Capital in the Twenty-First Century (123 page)

Industrial Revolution, 3, 10, 59–­61; world growth since, 73–­74, 79, 87–­89

In­e­qual­ity: subjective dimension of, 2; po­liti­cal nature of, 20; natural, 85.
See also
Convergence; Divergence; Global in­e­qual­ity of wealth; Income in­e­qual­ity

In­e­qual­ity, concentration and, 237–­270; work
vs.
inheritance and, 238–­242; labor
vs.
capital, 242–­246, 254, 255–­260; orders of magnitude of, 246–­250; class designations
and, 250–­252; deciles/centiles in mea­sur­ing of, 252–­255; total income and, 254,
263–­265; patrimonial middle class and, 260–­262; justification of, 264; synthetic
indices and, 266–­267; distribution tables and, 267, 269–­270; official publications
and, 267–­269

In­e­qual­ity, evolution of, 271–­303; twentieth century French reduction of, 271–­274;
chaotic po­liti­cal history and, 274–­276; rentiers to managers and, 276–­278; top
decile and, 278–­281; income tax returns and, 281–­284; interwar years and, 284–­286;
clash of temporalities and, 286–­290; increases in post 1980s France of, 290–­291;
in the United States, 291–­303; financial crisis and, 297–­298; supersalaries and,
298–­300; upper centile and, 300–­303

In­e­qual­ity, structures of, 19, 77, 83, 234, 237–­238; patrimonial society and,
260–­262, 264, 346–­347, 373, 411–­414; hypermeritocratic society and, 264–­265; social
tables and, 270; taxation and, 373–­374, 495; change in global, 377–­378; “natural,”
411

In­e­qual­ity of capital own­ership, 238–­244, 254, 300–­303, 336–­376; return of
capital and growth rate and, 264, 353–­361; decline of hyperconcentrated wealth and,
336–­337, 350, 368–­372, 611–­612n3; estate taxes and mea­sure­ment of, 337–­339;
Belle Époque Eu­rope and, 339, 342–­345, 369–­370, 372; wealth distribution and, 339–­343;
patrimonial society and, 346–­347; in the United States, 347–­350; mechanism of wealth
divergence and, 350–­353; time preference and, 358–­361; equilibrium distribution
and, 361–­364; Civil Code and French Revolution and, 362–­366; Pareto law and, 366–­368;
failure to return to past levels of, 368–­375; in the twenty-­first century, 375–­376.
See also
Global in­e­qual­ity of wealth; Inheritance, dynamics of

In­e­qual­ity of labor income, 238–­244, 254, 263, 300, 304–­335; in twenty-­first
century, 277–­278; top decile and, 279–­281, 290–­293, 295–­299; in the United States,
291–­296, 314–­315; supersalaries and, 298–­300; wages and, 304–­307, 310–­313; marginal
productivity and, 304–­308, 311, 314–­315, 330–­333; role of institutions and, 307–­310;
supermanagers and, 315–­321, 333–­335; Eu­rope and, 321–­325, 609n16; emerging economies
and, 326–­330

Infinite accumulation principle, 7–­11, 228

“Infinite horizon” model, 360, 613nn18–­19

Inflation: and growth, 102–­103; French Revolution and, 104; twentieth century, 106–­109,
142, 149; redistribution via, 133–­134; assets and, 210–­212, 599n13; return on capital
and, 452–­455; public debt and, 541, 544–­547, 648nn13,17

Inheritance, dynamics of, 377–­429; flows and, 379–­382; three forces in, 383–­385;
life expectancy and, 385–­390; age-­wealth profile and, 390–­396; impact of war on,
396–­398; in the twenty-­first century, 398–­401, 418–­421, 610nn32,34; stock of inherited
wealth and, 401–­404; Vautrin’s lecture and, 404–­406; Rastignac’s dilemma and, 407–­409;
rentiers and managers and, 410–­411, 418–­424; patrimonial society and, 411–­414,
619nn36–­37; as condition of civilization, 415–­416; meritocratic model and, 416–­420;
global and Eu­ro­pe­an, 424–­429

