Capital in the Twenty-First Century (124 page)

Père Goriot
(Balzac), 104, 106, 113–­115, 238–­240, 343, 412, 440

Perfect capital market, 214

Persuasion
(Austen), 362

Petroleum: investments and, 455–­460, 462, 627n49; rents, redistribution of, 537–­538

Petty, William, 56, 590n1

Phelps, Edmund, 651n40

Philip, André, 615n35

Pierson, Paul, 640n52

P90/P10 ratio, 267–­269

Po­liti­cal economy, 3–­5, 574

Poll tax, 495, 634n3

Pop­u­lar Front, 286, 649n25

Population.
See
Demographic growth; Demographic transition

Postel-­Vinay, Gilles, 18, 582n28, 599n14, 612nn4,5,9

Power laws, 367–­368

Prices: inflation and, 102–­103; monetary stability and, 103–­104; effects of
vs.
volume effects, 176–­177

Price system, 5–­7

Primogeniture, 362–­363, 365

Prince­ton University, 447–­449

Private wealth/capital, 50–­51, 57, 170–­183, 541; abolition of, 10; slavery and,
46, 158–­163, 593n16; defined, 46–­49, 123; and public wealth/capital, 123–­131, 142–­145,
153–­154, 183–­187, 569; in Eu­rope
vs.
United States, 164–­166; as disposable income, 180–­182; foundations and, 182–­183,
451–­452; world distribution of, 461–­462; public debt and, 541–­542, 567, 646–­647n2.
See also
Capital, metamorphoses of; In­e­qual­ity of capital own­ership; Inheritance, dynamics
of

Privatization, 136, 138–­139, 476; capital/income ratio and, 173, 183–­187

Production: wages and profits and, 39; global distribution of, 59–­61; regional blocs
and, 61–­64; global per capita output of, 62

Production function, 216–­220

Productive capital, 51–­52

Productivity: knowledge and skill diffusion in, 21; slavery and, 163.
See also
Marginal productivity

Productivity growth: purchasing power and, 86, 88, 90; structural growth and, 228;
in twenty-­first century, 375; in the United States, 511

Profits: nineteenth century, 8;
vs.
wages, 39–­40; rate of, 52, 227–­230, 584n15

Progressive taxation: on capital, 1, 355, 370, 471, 473, 532, 615n35; on income, 12,
493; rise of, 153, 374, 498, 532–­533;
vs.
regressive taxation, 255, 355, 374, 395–­397; confiscatory tax rates and, 273, 505–­508,
512; justification for, 444, 497, 505, 524–­527, 640n51; on inheritance, 493, 497,
502–­503, 505, 508, 527, 637–­638n32;
vs.
proportional (“flat tax”), 495, 500–­501; structure of in­e­qual­ity and, 495–­496;
on estates, 502–­505, 507; public debt and, 543–­544; Cyprus crisis and, 555–­556.
See also
Global tax on capital

Progressive taxation, rethinking, 493–­514; question of, 493–­497; twentieth century
evolution of, 498–­502; in the Third Republic, 502–­505; confiscatory tax rates and,
505–­508, 512; executive salary explosion and, 508–­512; top marginal rates and, 508–­514,
635n14.
See also
Global tax on capital

Proletariat, misery of, 7–­8

Property, 47, 49, 70, 569

Property rights: varying views of, 70, 483, 535–­536; division of, 123; French estate
tax and, 338, 374; revolutions and, 481

Property taxes, 501, 517, 520, 529, 532–­533.
See also
Estate tax

Prost, Antoine, 591n18

Protectionism, 515–­516, 523, 534

Proudhon, Pierre-­Joseph, 580n7

Public debt, 114, 118, 540–­570; World War I and, 106–­107; public wealth and, 123–­127,
127–­129, 142, 153; reinforcement of private capital and, 129–­131; profit from, 131–­134;
nineteenth
vs.
twentieth century, 132–­133; Ricardian equivalence and, 134–­135; reducing, 541–­544;
default on, 542–­543; inflation and, 544–­547; central banks and, 547–­553; Cyprus
crisis and, 553–­556; euro and Eurozone and, 556–­562, 650n32; government and capital
accumulation and, 562–­565; deficits debate and, 565–­567, 653n47; climate change
and, 567–­569; transparency and, 569–­570; interest rate on, 597–­598n1, 598n7; mutualizing
Eu­ro­pe­an, 650n31; slow growth and, 653n50

