Thomas Piketty’s book on ´Capital in the Twenty First Century’ has made waves. The fact that a 700-odd page tome full of numbers and graphs can become an international bestseller is itself noteworthy. It may be a testament to the concern that people have over the growing inequality within developed countries. What is startling is its claim that the developed world may be gravitating to the pattern of wealth distribution based on inheritance that characterised the pre-modern world. The contribution this book has made in putting together historical data that clearly indicate the trend of growing inequality is truly monumental. However, the notion that the crux of the matter is the fact that the rate of return on capital exceeds the rate of income growth may be confusing even to well-trained economists. Our motivation in putting together this symposium on Piketty’s book is to clarify the ideas in this important book on the burning issue of the day – ‘growing inequality’.
First, I would like to direct readers to a piece by Robert Solow – a Nobel Laureate and the father of modern growth theory – published by ‘New Republic’. There are few economists in the world that can match Solow in coming up with lucid expositions of complicated theories. And here he is at his best while interpreting Piketty, and as such should be accessible to any reader of I4I.
The second piece is by Debraj Ray. Clearly, the intended audience is economists. We have therefore kept the piece intact and included the appendix. We believe that this is an extraordinarily valuable and helpful comment on the book. It has the potential of lifting the fog created by Piketty’s discussion of the trends in endogenous variables (example, capital share) in terms of other endogenous variables (example, growth rate).
The third piece is by Pranab Bardhan. It is another lucid piece of writing that, in addition to commenting on Piketty, has some interesting observations on Indian data on inequality.