Capital in the Twenty-First Century

by Thomas Piketty

Conversely, a stagnant or, worse, decreasing population increases the influence of capital accumulated in previous generations. The same is true of economic stagnation. With low growth, moreover, it is fairly plausible that the rate of return on capital will be substantially higher than the growth rate, a situation that, as I noted in the introduction, is the main factor leading toward very substantial inequality in the distribution of wealth over the long run. Capital-dominated societies in the past, with hierarchies largely determined by inherited wealth (a category that includes both traditional rural societies and the countries of nineteenth-century Europe) can arise and subsist only in low-growth regimes. I will consider the extent to which the probable return to a low-growth regime, if it occurs, will affect the dynamics of capital accumulation and the structure of inequality. In particular, inherited wealth will make a comeback—a long-term phenomenon whose effects are already being felt in Europe and that could extend to other parts of the world as well. That is why it is important for present purposes to become familiar with the history of demographic and economic growth.