ABSTRACT
Thomas Piketty’s Capital in the Twenty-first Century (2014) has become one of the key books in contemporary economics and political economy. Although Piketty never mentions the financialization of real estate, his analysis of long-term developments as a “metamorphosis of capital” is indicative of financialization. His data show that in France and the UK the capital-to-income ratio followed a U-shaped curve in the period from the eighteenth to the twenty-first century. A stable capital stock in the range of 600 percent of income throughout the eighteenth and nineteenth centuries was largely based on agricultural land and increasingly from the colonial investment outlets. After WWI the ratio of capital-to-income declined dramatically, only to return from the 1970s onwards. This return towards a large capital-to-income ratio was largely propelled by real estate, i.e., again based on land, although now predominately on urbanized rather than agricultural land. From the 1950s to the 1990s Piketty’s data show that real estate wealth as share of overall capital remained stable at 40 percent albeit increasing rapidly vis-à-vis income. In the last two decades, however, the size of real estate increased to 58 percent of the overall stock of wealth and 300 percent of annual income in 2010.
