Piketty’s Capital and Ideology

For long, the subject of inequality was one that did not receive as much attention in the discourse of mainstream economics as questions of efficiency and equilibrium. The discussion was largely restricted to questions of differences in relative factor incomes, in the technical determinants of wages relative to profits. Moreover, the relative stability of wage and profit shares—Nicholas Kaldor’s “stylised fact”—in developed economies during periods of high economic growth implied that questions of inequality could be subsumed under technical questions of production functions and types of technological change (Jones and Scrimegour 2008).

This is not to say that there has been no work on the subject: the works of Anthony Atkinson, Amartya Sen, Emmanuel Saez, Anthony Shorrocks, etc, would prove otherwise. However, the publication of Thomas Piketty’s Capital in the Twenty First Century, coinciding with the Occupy Wall Street protests in the United States (US), thrust the subject into the spotlight of mainstream social and political discourse. Piketty’s work proved definitively that the stable income distributions seen in the developed Western economies—and in standard economic theory—were the exception, and not the norm. Current economic conditions—with regard to inequality—were beginning to resemble the period before World War I; it was hard to deny the assertion that extreme inequality is a central feature, and not an unlikely outcome, of capitalism.