R>G

Good news! There is a new economics hero, French economist Thomas Piketty. In a huge book, Capital in the Twenty-first Century, he argues that the effect of capitalism is, in its essence, unequal and, in the absence of intervention, that inequality will be self generating. Of course, there is a formula, r>g, where r stands for the average annual rate of return on capital (i.e. profits, dividends, interest, and rents) and g stands for the rate of economic growth. In other words, in a slow-growing economy, accumulated wealth grows faster than income from labor. So the rich, who already hold most of the wealth, will get richer, while everyone else, who depend mostly on income from their jobs, will be lucky to keep up with inflation.With the return of capital above the rate of economic growth--as it has been historically--the seeds of destruction are sown. In the time between 1945 and 1970, capitalism’s so-called Golden Age, the economies of Western Europe and the United States expanded and inequality declined. This period has left us with an erroneous optimism about capitalism.
Marx was right about the destination, just not the journey.