Global Inequality and the Top 1%

Thomas Piketty's Capital in the Twenty-First Century, published in French in 2013 and in English translation in 2014, transformed public and academic debate about inequality. The book combined two centuries of historical data on income and wealth in the United States, the United Kingdom, France, Germany, and other countries with a set of theoretical claims about how capitalism generates inequality in the long run. It became a surprise international bestseller, selling over two million copies, and generated a vast secondary literature of confirmation, extension, and critique.

Piketty's empirical contribution rested on the construction of long-run series documenting the shares of national income and wealth held by top percentiles. Using tax records, inheritance data, and national accounts, he and collaborators Emmanuel Säz, Anthony Atkinson, Gabriel Zucman, and Facundo Alvaredo (later assembled into the World Inequality Database and the Paris School of Economics' World Inequality Lab) showed that top-income shares followed a U-shaped trajectory in the developed West: very high before World War I, collapsing between 1914 and the 1970s, rising sharply again since about 1980. The US top 1% share rose from around 8% in the late 1970s to around 20% by the 2010s; the top 10% rose from about 32% to about 47%.

The theoretical core of the book was Piketty's r > g proposition: when the rate of return on capital (r) exceeds the rate of economic growth (g), inherited wealth compounds faster than labor incomes grow, and the wealth distribution tends to concentrate at the top. Piketty argued that the mid-twentieth-century compression of wealth inequality was a historical anomaly produced by wars, depression, and the high-growth postwar period, and that slowing growth in the decades since has allowed inherited wealth once again to dominate. His worry was that contemporary capitalism could drift toward a patrimonial society in which inherited wealth matters more than earned income — a return, in key respects, to the Belle Époque.

Piketty's policy recommendations — a global progressive tax on wealth, higher marginal income-tax rates, stronger inheritance taxes, and much greater financial transparency — were more politically radical than his analysis. The proposals were controversial, but the empirical series he and his colleagues constructed have become canonical. Even critics who dispute the r>g mechanism or specific data points generally accept the broad finding that top-income and top-wealth shares in the developed world have risen sharply since 1980 after a long period of compression. For sociology, Piketty's work restored wealth inequality and its transmission to the center of stratification research after decades of relative neglect.