IDEAS home Printed from https://ideas.repec.org/a/mes/ijpoec/v43y2014i3p4-17.html
   My bibliography  Save this article

The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti and John Maynard Keynes

Author

Listed:
  • Lance Taylor

Abstract

Thomas Piketty attributes increasing wealth inequality to the characteristics of a neoclassical aggregate production function, which is known not to exist. More plausibly, wage repression can lead to secular stagnation by enriching the rentier. Lower economic activity decreases labor’s bargaining power so that the share of profits in output (π)tends to rise. Activity is stimulated by increased investment due to a higher π. Dynamics of wealth are specified in terms of the ratio Z of capital owned by a capitalist rentier class to the total, a variation on a well-known theme by Luigi Pasinetti. Suppose that Z goes up. Rentiers have a high saving rate—from the paradox of thrift, output goes down. The profit share increases, pushing up the growth rate of Z. Depending on economic structure (in particular, differences in saving rates between the classes), this positive feedback may or may not destabilize the system. If stability reigns, there will be a persistent steady-state level of Z. In the long run, Z is reduced and activity increased by a downward shift in π, that is, less wage repression improves economic performance overall.

Suggested Citation

  • Lance Taylor, 2014. "The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti and John Maynard Keynes," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 4-17, July.
    • Handle: RePEc:mes:ijpoec:v:43:y:2014:i:3:p:4-17
    DOI: 10.1080/08911916.2014.1002296
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/08911916.2014.1002296
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/08911916.2014.1002296?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lance Taylor & Armon Rezai & Rishabh Kumar & Nelson Barbosa & Laura Carvalho, 2017. "Wage increases, transfers, and the socially determined income distribution in the USA," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(2), pages 259-275, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lance Taylor, 2014. "Modeling Distribution and Growth: Replies to Garbellini and Wirkierman, Harcourt, and Nell," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 44-54, July.
    2. Rezai, Armon & Taylor, Lance & Foley, Duncan, 2018. "Economic Growth, Income Distribution, and Climate Change," Ecological Economics, Elsevier, vol. 146(C), pages 164-172.
    3. Mark Setterfield, 2015. "Time variation in the size of the multiplier: a Kalecki-Harrod approach," Working Papers 1522, New School for Social Research, Department of Economics, revised Jan 2017.
    4. Stefan Ederer & Miriam Rehm, 2021. "Wealth inequality and aggregate demand," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 405-424, May.
    5. Setterfield, Mark & Kim, Yun K., 2016. "Debt servicing, aggregate consumption, and growth," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 22-33.
    6. Lance Taylor & Ozlem Omer & Armon Rezai, 2015. "Wealth Concentration, Income Distribution, and Alternatives for the USA," Working Papers Series 17, Institute for New Economic Thinking.
    7. Rishabh Kumar, 2015. "Thrift, stagnation and wealth distribution in a two class economy with applications to the United States," Working Papers 1506, New School for Social Research, Department of Economics, revised Jul 2015.
    8. Servaas Storm, 2023. "Lance Taylor (1940–2022): Reconstructing Macroeconomics," Development and Change, International Institute of Social Studies, vol. 54(5), pages 1331-1353, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:ijpoec:v:43:y:2014:i:3:p:4-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MIJP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.