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Capital in the 22nd Century

philiptrammell.substack.com · 10,011 words · saved by 13 readers

In his 2013 Capital in the Twenty-first Century, the socialist economist Thomas Piketty argued that, absent strong redistribution, economic inequality tends to increase indefinitely through the generations—at least until shocks, like large wars or prodigal sons, reset the clock. This is because the rich tend to save more than the poor and because they can get higher returns on their investments. As many noted at the time, this is probably an incorrect account of the past. Labor and capital complement each other. Wealthy people can keep accumulating capital, but hammers grow less valuable when there aren’t enough hands to use all of them, and hands grow more valuable when hammers are plentiful. Capital accumulation thus lowers interest rates (aka income per unit of capital) and raises wages (income per unit of labor). This effect has tended to be strong enough that, though inequality may have grown for other reasons, inequality from capital accumulation alone has been self-correcting. T

Capital in the 22nd Century Piketty was wrong about the past. He’s probably right about the future. Philip Trammell and Dwarkesh Patel Dec 29, 2025 750 94 117 Share Article voiceover 0:00 -56:52 Audio playback is not supported on your browser. Please upgrade. 1. Introduction In his 2013 Capital in the Twenty-first Century , the socialist economist Thomas Piketty argued that, absent strong redistribution, economic inequality tends to increase indefinitely through the generations—at least until shocks, like large wars or prodigal sons, reset the clock. This is because the rich tend to save more

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