Wealth inequality has been the subject of much hand-wringing over the past decade, kicked off by French economist Thomas Piketty’s weighty 2013 tome Capital in the 21st Century, which argues that the concentration of wealth over the past three centuries is a natural feature of the capitalist system – with greater equality only being imposed in times of extreme events, such as wars or revolution.
A similar argument is made in End Times, a new book by academic Peter Turchin that links societal disorder to an overproduction of elites when the balance of power in society tips too far in their favour. Yet speculating on whether, or even when, a massive upheaval in the social fabric will occur isn’t of much use to investors unless they commit, ahead of time, to a ‘guns and gold’ portfolio. Instead, it’s worth looking at where much of this money currently ends up: the luxury goods market.
The sector has enjoyed a fabulous run, growing at a compound rate of 6 per cent from 1996 to 2022, according to Bain & Company, comfortably outstripping the 3 per cent global GDP growth rate over the same period.