This is more of an economics question but I'll post it here anyway, for those of you who have read Piketty's book.
1) Why does r (the rate of return on capital) tend to be greater than g (the economic growth rate)?
2) Is it possible for r > g to persist indefinitely on a global level, as Piketty seems to assert? Since capital income + labor income = total income, r > g implies that capital income grows faster than total income, which of course doesn't last because a part can't outgrow the sum forever.
r > g because under normal conditions (i.e. peace and prosperity) people are willing to pay more to borrow cash than material goods of the same value. In times of war, scarcity, high uncertainty, or famine, it doesn't hold.
r can be greater than g indefinitely on paper, but in practice it doesn't work. About 2/3 of the way through (I forget which chapter) he talks about how the extreme inequality that capitalism naturally produces tends to lead to disruptions that destroy capital stocks, most often war, that resets inequality lower.
In the background is Foucault's idea of a
limit possibility, in which our theories of reality hit a natural limit and no longer hold when played out to their extremes.
My two takeaways from the book, even years later, are that (1) capitalism naturally produces extreme inequality, and (2) that extreme inequality leads to instability for everyone over the long term. The implication is that we all - rich and poor - have an interest in not seeing inequality become extreme.
While I think he has an insightful diagnosis of capitalism, his global wealth tax isn't going anywhere soon. Instead, I'd say A.O. Hirshman's classic
Exit, Voice, and Loyalty has more practical advice to offer us.