THE FUNDAMENTAL CONTRADICTION OF CAPITALISM REVISITED

Marcos Gómez, Fernando Parro

Research output: Contribution to journalArticle

Abstract

We build an overlapping generations model to analyse the evolution of inequality as an economy develops. Our model economy resembles a ‘very capitalist society’. Initially, wealth is exclusively concentrated in a rich dynasty. We ask whether or not this type of capitalist economy contains a fundamental contradiction, as claimed by Piketty in his recent book. We derive a condition under which the economy is driven to a state of perpetual inequality. However, we also show that an economy where capital deepening triggers the development process is very unlikely to be absorbed in that state.

Original languageEnglish (US)
Pages (from-to)381-399
Number of pages19
JournalBulletin of Economic Research
Volume70
Issue number4
DOIs
Publication statusPublished - Oct 1 2018

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All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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