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Unequal Exchange and the Rentier Economy

Author

Listed:
  • Ron Baiman

    (Graduate Business Administration, Benedictine University, Lisle, IL, USA)

Abstract

Detailed analysis of BEA methodology and data strongly suggests that U.S. GDP is overvalued on the output side. The ability to generate income without producing real value-added output is a key characteristic of a “rentier economy.†Broader indicators include a massive increase in financial activity and “finance, insurance, and real estate†(FIRE), declining manufacturing share, declining real investment in plant and equipment, increased outsourcing of production and rising trade deficits, declining employment and real wage growth, rising profits, growing inequality, and increasing aggregate demand dependency on private (household and business) and public sector debt. Based on these indicators, relative to other advanced countries like Germany, the U.S. has since the mid-1970’s increasingly become a “rentier economy.†Grafting a schematic “rentier economy†onto a simple “free trade unequal exchange†model from Baiman (2006) highlights the labor exchange, inequality, and efficiency characteristics of rentier United States, unequal exchange (German), and developing country (China), economies. Reviving the U.S. economy and restoring full employment will require a public policy induced reallocation of resources away from rentier activity back to productive high-value added “unequal exchange†production.

Suggested Citation

  • Ron Baiman, 2014. "Unequal Exchange and the Rentier Economy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 46(4), pages 536-557, December.
  • Handle: RePEc:sae:reorpe:v:46:y:2014:i:4:p:536-557
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    Citations

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    Cited by:

    1. Andrea Ricci, 2016. "Unequal Exchange in International Trade:A General Model," Working Papers 1605, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2016.
    2. Ivan Rubinic & Maks Tajnikar, 2019. "The Influence of the Economic Cycle on Eurozone Cross-Country Inequality Dynamics," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(2), pages 267-290.

    More about this item

    Keywords

    full employment; unequal exchange; rentier economy; national income and product accounts; federal deficit; trade deficit;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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