Study Notes

What are some of the key ideas of economist Thomas Piketty?

A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 16 Jul 2023

Piketty is a leading figure in the field of inequality economics. His work has helped to shape the way that economists think about inequality, and he has provided a framework for thinking about how to reduce inequality. His work has also been influential in the field of public policy, and it has been used to justify government intervention in the economy, such as wealth taxes and increased taxes on the wealthy.

Here are some of his key ideas:

  1. Capital in the Twenty-First Century: Piketty's most influential work is his book "Capital in the Twenty-First Century" (2013). The book provides a comprehensive analysis of historical trends in income and wealth inequality. Piketty argues that, without intervention, wealth inequality tends to increase over time due to the higher rate of return on capital compared to economic growth. He suggests that this trend poses significant social and economic challenges.
  2. R > G: Piketty's famous formula "r > g" encapsulates his analysis of the dynamics of wealth accumulation and economic growth. The "r" represents the rate of return on capital, while "g" represents the rate of economic growth. According to Piketty, when the rate of return on capital exceeds the rate of economic growth, wealth inequality tends to increase as the rich accumulate wealth faster than the overall economy expands.
  3. Progressive Wealth Tax: Piketty advocates for the implementation of progressive wealth taxes as a policy tool to address rising inequality. He argues that such taxes can help reduce wealth concentration and promote a more equitable distribution of resources. Piketty's proposal includes a global wealth tax to address the potential for tax evasion and capital flight.
  4. Measurement of Wealth and Income Inequality: Piketty has contributed to the development of methods for measuring wealth and income inequality, including the use of tax data and other sources. His research aims to provide accurate and comprehensive measures of inequality, including the concentration of wealth at the top of the distribution.
  5. Political Economy of Inequality: Piketty's work also explores the political and institutional factors that contribute to inequality. He highlights the role of political power and policy choices in shaping income and wealth distribution. Piketty argues that policy interventions and changes in social norms are necessary to counteract rising inequality.

Piketty's ideas have sparked extensive debates and discussions on income and wealth inequality globally. His research has influenced policymakers, economists, and the public discourse on inequality, calling for greater attention to the distributional consequences of economic growth and the need for policy measures to address inequality.

Here are some of his notable works:

  • Capital in the Twenty-First Century (2013): This book is a classic work on inequality that introduces the concepts of the rate of return on capital, inherited wealth, and the role of the state in reducing inequality.
  • Capital and Ideology (2020): This book is a sequel to Capital in the Twenty-First Century that discusses the history of inequality and the different ways that inequality has been justified throughout history.
  • A Brief History of Equality (2021): This book is a short book that discusses the history of equality and the different ways that equality has been achieved throughout history.

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