Its absolute wealth, not relative wealth, that determines whether your kids are likely to live to adulthood, how much leisure you're likely to have, what you'll eat, where you can live.
Capitalism has obviously excelled at raising absolute wealth across the board.
Relative wealth certainly matters when a society is foolish enough to vest massive power in a centralized political system, where it can easily be controlled by the wealthiest clade.
Which is the argument for more decentralized, limited government in a nutshell. That governments are run by the powerful is a tautology, and the iron law of oligarchy makes it clear that it isn't "the people" really running the show.
Piketty's argument, as well as the findings of the IMF report, is that what you've called relative wealth and absolute wealth are linked: greater inequality leads to lower growth rates. The entire economy suffers for the benefit of a few. Eventually, inequality might choke growth out entirely, leading to crisis.
This seems to contradict r > g . Inequality results in investment, which shifts wealth from the g part of the economy to the r part, due to a lower propensity to consume among the wealthy.
Or are there second order effects that the reviews (I haven't read the book) don't discuss?
This relies on an assumption that 1) the only (or only important) places wealth can exert power is in government, or 2) that the likely harm of centralizing measures to address abuse of power in other spheres is greater than the likely benefits. 1 seems plainly false. 2 is much more plausible, but should still be stated explicitly and supported rather than implicitly assumed
Capitalism has obviously excelled at raising absolute wealth across the board.
Relative wealth certainly matters when a society is foolish enough to vest massive power in a centralized political system, where it can easily be controlled by the wealthiest clade.
Which is the argument for more decentralized, limited government in a nutshell. That governments are run by the powerful is a tautology, and the iron law of oligarchy makes it clear that it isn't "the people" really running the show.