forbes compared its list of the wealthiest Americans in 1982 and 2012, it found that less than one tenth of the 1982 list was still on the list in 2012, despite the fact that a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. They did not, given pressures to spend, donate, or mis-invest their wealth. In a similar vein, the data also indicate (contra Piketty) that the share of the Forbes 400 who inherited their wealth is in sharp decline.” (“The Piketty Puzzle,” Democracy, Spring 2014).

17. Richard M. Salsman, “The Inequality Debate: Senseless Without Consideration of What is Earned,”, February 1, 2012,

18. For details and elaboration, see Torgeir Høien, “Piketty’s Laws and Logic,” Working Paper 7/14, Centre for Monetary Economics, BI Norwegian Business School, August 2014,; and Debraj Ray, “Nit-Piketty: A Comment on Thomas Piketty’s Capital in the Twenty First Century,” May 23, 2014,

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