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People line up to receive food relief in San Francisco. Piketty undeniably demonstrates that the US has hit record inequality with respect to both total income (the top 10 per cent get 50 per cent,the bottom 50 per cent get 20 per cent) and ownership of capital.

These words double as description for the first part of Piketty’s work. The second part recommends serious courses of action in the 21st century to deal with the rising inequalities he identifies in the global distribution of wealth.

Piketty,professor at the Paris School of Economics,has made four major contributions with this book:he has pioneered data collection and statistical analysis techniques for global wealth distribution,altered our collective understanding of long-term trends in inequality,opened up a serious public dialogue about inequality,and done so in such an eminently readable fashion that the world of macroeconomics becomes reasonable and interesting for the layperson.

Capital in the 21st Century by Thomas Piketty.

Piketty’s key technical insight was to combine wealth and income data from surveys and tax records. Using tax records allowed him to chart wealth and income distributions from the early 20th century in the US and Britain,and from the late 18th century in France when estate taxes were introduced.

Piketty describes inequality in the language of centiles and deciles,looking at the top 10 per cent,the middle 40 per cent and the bottom 50 per cent in conjunction. His data undeniably demonstrates that the US has hit record inequality with respect to both total income (the top 10 per cent get 50 per cent of income,the middle 40 per cent get 30 per cent,the bottom 50 per cent get 20 per cent) and ownership of capital (the top 10 per cent possess 70 per cent,the middle 40 per cent have 25 per cent,the bottom 50 per cent have 5 per cent). This level of inequality in total income was seen in Europe in 1910. In the case of accumulated wealth it is a record high.

Piketty’s history of inequality ‘‘across time and space’’ demonstrates a clear U-shape from the start of the 20th century to today:inequality at the beginning was high,fell drastically with the financial impact of the world wars and has been steadily increasing ever since. It is unlikely to stop for some time because the rate of return on capital is significantly higher than the rate of economic growth. Decelerations of economic and demographic growths mean the gap will grow larger and the rich will get significantly richer.

Piketty’s ideal solution to buck this trend is a global tax on all inherited and accumulated wealth to reduce return. (Growth could be increased,but nowhere near enough to avoid a spiral into severe global inequality.) He doesn’t expect this ever to be put into practice but he does expect it to be countenanced seriously and to be used as a yardstick against which to measure policy. In his own words:‘‘Whatever tools and regulations are actually decided on need to be measured against this ideal.’’

This is one of the great strengths ofCapital:it opens a necessary dialogue about a key concern of our times,including debates about the data and its interpretation. Piketty has put his data online in the name of transparency so people can contest his analyses if they see fit. WithCapital, Piketty has also provided a study so comprehensive that governments will eventually,if not immediately,have to consider it. This could not be more timely,in light of the Hockey-Abbott budget.

Last,Capital is wonderfully written. Piketty and his translator,Arthur Goldhammer,are to be commended for their command of the material. It is a patient,warm and quietly dignified book and,strangely,a page-turner. It tells the story in words,in figures,in basic understandable mathematics and even in literary history.

To demonstrate the inequality prevalent in 19th-century France,Piketty refers to Balzac’s novelPere Goriot,in which the ruthless Vautrin convinces the ambitious Rastignac thatto become wealthy,one should marry into money rather than work hard for a career. Balzac sets out the comparative figures and Vautrin is absolutely correct.

When Piketty finally discusses global trends in wealth from the early 1900s to the present,he can tell us what Rastignac’s best course of action would be at any given time:at the start of the 20th century and also today,he would do best by marrying into inherited wealth,whereas after World War II,when inequality was relatively low,he would be better off having a career.

Piketty is as comfortable discussing the socio-economic implications of fiction whetherMad Men,the novels of Henry James or Jane Austen,as he is the technical subtleties of macro-economic theories. And he is as provocative as his forefathers Adam Smith,David Ricardo or,of course,Karl Marx,as well as being far more accessible.