Short note on Thomas Piketty’s Capital in the Twenty-First Century

I am reading Thomas Piketty’s 2014 book Capital in the Twenty-First Century. I am not a socialist but I am not a capitalist either. Both systems are equally irrational. They lead to concentration of wealth and power in the hands of a tiny minority while causing large-scale deprivation and misery for the masses. 

I am convinced by Piketty’s argument that the rate of return on capital is over the long term greater than the rate of economic growth and it leads to concentration of wealth in the hands of a tiny minority (the inheritor class). To address this problem, he proposes a global system of progressive wealth taxes on inherited capital. I don’t believe his solution is right. Higher taxes mean more power to the politicians and the bureaucrats who create even bigger problems for society. 

I don’t know what the solution to the problem of concentration of wealth is, but I am certain that the solution that Piketty is proposing will lead to vast increase in the powers of the government and weaken democracy. 

In fact, Piketty’s economic argument can be taken into the sphere of politics. It can be argued that the return on political power of charismatic politicians is over the long term greater than the rate of growth of democratic institutions and freedoms and this leads to the concentration of power in the hands of a tiny minority (the dynastic political families). Concentration of political power in the hands of a few dynastic families is as destructive as the problem of concentration of wealth. 

In his book, Piketty tries to deal with the problem of concentration of wealth but he has nothing to say about the problem of concentration of political power.