I am grateful to Thomas Piketty for his ground-breaking book, “Capital in the Twenty-First Century,” as it raises fundamental questions about the kind of countries to which we in the West are giving birth.

Thomas Piketty [File photo]

Piketty bases his conclusions upon a study of historical data spanning more than 300 years. From this, he concludes that wealth — regardless of occasional economic and political turmoil — inevitably becomes concentrated within an elite micro-portion of the total population.

Specifically, throughout these 300 years the upper 10 percent of the studied populations consistently controlled 70-90 percent of total national wealth, despite the fact that this period witnessed immense social and political changes. (The sole, and misleading, exception occurred in the middle of the 20th century, a subject to which I will return shortly.)

How does Piketty explain this phenomenon? In essence, until fairly recent history, the growth of the value of capital over time has always exceeded the economic growth rate of individual nations. When more rapid economic growth occurs, it offsets the rate of capital growth by greater or lesser degrees, slowing or temporarily halting any greater concentration of wealth.

This rapid growth is the consequence of a combination forces, including technological innovation and widespread adoption of new processes, a sustained surge in demand by a large portion of the population, and a birth rate in excess of the death rate. Over long periods of time, however, the rate of capital growth remains fairly constant so that when economic growth declines the process of wealth aggregation resumes.

That this long-term pattern has been unnoticed up to now — leading some economists to erroneously conclude that capitalism inevitably leads to greater shared wealth — is primarily because previous studies focused on significantly shorter time frames. Within periods of only 30 or 50 years, for instance, considerable fluctuation in wealth ownership patterns can occur.

However, when viewed from the greater time frame used by Piketty, these are seen as the short-term, extra-norm phenomena they are. While on the eve of World War I, the uppermost 10 percent of the populations of France, Britain, and the United States owned 80-90 percent of total national wealth, by 1970 their proportionate share had declined to “only” 55 percent-65 percent. What had happened?

Piketty says it was the impact of the unprecedented magnitude of social, political, and economic catastrophes occasioned by the century’s two world wars and the Great Depression that caused the extraordinary elimination of much of the existing wealth of the uppermost 10 percent.

Further, the determination of post-war Western governments to eliminate the conditions of the social and political unrest of the 1920s and ‘30s led them to commit to employment and safety-net programs that formed the basis for middle class enjoyment of substantially expanded economic and social opportunities from the end of World War II through the 1970s.

Reversal of fortune

However, by the 1980s this favorable trend had reversed; by 2010 the upper 10 percent share of total wealth had rebounded to 70 percent and the middle class found itself struggling just to maintain previous gains.

If current, multi-decade economic and social trends continue, Piketty predicts that by the end of this century, America will resemble the aristocratic structure of “old Europe,” with the richest 10 percent of the population controlling 80-90 percent of total national wealth.

What caused this reversal of fortune after 1980?

1. For several decades now, the rate of economic growth has been slowing in all advanced societies. Piketty notes that since the 1980s both the slowing rate of economic growth and the rising rate of capital growth appear to be returning to their long-term norms. If these trends hold, which Piketty thinks likely, outsize wealth accumulation by the richest will intensify to the further detriment of the majority.

2. Since the witnesses of the havoc of the inter-war years of the 1920s and ‘30s are mostly dead, the public’s memory of those threats — and of the fact that the benefits of the post-war years derived directly from governmental action seeking full employment and an adequate safety net for all — has receded.