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The distribution of wealth (who owns what) is even less equal. The poorest 50% do not own more than 5% of total wealth in any country on earth.

As important as they have been, advances towards reducing inequality in the 20th century mainly concerned the distribution of income."When it comes to the distribution of wealth," Piketty argues,"things have changed very little."

As he points out, the"great redistribution" of property in his native France, largely between 1914 and 1980, had"a significant impact on reducing disparity between the richest 10% and the next 40%", via the emergence of a"property-owning middle class." Despite this important development,"the poorest 50% have hardly benefited from the redistribution of property in the past two centuries at all."

Piketty argues that, like the 20th century movement towards greater equality, recent patterns of increasing inequality are not inevitable. Nor are they explainable in terms of"personal talent, native endowment or natural temperament."

As journalist Jonathan Portes summarizes , the idea that"great disparities are somehow 'natural,', because ability or entrepreneurialism is unevenly distributed across individuals (or countries, or ethnic groups)" is regularly"used to argue that efforts to reduce inequality will either be ineffective or reduce growth and prosperity, or both."

This claim is not supported by the historical data, says Piketty. He rejects the view, which dominates much contemporary economic thinking and policy discussion, that"very large inequalities are the inevitable outcome of a well-functioning market economy." The key to understanding reductions in inequality, he argues, is that they are directly related to a country's political culture and institutions. In particular, they are a result of the historical role of collective political mobilization to drive policy change.

What works: Sweden vs. the United States

Sweden in the 20th century, Piketty writes, is an example of the power of political organization, social struggle and"the ability to build new institutional outcomes."

Until around 1920, Sweden, like other European countries, was"extremely inegalitarian." It had an elitist political system. Only the richest 20% of men could vote. Votes were apportioned based on individual wealth: the richer you were, the more votes you could cast.

Then a"collective mobilization" by the trade unions and the Social Democratic Party"put the state capacity of Sweden to the service of a ... different political project." Rather than use"the records that had made it possible to measure income and property" to allocate the right to vote, they used them to"impose a progressive tax, with the goal of funding access to education and healthcare."

Piketty argues that the Swedish example is instructive on several fronts. Firstly, it shows that"a country is never inegalitarian or egalitarian by nature." That"depends who controls the government and to what end." Secondly, Sweden's social democratic policies led to it becoming both one of the most equal societies in the world, as well as one of the richest.

The United States makes an interesting comparison. In recent history, the wealth of its middle class has been shrinking. Having at one point reached wealth distribution patterns similar to Europe's, it is now headed in the direction of"Europe's pre-World War I levels."

Inequality decreased in the United States between 1932 and 1980. During that period, the country had progressive income and inheritance tax rates, and a prosperous economy that"stifled neither economic growth nor innovation." The totemic Reagan-era slashing of top tax rates in the 1980s did not achieve what its supporters promised. Economic growth in the United States in the period 1990-2020 was half what it was in 1950-1990. Inequality accelerated .

Addressing inequality

Imperfect though the process has been, the development of the welfare state was the most important factor in addressing inequality in the 20th century. Progressive taxation was used to fund increased spending on healthcare, pensions, housing, infrastructure and education. Piketty argues that the roughly tenfold increase in public spending over the century was an important factor in promoting individual freedom, reducing inequality and raising productivity and living standards.

The question of what might represent"acceptable levels" of income disparity, according to Piketty, is"clearly a question that a democratic process and public deliberation should deicide." But he proposes a ratio between the poorest and richest somewhere in the order of 1 to 3 or 1 to 10. These levels can accommodate diversity of aspirations, while maintaining the incentives"necessary for social and economic organization." Nothing, economically or socially, justifies ratios of 1 to 50 or 1 to 100.

A crucial factor in the United States' historical advantage over its competitors in productivity, especially in the industrial sector, was not low tax rates or astronomical corporate incomes. It was its lead in education. The"near-universal" access to secondary education the United States achieved in the 1950s was not realised in Germany, France and Japan until the 1980s and 1990s.

Since then, despite the significant expansion of access to tertiary education, with its acknowledged advantages, spending on education across Western countries has stagnated.