> "But Marx's original critique of capitalism was not that it made for lousy growth rates. It was that a rising concentration of wealth couldn't be sustained politically."
I feel like this is one of the very most important things to consider in any discussion of wealth concentration. Economic growth does not necessarily correlate with a broadly pleasant experience for all participants in that economy. I think we came out of the 20th century with it being taken as axiomatic that some kind of tradeoff must be made to achieve both goals in concert somehow, but this understanding seems to be receding (really starting with the rise of austerity policy in the 80s, but coming very much to a head lately).
If that fact changes then the entire premise of the book is wrong. But the thesis of the book is grounded in historical evidence (this is how the world works), not any particular theory that answers "why."
Actually, the data says quite a bit more than that. I'm looking at the chart shown in Krugman's review (Figure 1, a bit more than halfway down the page):
http://www.nybooks.com/articles/archives/2014/may/08/thomas-...
First, this chart says that r > g has been the historical norm since antiquity, not just since the industrial revolution. The first data point on the chart is for years "0 - 1000". I'm assuming that Piketty's book gives some explanation of how he figured out the rate of return on capital during the Dark Ages. :)
Second, the chart says that the difference between r and g decreased all through the period studied, up to the "1913 - 1950" data point, when r < g became true for the first time. Then, up through the "1950 - 2012" data point, r and g both rose sharply, but r < g was still true, and the difference between the two was more or less the same.
Third, the chart says that, for the rest of the 21st century, not only will r > g be true again, but r will continue to rise while g will fall sharply--which has never happened before in history. So I think it's wrong to claim that Piketty's prediction for the 21st century is just a prediction of things "returning to the historical norm". It's not--it's a prediction of a drastic change from the historical norm.
the data reveals a deeper historical tendency for the rate of return on capital to outstrip the overall rate of economic growth, leading to greater and greater concentrations of wealth at the very top. quote from NY Times article: www.nytimes.com/2014/04/19/books/thomas-piketty-tours-us-for-his-new-book.html
Why does the rate of return on capital exceed the rate of economic growth? Isn't this just indicative of an asset bubble? And bubbles don't last forever. Or do they (if the Fed is always bailing the banks out)?