Search Results

You are looking at 1 - 10 of 210 items

  • Series: New Directions in Modern Economics series x
Clear All Modify Search
You do not have access to this content

Innovation, Evolution and Economic Change

New Ideas in the Tradition of Galbraith

Edited by Blandine Laperche, James K. Galbraith and Dimitri Uzunidis

The book begins with a penetrating analysis of the main features of today’s capitalism and in particular the conflict between shareholders and managers. It moves on to focus on the consequences of globalization in the decision-making processes of large corporations and represents an important step in the development of a theory of fraud and corruption within corporations. In the final part, the authors address and explore the consequences of the domination of influential groups over major social and political decisions, on the blurred boundaries between the public and the private sectors and its consequences in the fields of technological regulation and the evolution of public services. In so doing, the authors question the meaning and power of democracy in today’s society.
You do not have access to this content

Approaching Equality

What Can Be Done About Wealth Inequality?

Roger A. McCain

Drawing on some recent research (especially that of Piketty and his associates) and on older ideas (particularly from Sir Arthur Lewis), Roger McCain proposes policies that, together, would aim to reverse the observed tendency towards the concentration of wealth in market economies, thus ‘approach equality.’ The shortcomings and dangers of rising wealth inequality are discussed, both from the point of view of increasing instability and of equalitarian values.
This content is available to you

Introduction: plan and scope of the book

What Can Be Done About Wealth Inequality?

Roger A. McCain

Sketches the plan of the book. Argues that wealth inequality is the basis of many other economic problems, noting that concentrations of wealth inevitably become concentrations of political power; this concentration of political power makes political democracy increasingly difficult to sustain; concentration of wealth inevitably creates instability and differences of social status, and inequality of wealth is the major cause of income inequality.

You do not have access to this content

The future of capitalism

What Can Be Done About Wealth Inequality?

Roger A. McCain

The chapter begins by refining a definition of capitalism, drawing on Marx and Schumpeter, but reconciles this definition with the existence of what Piketty calls a “Patrimonial middle class” by restating the definition of the working class in terms of the life-cycle. Sketches and in part criticizes Piketty’s account of the concentration of wealth, and integrates some of Stiglitz’s writing on rent-seeking. Concludes that mature capitalism tends to be transformed, via concentration of wealth, into plutocratic oligarchy, with regrettable consequences.

You do not have access to this content

Why be concerned? Inequality and instability

What Can Be Done About Wealth Inequality?

Roger A. McCain

Discusses two reasons to favor increased equality: first, from equalitarian values, and second, from the dangers of instability that inequality creates. The first section considers, and criticizes, some traditional defenses of inequality. The second section summarizes some recent writing on secular stagnation and the associated danger of bubbles and crashes. A point which does not seem to have been noticed, and that arises from the use of a Marxist definition of class, is that consumer lending from the capitalist to the working class creates an instability similar to the instability that arises from international lending when the lender and debtor countries are within a common currency union. Extends the discussion of equalitarian values, drawing on the literature of superfairness and related models. Following exposition in terms of numerical examples, a mathematical formalization is given.

You do not have access to this content

Sir Arthur Lewis’ equalitarian vision

What Can Be Done About Wealth Inequality?

Roger A. McCain

Revisits and adapts some economic ideas of Sir Arthur Lewis. Writing for the Fabian Society at midcentury, Lewis argued against nationalization of industry and instead for redistribution of wealth through the tax system: by running an average government surplus in successive years, the government might use the surplus to buy corporate shares and similar wealth, establishing a public patrimony. This chapter suggests that a Social Endowment Fund built in this way might be run essentially as an index mutual fund, thus retaining an arm’s-length distance between economic and political decisions. Some obstacles to this program are considered and responses sketched.

You do not have access to this content

Piketty’s narrative and the wealth tax

What Can Be Done About Wealth Inequality?

Roger A. McCain

Piketty’s model of the increasing inequality of wealth is reviewed with some issues that have arisen from it, including the discussion of the “elasticity of substitution.” The proposal that a tax be placed on net wealth above some minimum, also present in Lewis’ proposals, is discussed, and it is suggested that such a tax be hypothecated to fund and enlarge the Social Endowment Fund. The problem of enforcement is discussed and it is suggested that some reforms of other tax laws could create a situation in which “at some stage some buyer or seller will want to report the transaction to save himself taxes,” thus making a tax system including the wealth tax essentially self-enforcing. Some related issues are discussed, along with Atkinson’s recent (much more far-reaching) proposal of public policies to limit income inequality. A simple three-factor CES model of production and growth is sketched that (1) generates the movements in capital incomes that Piketty’s model suggests, despite the fact that (2) raw labor and an aggregate of human and physical capital are complements. The model is approximately fit to data for the United States in the later twentieth century and used to project the impacts of a wealth tax and a Social Endowment Fund for a highly simplified case.

You do not have access to this content

Can we “grow the middle class?”

What Can Be Done About Wealth Inequality?

Roger A. McCain

Revisits the definition of what Piketty calls the Patrimonial Middle Class and argues that what is significant in it is that it includes a component of the (Marxian) working class, a twentieth-century transformation of capitalism. From the point of view of modern macroeconomics, the puzzle is why everyone is not a member of the “middle class.” The utopian element in this view is discussed. The chapter then addresses the puzzle, which is that a majority of the population are not included in the middle class, and addresses this with an ordinary-language exposition of a model of wealth formation that extends the standard model in modern macroeconomics by allowing for “liquidity constraint,” arguing that it may be rational for an agent to fail to save in financial terms when the rate of return to formation of human capital is greater than the rate of return on financial capital. A mathematical model is presented that corresponds to the ordinary-language discussion of liquidity constraint and the rate of return to human capital formation in Chapter 6. A simplified diagrammatic exposition is also given.

You do not have access to this content

Synthesis and extension

What Can Be Done About Wealth Inequality?

Roger A. McCain

Reconsiders the proposals to form a Social Endowment Fund and expand it via a hypothecated wealth tax as a whole and considers some details. The division of the proprietary income of the Fund between reinvestment and payment of a social dividend will probably shift toward reinvestment as the Fund becomes more and more the dominant financier in the market economy. This will also be influenced by “business cycle” conditions, as would the use of the Fund to retire the public debt. The impact of the wealth tax on small business is considered. Some shifts from free government provision to efficient pricing of services are quite consistent with the program proposed here. Finally, the abstract determinants of the stability and trends of social systems are reconsidered and the proposal discussed in that light.

You do not have access to this content

To each according to need

What Can Be Done About Wealth Inequality?

Roger A. McCain

The famous slogan “to each according to need, from each according to ability” stems not from Marx but from the democratic socialist Louis Blanc, and Marx dismissed it as obsolete. Nevertheless programs of distribution according to need played a key role in the class-compromise that characterized successful developed countries in the twentieth century. The logic of “need” is discussed. Since needs are satiable, it may be that distribution according to need will play less part in the future, but health needs are an apparent exception.