Capital in the Twenty-First Century

by Thomas Piketty

First, it is important to be clear that the second fundamental law of capitalism, β = s/g, is applicable only if certain crucial assumptions are satisfied. First, this is an asymptotic law, meaning that it is valid only in the long run: if a country saves a proportion s of its income indefinitely, and if the rate of growth of its national income is g permanently, then its capital / income ratio will tend closer and closer to β = s/g and stabilize at that level. This won’t happen in a day, however: if a country saves a proportion s of its income for only a few years, it will not be enough to achieve a capital / income ratio of β = s/g.