Capital in the Twenty-First Century

To understand the inequality and accumulation of wealth, Piketty looks at the roles of inheritance and savings in capital formation. His broad conclusion is that “the past tends to devour the future” (477). In other words, wealth from inheritance will always tend to predominate, and grow more quickly, than savings possible in an individual’s lifetime from work. This was true to an even greater extent historically. In the 19th century, increasing slightly between 1800 and 1910, the annual inheritance flow as a proportion of national income stood at between twenty and twenty-five percent. After the second world war, however, and by 1950-1960 the same figure was barely more than four to five percent in France. This led to “the idea that the age of inheritance was over” (480). Yet, like wealth, inheritance flow started to increase in the 1970s and 80s, reaching around half of what it had been between 1880 and 1910.

Piketty assesses the argument that as life expectancy increases the importance of inheritance in society diminishes. He acknowledges that the average age of inheritance has increased from around thirty in the 19th century to fifty in the 21st century.