Public sector, or­ga­ni­za­tion of, 482–­483

Public wealth/capital: defined, 46–­49, 123; privatization and, 46–­49, 123, 183–­187;
public debt and, 123–­135, 142, 153, 541–­544; financial and nonfinancial, 124; historical
perspective on, 126–­129; assets and, 135–­139, 143, 541–­542; desirable level of,
562–­565

Purchasing power: parity in, 64–­67, 586nn26,27,28; increase in, 86–­90; inheritance
and, 415–­416

Qatar, 537

Qian, Nancy, 17, 634n50, 646n43

Quesnay, François, 603n26

Rajan, Raghuram G., 606n32, 608n12, 639n48, 640n53

Rancière, Jacques, 655n59

Rancière, Romain, 606n32

Rastignac’s dilemma, 238–­242, 379, 407–­409, 412, 497

Rate of interest, 52–­53, 210, 584n15, 598n10

Rate of profit, 52, 227–­230, 584n14

Rate of return on capital: in­e­qual­ity and, 1, 23, 25–­27, 84; first fundamental
law of capitalism and, 52–­55; average long-­run, 53; determination of, 199–­212;
pure, 201, 205–­206, 208–­209, 353–­355; historical perspective on, 206–­208; in twenty-­first
century, 208–­209, 375; uses of capital and, 212–­213; marginal productivity of capital
and, 213–­215; too much capital and, 215–­217, 223, 227–­230; capital’s comeback and,
232–­233; growth rate and, 232–­233, 351, 353–­361, 364–­366, 431, 571–­572; time
preference and stability of, 258–­361; inheritance and, 377–­378; inflation and, 452–­455;
pensions and, 488–­489

Rate of return on land, 53–­54

Rauh, Joshua, 607n41

Rawls, John, 480, 630n21, 631n22, 652n45

Reagan, Ronald, 42, 98, 309

Real estate: urban, 6, 197–­198; as capital/assets, 48, 55, 122, 164, 179, 210, 598n11;
return on, 53–­54, 626n28; pricing of, 57–­58, 144–­145, 149–­150, 171–­173, 176,
187–­188, 191; rental value of, 209; own­ership of by centile, 260; size effects and,
454; taxes, 501, 517

Recession (2008–­2009), 472–­474, 553–­554

“Reconstruction capitalism,” 397

Redemption fund proposal, 544, 559, 647n9, 649n27

Redistribution: inflation and, 133–­134, 544–­547; social state and, 479–­481; of
petroleum rents, 537–­538; through immigration, 538–­539; central banks and, 547–­553;
United States and, 638n33

Regional blocs, 61–­64

Regressive taxation, 255, 355, 374, 495–­497

Regulation: transparency and, 519; global tax on capital and, 534–­536; of central
banks, 548, 552–­553, 557–­558

Renault, Louis, 137

Renault Company, 137, 139

Rent control, 149, 153

Rentiers: society of, 264, 276–­278, 293, 370, 372–­373; fall of, 274, 369; basic
arithmetic of, 410–­411; petits, 418–­421; as enemy of democracy, 422–­424

Rent(s): land, 5–­6, 39, 53–­54, 56; capital and, 113, 115–­116; meaning of, 422–­424;
on natural resources, 459, 537–­539, 627n44

Rent-­seeking, 115–­116

Replacement incomes, 477–­479, 602n9

Residence and taxation, 562

Residential capital, 48, 51–­52

Retail ser­vice sector, 91

Retained earnings, 176–­178

Retirement: pension funds and, 391–­392, 478, 627n47; future of, 487–­490, 633n47

