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Title: Capital [i.e. Wealth ] in the Nineteenth Century: Definition, Distribution , and Disposition

Citation Type: Conference Paper

Publication Year: 2015

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Abstract: The title is intended to signal that this paper is a commentary on Capital in the Twenty-First Century by Thomas Piketty. The editorial insertion in the title calls attention to the point that capital as defined by Piketty is not the reproducible tangible capital that contributes to the production of output, the argument K in the economists production function. Rather Piketty defines capital as marketable (i.e., bequeathable wealth) at current market prices. Pikettys major focus is on the increasing magnitude of the ratio of national marketable wealth to national income over the last 25 to 30 years where the data on wealth is fairly good and his prediction that there will be further increases in this ratio and a growing concentration of wealth at the top as the twenty-first century unfolds. He has much to say about wealth and inheritance in the twentieth century. For the United States he also presents some speculative evidence for the nineteenth century. Pikettys prediction about a worsening wealth distribution depends critically on his assertion that a strong bequest motive dominates the life-cycle motive for wealth accumulation. Inheritance, he suggests, is the major force that is propelling increasing wealth inequality. The contribution of this paper is to explore wealth acquisition, the distribution of marketable wealth, and the magnitude of inherited wealth in the late nineteenth century U.S. For that era I find an abundance of evidence for life-cycle saving (even among industrial workers) and little support for a strong bequest motive (even among the wealthy). This does not mean that wealth inequality was not a serious problem during the Gilded Age nor that it is not a serious problem today, but my findings do challenge Pikettys conclusion that inheritance has always been a driving mechanism producing growing concentrations of wealth and power in capitalist America. As a consequence his fundamental laws regarding the dynamics of capitalism may need to be reexamined. To develop effective policy to counter inequality, we need a better understanding of the forces driving the distribution of wealth over the life cycle of the household and over the population of households in the economy.

Url: http://allucgroup.iga.ucdavis.edu/papers/Sutch Wealth 9 26.pdf

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Authors: Sutch, Richard

Conference Name: All - UC Economic History Group/Caltech Conference Unequal Cha nces and Unequal Outcomes in Economic History

Publisher Location: Pasadena, California

Data Collections: IPUMS USA

Topics: Other

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