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Capitalism and Inequality

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  • Prabhat Patnaik

Abstract

In discussing inequality under capitalism, we must distinguish between ‘stock inequality’ and ‘flow inequality’, or inequality in wealth and inequality in incomes. We also have to be clear whether our focus is the capitalist sector proper, consisting only of the workers and the capitalists, or the capitalist sector together with the setting in which it exists, which includes its pre-capitalist surroundings. This article argues that the focus must be wider, encompassing the capitalist sector together with its setting. Over this wider terrain, wealth inequality has a tendency to increase over time not only because of ‘centralization of capital’ highlighted by Marx but also because of the dispossession of petty producers, the so-called ‘primitive accumulation of capital’, which continues throughout the history of capitalism. Primitive accumulation also ensures the existence of a persistently large reserve army of labour which keeps down real wages even as labour productivity increases, resulting in an increase over time in income inequality as well.

Suggested Citation

  • Prabhat Patnaik, 2015. "Capitalism and Inequality," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 4(2), pages 153-168, August.
    • Handle: RePEc:sae:agspub:v:4:y:2015:i:2:p:153-168
    DOI: 10.1177/2277976015592070
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Luigi L. Pasinetti, 1962. "Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(4), pages 267-279.
    3. Paul A. Samuelson & Franco Modigliani, 1966. "The Pasinetti Paradox in Neoclassical and More General Models," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 33(4), pages 269-301.
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