Retirement, life-­cycle theory and, 384, 391–­392

Return on capital.
See
Rate of return on capital; Rate of return on land

Revell, J., 591n19

Rey, Hélène, 597n31

“Rhenish capitalism,” 140–­146

Ricardo, David, 5–­6, 9, 579n1, 580n8, 591n15; Ricardian equivalence and, 134–­135

Rights-­based approach, 479–­481

Rignano, Eugenio, 637n29

“Rising human capital hypothesis,” 21–­22

Risk, 115–­116, 431

Ritschl, Albrecht, 647n10

Robinson, James A., 624n20, 639nn45,48

Robinson, Joan, 231

Rodrik, Dani, 651n35

Roemer, John, 631n23

Roine, Jesper, 18, 344, 614n27, 628n58

Romer, Paul M., 586n35

Roo­se­velt, Franklin D., 153, 286, 472–­473, 506–­507

Rosanvallon, Pierre, 588n8, 614n24, 635n13

Rosen, Harvey S., 632n31

Rosenthal, Jean-­Laurent, 18, 599n14, 612nn4,5, 646n44

Roy, René, 591n19

Rus­sia, 186–­187, 554

Rus­sia-­Ukraine bloc, 62–­63, 585n22

Saez, Emmanuel, 17, 511, 581nn22,23, 606nn33,36, 607nn38,39, 613n32, 634n4, 638n38,
642n19, 643n21

Samuelson, Paul, 137, 218, 231–­232

Sandström, Susanna, 623n8

Sartre, Jean-­Paul, 655n2

Saudi Arabia, 538

Saudi Arabia sovereign wealth fund, 457–­458

Savings, private: rate of, 26, 174–­175, 177, 186; components of, 176–­178; durable
goods and, 179–­180; middle class and, 260; concentration of wealth and, 351–­353,
377–­378, 617n18; retirement and, 384, 391–­392; in twenty-­first century, 400–­401.
See also
National savings

Say, Jean-­Baptiste, 9, 579n2

Scandinavian countries: income in­e­qual­ity in, 246–­250, 253, 255–­256; Gini coefficient
and, 266

Scarcity principle, 5–­7, 9, 27

Scheve, Kenneth, 637n26

Schinke, Christoph, 622n59

Schlozman, K., 640n52

Schmidt, Helmut, 652n43

Schueller, Eugène, 440

Schumpeter, Joseph, 137

Schwartz, Anna, 548–­549

Sciences Po, 486–­487, 632n37, 633n40

Séaillès, M. J., 612n7

Seligman, Edwin, 635n13

Sen, Amartya, 480, 603n25

Sense and Sensibility
(Austen), 113, 362, 413–­414

Ser­vice sector, 88, 90–­93

Shareholder model, 145–­146

Shares of Upper Income Groups in Income and Saving
(Kuznets), 11–­13

Shocks: in­e­qual­ity and, 8, 13–­15, 25, 271–­276, 293–­294, 323; growth and, 107,
109; capital and, 117, 121, 139, 141, 146–­150, 152–­153, 284; capital/income ratio
and, 164, 167, 168, 170, 191, 206, 368–­369; short-­term, 244–­245, 311; concentration
of wealth and, 346, 349, 350, 356; family fortunes and, 362, 364, 369; inheritance
flows and, 380–­381, 396–­398

Shorrocks, Anthony, 623n8

Short-­termism, 214

Siegfried, André, 615n35

Simiand, François, 582n34, 600n28

Size effects of assets, 453–­454

Skills: and knowledge diffusion, 21, 71, 313; supply and demand of, 305–­308; in­e­qual­ity
and, 419–­420

Slavery, capital and, 46, 158–­163, 593n16

Slim, Carlos, 444–­445, 624nn14,20

Slow growth: in­e­qual­ity and, 25–­27, 42, 84, 166, 351–­358; return to, 72–­74,
84, 93–­95, 232–­233; beyond bubbles, 173–­183; inheritance and, 378, 400, 411; public
debt and, 653n50

