In the age of Twitter, a 700-page book about wealth distribution is an odd pathway to celebrity.

But a sweeping analysis of economic inequality by Thomas Piketty called Capital in the 21st Century proves economic wonks can create a global sensation. His tome sits at the top of Amazon's bestseller list and local book sellers in Sydney say stocks have sold out and back orders are long. London's Financial Times labelled Piketty a "rock star economist" after the book's release and according to Salon.com writing about Capital has become "a rite of passage" for aspiring economists everywhere. Reviews of reviews are fast appearing, the Washington Post's Carlos Lozada producing an advisory on "How to write a Thomas Piketty think piece, in 10 easy steps."

Piketty has become an intellectual superstar. When the youngish professor from the Paris School of Economics headlined a debate alongside Nobel prize-winning economists Paul Krugman and Joe Stiglitz at the City University of New York earlier this month, the event was described as the hottest ticket in town.

Amid this storm of publicity some of the world's best-known economists have hailed the arrival of Capital. Krugman called it an "awesome" work that has transformed the economic discourse. "We'll never talk about wealth and inequality the same way we used to," he wrote in the New York Review of Books. Branko Milanovic, a former senior economist at the World Bank, labelled it "one of the watershed books in economic thinking".

Piketty's blockbuster begins with the claim that debate about the distribution of wealth has been marked by "an abundance of prejudice and a paucity of fact". He then delivers a mountain of data and evidence on the subject. Drawing on 15 years of research and centuries of data, Piketty demonstrates how wealth tends to become concentrated at the top in capitalist economies. The traditional way of studying the distribution of income has been to compare the fortunes of the poorest fifth of households with those of the middle fifth and the top fifth. But Piketty uses tax statistics to focus on changes in the share of total income commanded by the top 1 per cent of income earners.Advertisement

He argues that a reduction in inequality around the middle of last century was a temporary aberration that won't continue. The Depression and two world wars diminished the advanced world's capital stock which, in turn, equalised the distribution of wealth and incomes across society. Since the late 1970s the rich have again been getting rapidly richer in advanced capitalist economies. Piketty warns that the extreme disparities in wealth distribution seen before World War I will gradually re-emerge. This is because the return on capital is likely to be higher than the economic growth rate, meaning those who own capital – the rich – stand to benefit the most. Piketty says we're "not far" from the highly unequal worlds depicted by 19th century novelists Jane Austen and Honore de Balzac.

His remedy? Stronger "democratic institutions", especially progressive tax systems and high quality universal education to ensure wealth and income do not become too centralised at the top. He also proposes a global tax on capital to help "regulate capitalism" and ensure the super-rich can't shift money to tax havens.

Piketty admits this idea is "utopian" but argues it will reduce inequality and help stabilise democratic societies.

Australians like to think of themselves as egalitarian but Picketty's analysis is prescient here. The book groups us with other "Anglo-Saxon" countries – US, UK and Canada – where the proportion of national income going to the top 1 per cent has risen markedly since the early 1980s. While Australia's "1 per cent" has a smaller share of national income than our counterparts in the US, the trends are in the same direction. The changes are gradual but the cumulative impact over time is significant. Andrew Leigh, a Labor MP and former economics professor, says that since 1975, real wages for the bottom tenth of Australians have risen 15 per cent, while wages for the top tenth have risen 59 per cent. The income share of the top 1 per cent has doubled, the share of the top 0.1 per cent has tripled and that of the 0.001 per cent has quadrupled. The richest 50 Australians now have more wealth than the bottom 2 million, and just three Australians have more wealth than the bottom 1 million, says Leigh. Surveys show that most Australians think disparities of wealth and incomes are already too large.

Whether or not you agree with Piketty's analysis and policy prescriptions, his book is a milestone. The reaction to it illustrates how economic inequality has forced its way on to the global agenda.

The International Monetary Fund – known for its hard-headed economic analysis – published research in February arguing low levels of inequality are "robustly correlated with faster and more durable growth." Even the World Economic Forum – a meeting of wealthy business people and political leaders in Switzerland each year – has identified "severe income disparity" as one of the biggest risks to the global community in the next decade.

Piketty's surprise hit is a signal that debate about the distribution of wealth and income is bound to intensify.

Capital - The New Rock Star Of The World Economy