Inheritance society, 351–­353

Inherited wealth, 18–­19, 26, 29; demographics and, 83–­84; income from, 238–­242,
246; sharp decrease in, 262; renewed importance of, 290; return on capital and, 351–­353;
taxation and, 493, 497, 502–­503, 508, 525–­526, 637–­638n32

Intellectual property, 49

Interdecile ratios, 267–­269, 603nn23,24

Interest, efforts to prohibit, 530–­531

Interest rates, 52–­53, 210, 584n15, 589n10

Intergenerational mobility, 420, 484, 631nn26,27

Intergenerational warfare, 246

International Comparison Program (ICP), 64

International divergence, 463–­465

International Monetary Fund.
See
IMF (International Monetary Fund)

Internet bubble, 172

Investments: in­e­qual­ity of, 430–­432, 452–­455; wealth rankings and, 432–­443;
university endowments and, 447–­452; alternative, 449–­450, 454, 456; petroleum and,
455–­460, 462; sovereign wealth funds and, 455–­460

Iraq, 537–­538

Italy: growth rate of, 174, 445; savings in, 177–­178, 185; public wealth in, 184–­185;
wealth tax in, 528–­529, 533

Ivanishvili, Bidzina, 625n22

James, Henry, fiction of, 152, 414

Jantt, Markus, 631n28

Japan: national income and, 63–­64, 66, 68; growth in, 86, 93, 95, 174–­176, 588n10;
savings in, 177–­178; foreign assets in, 192–­194; capital/income ratio in, 195; in­e­qual­ity
in, 322, 445; taxation and, 490, 498, 637n31

Japa­nese bubble, 172, 597n30

Jeanne, Olivier, 645n41

Jefferson, Thomas, 158, 363

Jobs, Steve, 440–­441

Joint stock companies, 203

Jones, Alice Hanson, 159, 347

Jones, Charles I., 586n35

Judet de la Combe, P., 644n30

Judicial conservatism, 566, 653n49

Justification of in­e­qual­ity, 264

Kaldor, Nicholas, 231, 601n36, 634n1,
638n35

Kaplan, Steven N., 607n41

Katz, Lawrence, 306, 314–­315, 608n12,
640n53

Kennickell, Arthur, 347

Kesztenbaum, Lionel, 612n4

Keynes, John Maynard, 135, 220, 231–­232, 600n22, 652n44

King, Gregory, 56, 180, 590n1, 637n28

King, Willford, 348, 506, 613n13

Knowledge and skill diffusion, 21, 71, 313

Kopczuk, Wojciech, 607n38

Kotlikoff-­Summers thesis, 428, 622n63

Krueger, Alan, 313, 608n10

Krugman, Paul, 294

Kubrick, Stanley, 620n40

Kuczynski, Jürgen, 219–­220, 599n20

Kumhof, Michael, 606n32

Kuwait, 537

Kuznets, Simon, 11–­17, 20, 23, 580nn9,11,14, 581nn15–­16, 582n36, 603n4

Kuznets Curve, 13–­15, 237, 274, 336, 580n14

Labor.
See
Capital-­labor split

Labor, income from, 18, 21, 53.
See also
In­e­qual­ity of labor income

Labrousse, Ernest, 582n34, 600n28

Lagardère, Arnaud, 445

Laissez faire doctrine, 136

Lamont, Michèle, 417–­418, 621n49

Lampman, Robert, 18, 582n27

Land: price of, 5–­6, 151; rate of return on, 53–­54, 613n16; accounting and, 56;
values, capital/income ratio and, 196–­198, 596n33

Land, as capital, 47, 644n31; in Britain and France, 114, 117–­119, 122–­123; in Germany,
141; in America, 150–­151, 155; rural
vs.
urban, 197–­198

