Piketty's Inequality Theory Gets Dinged

People tend to like big, sweeping theories of economic history. When Karl Marx foretold a supposedly inevitable series of class conflicts and revolutions that would end in a communist utopia, the idea was so powerful that it inspired revolutions, alternative economic systems and wars. Other thinkers depicted economic history as the triumph of a particular culture, or the inevitable ascendance of free-market capitalism.

French economist Thomas Piketty, the latest to win popular acclaim for a grand theory of economic history, was a bit different. Unlike some of those who came before, Piketty brought a wealth of data. Painstakingly exploring historical records, he constructed measures of income and wealth going back centuries and covering a number of different countries. His thesis was also unusually simple -- instead of a complex theory of social class or the vagaries of human culture, he merely predicted that the rich get richer until a big war or revolution resets things. His reams of historical data purported to bear this pattern out -- the wealth and income shares of the rich tend to rise and rise, unless a calamity like World War II temporarily levels the playing field.