Capital in the Twenty-First Century — In the Rest of the World

Posted: 13 May 2016

See all articles by Michael Albertus

Michael Albertus

University of Chicago - Department of Political Science

Victor A. Menaldo

University of Washington - Department of Political Science; UW Political Economy Forum

Date Written: May 2016

Abstract

Recent work has documented an upward trend in inequality since the 1970s that harks back to the Gilded Age: the inegalitarian pre–World War I world. Most prominently, Thomas Piketty argues in Capital in the Twenty-First Century that this is partially due to the fact that capitalism is hardwired to exacerbate the gap between the rich and poor. By critically evaluating recent literature on this topic, this article offers three big contributions. First, we advance an alternative explanation for the long-term U-shaped nature of inequality that Piketty examines. Political regime types and the social groups they empower, rather than war and globalization, can account for the sharp fall and then sharp rise in inequality over the long 20th century. Second, we demonstrate that this U-shaped pattern only really holds for a handful of industrialized economies and a subset of developing countries. Finally, we provide a unified framework centered on two unorthodox assumptions that can explain inequality patterns beyond the U-shaped one. Capitalists and landholders actually prefer democracy if they can first strike a deal that protects them after transition. This is because dictators are not the loyal servants of the economic elite they are portrayed to be — in fact, they are often responsible for soaking, if not destroying, the rich under autocracy.

Suggested Citation

Albertus, Michael and Menaldo, Victor A., Capital in the Twenty-First Century — In the Rest of the World (May 2016). Annual Review of Political Science, Vol. 19, pp. 49-66, 2016, Available at SSRN: https://ssrn.com/abstract=2779549 or http://dx.doi.org/10.1146/annurev-polisci-042114-015008

Michael Albertus (Contact Author)

University of Chicago - Department of Political Science ( email )

Chicago, IL 60637
United States

Victor A. Menaldo

University of Washington - Department of Political Science ( email )

101 Gowen Hall
Box 353530
Seattle, WA 98195
United States

UW Political Economy Forum ( email )

Seattle, WA 98195
United States

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