Landais, Camille, 605n20, 626n34, 634n4

Landier, Augustin, 639n47

Landowners, Ricardo and, 5–­6

Latin America, 62–­63, 195, 491

Laval, Pierre, 285

Lavoisier, Antoine, 56

Law of cumulative growth, 74–­77

Law of cumulative returns, 75, 77

Laws of capitalism: first fundamental, 52–­55; second fundamental, 55, 166–­170

Lebeaupin, A., 605n20

Le Bras, Hervé, 587n5, 589n20

Lefranc, Arnaud, 631n26

Le mouvement du profit en France au 19e siècle
(Bouvier, Furet, and Gillet), 575, 576, 582n34, 600n27

Leroy-­Beaulieu, Paul, 30, 417, 503–­504, 506, 636nn20,21,22, 637n28

Le Van, L., 591n18

Levasseur, Pierre Emile, 617n10

Liberalization, economic, 98–­99, 138–­139, 492

“Life-­cycle theory of wealth,” 384, 391–­392, 428

Life expectancy, inheritance and, 385–­390, 400

Limited liability corporations, 203

Linder, Peter, 343

Lindert, P., 603n26, 628n3

Liquidity, 472, 548, 551

Lonmin, Inc., 39–­40, 570

L’Oréal, 440, 624n15

Lower class, 250–­251

Low growth.
See
Slow growth

Lyndon, Barry, 620n40

Maastricht Treaty, 556, 565–­566

Maddison, Angus, 28, 59, 66, 74, 585nn20–­21, 586n30, 588n10

Mad Men
(TV series), 156

Mahfouz, Naguib, 109

Malinvaud, Edmond, 651n40

Mallet, B., 612n7

Malthus, Thomas, 4–­5, 579n1, 580n8

Managers: super, 265, 291, 302–­303, 315–­321, 333–­335; society of, 276–­279, 373;
Great Depression and, 285; compensation of, 331–­335, 505–­512, 639n47; basic arithmetic
of, 410–­411

Mansfield Park
(Austen), 115, 120–­121, 207

Marginal productivity: of capital, 69; theory of, 304–­308, 311, 314–­315, 330–­335;
top marginal tax rates and, 509–­512

Margo, R., 606n36

Marikana tragedy, 39–­40, 68, 583n2

Market(s): imperfections of, 27m 312, 423–­424; financial, 49, 58, 476; perfect capital,
214; collective decisions and, 569, 654n56

Market
vs.
book value, 189–­191

Marx, Karl, 5, 7–­11, 27, 531, 565, 579n4, 580nn6,78; falling rate of profit and,
52, 227–­230, 600n33; public debt and, 131–­132

Marxists, 52, 219, 576, 655n2

Masson, André, 633n43

McGovern, George, 638n33

Meade, James, 582n36, 638n35

Meer, Jonathan, 632n31

Meritocratic model: challenge to, 21, 26–­27; extremism and, 334, 416–­418, 620n46;
belief and hope in, 419–­422; education and, 485–­487

Middle class, 250–­251; patrimonial, 260–­262, 346–­347, 350

Middle East, 537–­538

Milanovic, Branko, 585n20, 603n26

Military expenditures, 628n2

Mill, John Stuart, 638n35

Minimum wage, 308–­313, 608n5, 608nn5,6,7,8,9,10

Mittal, Lakshmi, 445, 625n21

Mixed economies, 136–­137, 140, 483

Mixed incomes, 204

Mobility: social, 84–­85, 484–­487; wage, 299–­300

Modigliani, Franco, 232, 245, 384, 391, 396, 400, 428, 601n36, 621n55, 622n63

Monetary History of the
:
United States
(Friedman and Schwartz), 548–­549

Monetary policy, 548–­553

Monetary systems: stability of, 103–­105; growth and, 103–­109; in France, 104, 589n27,
590n29; in Britain, 105, 589–­590nn28,29; in Eurozone, 108; confidence in US dollar
and, 156; in Eurozone, 544–­545, 554–­562, 565–­567, 653n47

