Thomas Pikety's Return Of Capital In The 21st Century

For his research, Thomas Piketty checked the capital time series data from 1700 to 2010. These data are collected by him from income and wealth data that available in market. The data's collection shows the evolution of the rise and fall of capitalism since the industrial revolution. He argues, on the capital's structure of assets, the composition of capital in the 21st Century has nothing in common with the capital in 18th Century. In simply words, the asset in 18th Century are dominated by agricultural assets such as land, livestock and etc. In contrast, the 21st Century assets are building, machinery and etc (Piketty, 2014; pp.118)

Through the data history, Piketty found general theory on capital and unequality. Unequality emerged when

In the 18th Century and 19th Century, the role of inheritance is very obvious, in consider the rigid class' structure at the time, in which the wealthy would only mary with someone who had same level of wealth, with which the wealth between them will increase the rate's return of capital. However, for him, inheritance has a broader significance for the structure of inequality when seen in a long time span. He argues, whenever the rate's return of capital is significantly higher than the rate of economic growth, then it will make the mechanism of inheritance would be more dominating than the savings as a way to accumulate wealth (p. 378). In other words, when the inequality is higher, it is useless to rely on savings to increase personal wealth, because it would be irrelevant equal with the inheritance of wealth from the owners of the wealth that existed

He emphasizes the importance of sistemic development that was done by the State on social sectors, such as education, health, social security, unemployment and income support for the poor (Piketty, 2014; pp. 471). Furthermore, he argues the deficit is not always a bad things, if only deficit financing has done wisely and does not use as a justification on austerity. Even, deficit can be use as a central bank's instrument to create inflation and to push tax's capital (Piketty, 2014; pp.