In his latest book, French economist Thomas Piketty warns that modern-day capitalism leads to unsustainable levels of inequality. While he is often linked to France’s Socialist Party, his writings have made him unusually popular in the US. Thomas Piketty’s “Capital in the Twenty-First Century” has only just been translated into English – several weeks ahead of schedule, due to popular demand – and the New York Times’s star columnist Paul Krugman has already described it as “the most important economics book of the year — and maybe of the decade”. The French economist’s current US book tour is turning into something of a red carpet event. So far this week, he has met the White House’s Council of Economic Advisors as well as Treasury Secretary Jacob Lew. “The Democratic Party, especially the Obama administration, has been in contact with us and using our findings for a long time,” Piketty told AFP in Washington. On Wednesday evening, he was due to give a conference at the City University of New York, along with economics Nobel Prize laureates Joseph Stiglitz and Paul Krugman.
In “Capital in the Twenty-First Century”, Piketty warns that free-market economies will see ever growing concentration of wealth in the hands of those who already hold capital. “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based,” he wrote. The Paris School of Economics scholar argues that in the long run, earnings from possessions such as property and financial assets grow faster than the rest of the economy – especially workers’ wages. This, he warns, leads to deepening inequalities with serious social consequences. The belief among free-market economists that capitalism will regulate itself and lift the general population towards higher incomes is flawed, according to Piketty, because it is based on observations made during the 20th century, a war-ridden age unlike any other. More