In my view, _Capital in the 21st Century_ is primarily a book about the history of the distribution of income and wealth. Thanks to the cumulative efforts of several dozen scholars, we have been able to collect a relatively large historical database on the structure of national income and national wealth and the evolution of income and wealth distributions, covering three centuries and over 20 countries. In effect, we have been extending to a larger scale the pioneering historical data collection work of Simon Kuznets and Tony Atkinson (see Kuznets, 1953, and Atkinson and Harrison, 1978). My first objective in this book is to present this body of historical evidence in a consistent manner, and to try to analyze the many economic, social and political processes that can account for the various evolutions that we observe in the different countries since the Industrial Revolution (see Piketty and Saez, 2014, for a brief summary of some of the main historical facts). Another important objective is to draw lessons for the future and for the optimal regulation and taxation of capital and property relations. I stress from the beginning that we have too little historical data at our disposal to be able to draw definitive judgments. On the other hand, at least we have substantially more evidence than we used to. Imperfect as it is, I hope this work can contribute to put the study of distribution and of the long run back at the center of economic thinking.
In this essay, I seek to discuss a number of implications of my findings, in particular regarding the optimal regulation of capital and the complementarity between the “predistribution” and the “redistribution” approach. I will also attempt to address some of the very valuable comments made by the participants to the Crooked Timber symposium. First, I will clarify the role played by r>g in my analysis of wealth inequality. Next, I will present some of the implications for optimal taxation, starting with inheritance taxation and then moving with annual taxation of wealth, capital income and consumption. Finally, I will emphasize the need to develop a multi-sector approach to capital accumulation. This will lead me to stress the limits of capital taxation and the complementarity with other public policies aimed at regulating the accumulation and distribution of capital (such as land use, housing policies, intellectual property rights, co-determination and participatory governance). [click to continue…]