Money: meaning of, in literature, 105–­106, 109; twentieth century inflation and,
106–­109; gold standard and, 107, 547–­548, 589n28

Monopoly, 214, 444

Monopsony, 214, 312, 608n10

Moral hierarchy of wealth, 443–­447

Mortality, differential, 617n15

Mortality multiplier, 612n7

Mortality rate, 383–­388

Mullainathan, Sendhil, 611n35

Multinational corporations, 156

Murnane, R., 632n30

Murphy, Richard, 628n56

Mutualization of Eu­ro­pe­an debt, 650n31

Napoleon I, 162, 417, 620n46; Civil Code of, 362–­366, 613n21, 614n23

National accounting, 55–­59, 92, 230, 269

“National Bloc” majority, 499–­500

National Health Ser­vice (Britain), 629n12

National income: concept of, 43–­45, 583n7; growth of, 50–­51, 173–­183, 595n20; per
capita, 53, 584n13; domestic product and, 68; over the long term, 164; top decile
and, 322–­323

Nationalization, 138–­139, 370

National savings, 149–­150, 153; accumulation of wealth and, 166–­170, 173; negative,
185–­186, 595n18; China and, 462.
See also
Savings, private

National solidarity tax, 370, 615n35

National War Labor Board, 298, 308

National wealth/capital, 19, 48–­49, 118–­119, 123, 197, 583n8; slavery and, 162–­163;
in Eu­rope
vs.
United States, 164–­166; net foreign assets and, 191–­194; desirable level of, 562–­565

Natural inequalities, 85

Natural resources: as capital, 47; private appropriation of, 446; rent on, 459, 537–­539,
627n44; climate change and, 567–­569

Naudet, J., 621n49

Net asset positions, 49–­50, 191, 194; of rich countries, 465–­467, 541

Net domestic product, 43

Net foreign capital/assets, 49–­50; in America, 155–­156; rich countries and, 191–­194,
466

Netherlands, 642n15

New Deal, views of, 549

New World.
See
America

Nixon, Richard, 638n33

Noah, Timothy, 640n52

Nonwage workers, 203–­204

Nordhaus, William, 568, 654n52

North Africa, 62–­63, 491

North America, 59–­61, 64; growth in, 81, 86, 93, 95, 97, 588n10; capital in, 140.
See also
Canada; United States

North Iowa Community College, 447

Norwegian sovereign wealth fund, 455, 626–­627n39

Obama, Barack, 310, 313, 473

Obiang, Teodorin, 446

Occupy Wall Street movement, 254

OECD (Or­ga­ni­za­tion for Economic Cooperation and Development) reports and statistics,
220, 267–­268

Ohlsson, Henry, 614n27, 645n37

Oil prices, 6–­7, 459.
See also
Petroleum

Oligarchic divergence, 463–­465, 514, 627n49

Output.
See
Income and output; Per capita output growth

Paine, Thomas, 197, 644n34

Palan, Ronen, 628n56

Pamuk, Orhan, 109

Pareto, Vilfredo, theory of, 364–­368, 610n19, 614nn25,30,32

Parsons, Talcott, 384, 621n55

Partnerships, 203

Pasinetti, Luigi, 231

Passeron, Jean-­Claude, 486

Patrimonial capitalism, 173, 237, 473

Patrimonial society: middle class and, 260–­262, 346–­347, 373; metamorphoses of,
339–­343; classic, 411–­414

“Pay for luck,” 335

PAYGO systems, 487–­490, 633n45, 648n13, 652n42, 653n50

Pension funds, 391–­392, 478, 487–­490, 627n47, 630n15

Per capita income, 106, 122, 590n31, 590–­591n8,9

Per capita output growth, 72–­74, 97, 510; stages of, 86–­87; purchasing power and,
87–­90; diversification of lifestyles and, 90–­93; end of, 93–­95; social change implications
of 1 percent, 95–­96; in postwar period, 96–­99; bell curve of global, 99–­102; inflation
and, 102–­103; monetary systems and, 103–­109