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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Soon Ryoo, 2016. "Inequality of Income and Wealth in the Long Run: A Kaldorian Perspective," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 429-457, May.
    2. Kumar, Rishabh & Schoder, Christian & Radpour, Siavash, 2018. "Demand driven growth and capital distribution in a two class model with applications to the United States," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 1-8.
    3. Javier López-Bernardo & Félix López-Martínez & Engelbert Stockhammer, 2016. "A Post-Keynesian Response to Piketty's ‘Fundamental Contradiction of Capitalism’," Review of Political Economy, Taylor & Francis Journals, vol. 28(2), pages 190-204, April.
    4. Arthur Jacobs, 2023. "Capitalist-Worker Wealth Distribution in a Task-Based Model of Automation," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 23/1064, Ghent University, Faculty of Economics and Business Administration.
    5. Stefan Ederer & Miriam Rehm, 2021. "Wealth inequality and aggregate demand," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 405-424, May.
    6. Edward J. Nell, 2014. "On the Causes of Growing Inequality: Piketty, Pasinetti and Taylor," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 26-34, July.
    7. repec:epa:cepawp:2014-8 is not listed on IDEAS
    8. Linus Mattauch & Ottmar Edenhofer & David Klenert & Sophie Bénard, 2016. "Distributional Effects of Public Investment when Wealth and Classes are Back," Metroeconomica, Wiley Blackwell, vol. 67(3), pages 603-629, July.
    9. Luca Zamparelli, 2017. "Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti-Dual’ Pasinetti Economy," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 927-946, November.
    10. Thomas R. Michl, 2016. "Capitalists, Workers and Thomas Piketty's," Review of Political Economy, Taylor & Francis Journals, vol. 28(2), pages 205-219, April.
    11. Fischer, Thomas, 2017. "Thomas Piketty and the rate of time preference," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 111-133.
    12. Geoffrey C. Harcourt, 2015. "Review Article of Capital in the Twenty-First Century, Thomas Piketty," Discussion Papers 2015-10, School of Economics, The University of New South Wales.
    13. Kazuhiro Kurose, 2022. "A two-class economy from the multi-sectoral perspective: the controversy between Pasinetti and Meade–Hahn–Samuelson–Modigliani revisited," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 239-270, April.
    14. Baranzini, Mauro L. & Mirante, Amalia, 2021. "Pasinetti's theorem: A narrow escape, for what was to become an inexhaustible research programme," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 470-481.
    15. Mattauch, Linus & Klenert, David & Stiglitz, Joseph E. & Edenhofer, Ottmar, 2017. "Piketty meets Pasinetti: On public investment and intelligent machinery," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168156, Verein für Socialpolitik / German Economic Association.
    16. Mattauch, Linus & Klenert, David & Stiglitz, Joseph E. & Edenhofer, Ottmar, 2022. "Overcoming wealth inequality by capital taxes that finance public investment," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 383-395.
    17. Borissov, K. & Pakhnin, M., 2018. "A Division of Society into the Rich and the Poor: Some Approaches to Modeling," Journal of the New Economic Association, New Economic Association, vol. 40(4), pages 32-59.
    18. Gregor Semieniuk, 2017. "Piketty’s Elasticity of Substitution: A Critique," Review of Political Economy, Taylor & Francis Journals, vol. 29(1), pages 64-79, January.
    19. Hiroaki Sasaki, 2022. "Growth and income distribution in an economy with dynasties and overlapping generations," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 215-238, April.
    20. Correa, Romar, 2015. "Conflict in the profit-led growth model," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-9.
    21. Sasaki, Hiroaki & Asada, Yasukuni & Sonoda, Ryunosuke, 2024. "Effects of Minimum Wage Share and Wage Gap Reduction on Cyclical Fluctuation: A Goodwin Approach," MPRA Paper 121695, University Library of Munich, Germany.

    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 & Ozlem Omer & Armon Rezai, 2015. "Wealth Concentration, Income Distribution, and Alternatives for the USA," Working Papers Series 17, Institute for New Economic Thinking.
    2. Servaas Storm, 2023. "Lance Taylor (1940–2022): Reconstructing Macroeconomics," Development and Change, International Institute of Social Studies, vol. 54(5), pages 1331-1353, September.
    3. 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.
    4. Rezai, Armon & Taylor, Lance & Foley, Duncan, 2018. "Economic Growth, Income Distribution, and Climate Change," Ecological Economics, Elsevier, vol. 146(C), pages 164-172.
    5. 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.
    6. Stefan Ederer & Miriam Rehm, 2021. "Wealth inequality and aggregate demand," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 405-424, May.
    7. Setterfield, Mark & Kim, Yun K., 2016. "Debt servicing, aggregate consumption, and growth," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 22-33.
    8. 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.

    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.