Historicizing Piketty: The Fall and Rise of Inequality Economics
Since Thomas Piketty’s Capital in the Twenty-First Century took the economics world by storm in 2014, the study of economic inequality has quickly moved to the centre of academic inquiry and public discourse. But why was the topic of inequality largely neglected by mainstream economists for so long? In examining key economic treatises and textbooks, this chapter argues that it was the hegemonic rise of neoclassical economics which effectively marginalized the issue of economic distribution by the second half of the twentieth century. It contends that three central theoretical pillars of neoclassical economics were most responsible for this development: marginal productivity, utility theory and Pareto optimality. While these pillars emerged in the Western world, the worldwide success of neoclassical economics in the second half of the twentieth century insured that the neglect of inequality would become a global phenomenon, from India to Israel, Germany to Chile.