Smith, Adam, 9, 579nn1,2, 654n56

Social insurance contributions, 494–­495, 496, 641n10

Socialism, capital and, 531

Socialist movements, 8

Social justice: democracy and, 26, 424, 571; meaning of, 31, 480; in­e­qual­ity and,
241, 287, 310, 350, 417, 537

Social mobility: growth and, 84–­85; education and, 484–­487

Social norms, executive compensation and, 332–­335

Social own­ership, 145–­146

Social scientists, 574–­575

Social spending, 477–­479, 481–­483, 629n14; education and, 484–­487; retirement and,
487–­490

Social state, 471–­492, 629n9; crisis of 2008 and, 472–­474; growth of, 474–­479;
modern redistribution and, 479–­481; modernizing of, 481–­483; education and, 484–­487;
retirement and, 487–­490; in poor and emerging countries, 490–­492; US view of, 549

Social tables, 269–­270, 603n26

Sole proprietorships, 203

Solidarity tax on wealth.
See
France, wealth tax in

Solow, Robert, 11, 15, 231–­232, 580n10, 586n35

Soltow, Lee, 347

Song, Jae, 607n38

Sotura, Aurélie, 628n51

South Africa, 161, 326–­328, 330; Marikana tragedy in, 39–­40, 68, 583n2

South America.
See
Latin America

South Asia, 491

Sovereign wealth funds, 455–­460

Soviet ­Union, 531–­532, 565, 637n27, 652n44

Spain, wealth tax in, 533, 645n39

Spanish bubble, 193, 596n27, 597n30

“Specific investments” argument, 312

Stagflation, 134, 138, 557

Stakeholder model, 145–­146, 312

Stamp, J. C., 612n7

Stantcheva, Stefanie, 511

Stasavage, David, 637n26

State, economic role of, 136, 180–­181, 474, 476

State, social.
See
Social state

State interventionism, 98–­99, 136–­137, 473–­474

Stern, Nicholas, 567–­569, 654n52

Sterner, Thomas, 654n52

Stiglitz, Joseph E., 603n25, 605n25

Stock: capital as, 50; in postwar period, 149–­150, 153

Stock market: capitalization of corporations and, 49, 54; Great Depression and, 150;
prices, 171–­173, 187–­191

Stone, Richard, 585n19

Structural growth, 228

Structures of in­e­qual­ity.
See
In­e­qual­ity, structures of

Strutt, H. C., 612n7

Sub-­Saharan Africa, 62–­64, 86, 491, 588n9

Substitution, elasticity of, 216–­224, 600n32

Superentrepreneurs, 607n43

Supermanagers, 265, 291, 302–­303; in­e­qual­ity of labor income and, 315–­321, 333–­335;
meritocratic beliefs and, 417

Supersalaries, rise of, 298–­300

Supply and demand: extreme changes in prices and, 6–­7, 579n3; convergence and, 21;
of skills, 305–­308

Suwa-­Eisenmann, Akiko, 612nn4,9

Sweden, 344–­345, 346–­347, 475–­476, 498, 614n27

Sylla, R., 613n16

Taxation, 12, 493–­495; as source of data, 12, 16–­18; on capital, 208, 355–­356,
370, 373, 464, 471, 494, 525–­527, 652n43; progressive
vs.
regressive, 255, 355, 374, 495–­497; on wealth, 424, 524, 527–­530; confiscatory
tax rates and, 473, 505–­508, 512; relative to national income, 474–­476; transparency
and, 481; on inheritances, 493, 502–­503, 505, 508, 527, 637–­638n32; on consumption
(“indirect”), 494, 496, 651n37; social insurance contributions and, 494–­495, 496,
641n10; progressive
vs.
proportional (“flat tax”), 495, 500–­501; categorical or schedular, 501; on property,
501, 517, 520, 529, 532–­533; on earned and unearned income, 507–­508; top marginal
rates of, 508–­514; defining norms through, 520; public debt and, 541–­542; on Eurozone
corporate profits, 560–­561; residence and, 562.
See also
Competition, fiscal; Estate tax; Global tax on capital; Income tax; Progressive taxation