Capital In Twenty First Century is the new book by French economist Thomas Piketty that is generating controversy in the circle of economist. In Capital in the Twenty-First Century, Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.
The history of capitalism is fraught with lot of controversy. Boom and bust is considered to be an inherent part of any capitalist market cycle. Free markets are a byproduct of a capitalist economy. The rise of the stock market can be considered to be triumph of the free market and capitalism. First it was the gold standard that was considered to be the backbone of the capitalist system that prevailed in the 19th century and was designed and developed by the British. Free trade was also considered to be an essential part of the capitalist system. Free trade still is the ideal that the capitalist system has yet to attain fully. Gold standard has been replaced with a system of free floating currencies. This system of free floating currencies developed in early 1970s has given rise to the $5 trillion daily turnover currency market.
The stock market crash of 1929 sent tremors through the free market system and capitalism. The systemic risk involved in unbridled capitalism were tamed using a robust financial regulatory system that was put in place especially in US as the baton of capitalism passed from the hands of Britain to US. Markets worked well as long as they were regulated properly. In 1980s neo economists advocated dismantling of the regulatory system that was put in place after the stock market crash of 1929 and it resulted in another stock market crash in 2008 which heralded a new global financial crisis especially for the banking system.
The beginning of capitalism was painful. There were long working hours for the workers and very little regulation by the government to check the unbridled excesses being committed by capitalist. This result in the Karl Marx declaring war on capitalism and communism was born. 20th century was spent fighting communism. Capitalist system made many reforms that resulted in modern welfare state that got promoted with a universal free health system, a free education system and welfare for the unemployed and old people in the shape of social security and unemployment benefits. These reforms were carried out in order to answer inequality that capitalism breeds. United States did not follow a free health system and instead focused on health insurance. Communism was ultimately defeated when it collapsed under its own weight. Today once again capitalism is becoming unbridled with a few 2-3% people in the world owning trillions of dollars as wealth while the rest of the world population working hard to make ends meet.
Thomas Piketty broke out of the pack of faceless economists in 2014 with an unlikely bestseller, Capital in the Twenty-First Century, which argued that capitalism accentuates inequality. He was recently presented France’s highest award, the Légion d’honneur (though he promptly turned it down). This weekend, though, Piketty faces a trial conducted by some of the world’s top academic economists—his peers. And from the looks of it, they won’t be going easy.
Mr Piketty is not the only French citizen to turn have turned down the Légion d’Honneur. Jean-Paul Sartre and Simone de Beauvoir both did, along with various other writers, artists and scientists over the decades since Napoleon introduced the honour in 1802.
The question of inequality in capitalism that has been once again raised by Thomas Piketty will decide how the capitalist system evolves in this century.