Patrimonial capitalism—and the landed or urban gentry living off of inherited wealth—was dealt a mortal blow by the Great Depression and World Wars. But it’s making a comeback, and the only way to stop it might be a worldwide tax on capital.
Why is capital re-establishing dominance over income? Because, Piketty writes, r > g.
In plain English: The return on capital (r) almost always exceeds economic growth (g). Piketty calls r > g an “inequality” rather than a formula because it isn’t “an absolute logical necessity.” Rather, it’s “the result of a confluence of forces, each largely independent of the others.” These include demographics (a rapidly growing population boosts g); the extent to which a country’s economy has matured (China has much higher g than the U.S. and Western Europe because it’s still catching up); and various “technological, psychological, social, and cultural factors” (all of which can cause r to fall). Typically, r is four to five times g, but the ratio gets larger as capital accumulates across generations. The dead—though worse off in most obvious respects than the rest of us—are wealthier than the living. “The past,” Piketty writes, “tends to devour the future.”