Thomas Pikkety's Capital in the 21st Century - an Analysis Based on Intellectual Capital
In this paper we analyze the book that was hailed by Paul Krugman and the Financial Times as the book of the Year of 2014, through the lenses of the Intellectual Capital. Published in 2012, Thomas Piketty’s Capital in the 21st century became a worldwide sensation and best seller because of the depth of its analysis and the controversy created by its findings. In a nutshell Piketty claims that contrary to the neoclassical forecast, inequality in the world might grow, due to a shock between forces of convergence and forces of divergence. Furthermore, Piketty also claims that only redistribution policies can reduce the inequality trend, and calls for a new set of social policies. All this is very impressive but for us what matters the most is how to put IC in the analysis. In this context, we analyze Piketty’s ideas using the concepts and theories on Intellectual Capital (Bonfour and Edvinsson 2005; Edvinsson and Malone, 1997; Kaplan and Norton, 1994), and we also recall what the main theories on inequalities are (Coleman, 1991, Atkinson 1983 or Stiglitz 2012), and about Welfare States (Esping Andersen, 1990). We find that in the history of socio-economic thought, Intellectual Capital and Inequalities have been marching in separate paths: not only the paradigms of analysis are totally different, but only a handful of empirical studies exist that bring together IC and inequalities. The fact is crucial for our paper because we believe that IC in fact increases inequality and explains growing inequality. We also found that Piketty almost does not address IC directly in his entire book, a fact that by itself speaks volumes about the position of IC in the world of socio-economic thought. Pikettys’ analysis, for all its importance, and novelty, is traditional and surprisingly old fashioned when it comes to considering Intangibles. He never uses IC, he seems to be unware of IC analysis. However we also think that most of Piketty’s analysis would gain strength if IC is considered (as we believe it certainly should be) as a major force of inequality in the economy of the 21st century. In the discussion of the paper we point out seven ways in which the inclusion of IC in the analysis could benefit Piketty’s conclusions; the seven ideas relate to Human Capital, super-professionals, billionaires, social policies and development, taxes on wealth, modern slavery, and the rise of political oligarchies in the 21st century. The paper is of limited scope because it is basically theoretical. The paper is original because we don’t know of any other previous study linking Piketty’s book to IC analysis; in this context we believe further efforts should be done in this very relevant area of research.