I’ve asked my university library to order in a copy. It’s not here yet but the basic argument seems very simple. Matthew Yglesias writes:
The main concepts Piketty introduces are the wealth-to-income ratio and the comparison of the rate of return on capital (“r” in his book) to the rate of nominal economic growth (“g”). A country’s wealth:income ratio is simply the value of all the financial assets owned by its citizens against the country’s gross domestic product. Piketty’s big empirical achievement is constructing time series data about wealth:income ratios for different countries over the long term.
R is a more abstract idea. If you invest $100 in some enterprise and it returns you $7 a year in income then your rate of return is 7%. Piketty’s “r” is the rate of return on all outstanding investments. A key contention of the book is that r is about 5 percent on average at all times. The growth rate (“g”) that matters is the overall rate of economic growth. That means that if g is less than 5 percent, the wealth of the already-wealthy will grow faster than the economy as a whole. G has, in fact, been below 5 percent in recent decades and Piketty expects that trend to continue. Because r > g, the rich will get richer.
Let’s assume that Piketty is correct and he’s discovered something deep and important about the nature of capitalism. That’s a really big deal, and Pikkety’s work looks like it’ll be a landmark in its field.
Now, obviously I’m not an economist, but from a layman’s point of view this doesn’t seem like this is a very difficult or opaque idea. Pikkety looked at the historic data and noticed a trend. It’s not like, say, Heisenberg’s work on quantum theory – which was so counter-intuitive and nonsensical even subsequent Nobel Prize winners are baffled as to how and why he developed his ideas, but which happened to be correct and revolutionised physics. It’s a little disturbing that after two hundred years of capitalism we’re only now discovering critically important but fairly simple insights into how it works.