Capitalism in 20 Century

Capital in the Twenty-First Century 

Recently, the gap between rich and poor becomes a serious problem around the world. The book “Capital in the Twenty-First Century” which wrote by French economist Thomas Piketty mainly stats the issue about what causes this problem and the author Thomas Piketty gives some recommendation, and how to solve it. 

Thomas Piketty collects lots of data and facts to analyze the issue of distributing wealth since the 18th century. He lists that in American the top of 10% people possess 50% wealth, 1% own 20% wealth of American. However, if government not takes any valid solution to this situation, then this existing system will make the rich richer, the poor poorer. Through this current condition, author believes that the unequal distribution of wealth will cause social and economic unbalance. And also, free market economy does not completely address this issue. He predicts that our world will trend to a new century “patrimonial capitalism”. Thomas Piketty proposes that reducing inequality distribution by taking a measure of progressive wealth taxes.  

After reading this book, I agree with Piketty’s opinion in some degrees, for example, the main point of “Kuznets curve” is the distribution of capitalist economy will tend to equally. With growth of economy, it will solve the relevant issues of unequal income. Nevertheless, Piketty states income inequality is not an inverted U-shaped curve. Piketty found the evidence from historical research. In the whole century of 19ththe trend of unequal income is increasing, specifically during 1913-1948, the unequal income decrease, and then unequal income rise again in the 20th century, so it is an U-shaped curve. For this example I get my own opinion on this point. There is nothing wrong with “Kuznets curve”. And also, Piketty’s U shape curve is also true. I think both of them analyze the issue of economic disturbing with different degree. So, they have the different result on it.

Kuznets curve is more focus on the macroeconomic rather than microeconomic phenomenon. When the capital income reaches to a certain level, the gap between rich and poor will beyond the peak, and then decline as time passed. This whole economic system will maintain a balance. Piketty picks a specific historic fragment to analyze this issue. I cannot say Piketty’s standpoint is wrong, because it is history, and I canno deny the past. Whereas I don’t think the circumstance of income inequality has the true sense of declining during 19 centuries, even though the government tries to make measures to reduce income inequality. Comparatively speaking I felt the income inequality more likely rising in that period. The book mentioned that the trend decline due to some events, like, two World Wars, the Great Depression which destroys the wealth people creates. Let us try to consider this problem from other perspectives. For myself, I heard some real stories from my grandfather, he told me the amount of people have no job, had no food even cannot feed themselves during that time. They fear the war, fear no job, and fear everything. The reason is no money, in other words, they cannot find a stable job to work. But, the real world is some of the people who control the amount of capital. For instance: capitalist who possess a lot of resource like, food, material, technology, knowledge. They take advantage of these resources to make the profit from others who don’t have resources. Based on this point, I think the income inequality shows rising compare to other periods. Because of the peace world, people could find a job, make some money, and keep a basic living condition. You may know the present value of 1 dollar is less than 1 dollar in 19 century.