Thomas Picketty’s Capital in the Twenty-First Century has reinvigorated the economic and political debates on inequality, and its relationship with wealth and economic growth. Not least because of the direct relevance of these issues to the African context, the book is illuminating in that it comprehensively deals with the questions of how the very rich became and remain rich. Using tax returns data the book teases out a ‘simple’ relationship wherein because capital ownership is highly concentrated, and because the marginal product of capital and the associated rate of profit outstrip the rate of economic growth, inequality rises as the incomes of the wealthy outstrip growth in the overall economy.
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Published by the Centre for Competition, Regulation and Economic Development