A Review of Rent-seekers, Profits, Wages and Inequality, The Top 20%, 2019 by Peter Mihalyi and Ivan Szelenyi

Mehrdad Vahabi ()
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Mehrdad Vahabi: Centre d'Economie de l'Université de Paris Nord (CEPN)

No 2019-07, CEPN Working Papers from Centre d'Economie de l'Université de Paris Nord

Abstract: The authors, Péter Mihályi and Iván Szelényi, set themselves the ambitious task of formulating an alternative discourse about inequality in which the extent of inequality per se is not the problem but rather where inequalities stem from? Herein lies their fundamental divergence with Piketty (2014) for whom the excessive growth of “profits” is assumed to be the source of inequalities. The problem with mainstream economics and Piketty is that “profit” and “rent” are lumped together. A critical distinction between the two is warranted to grasp the relationship between inequalities, innovation and economic growth. In line with Kornai’s criticism of Piketty (2016), the authors insist on the source of inequality. Are they engendered by wages and profits earned on competitive markets or are they originated from rents due to imposed restrictions on market competition? In contrast with Piketty, the general assumption of the authors is that higher profits and wages often add to the annual growth or national income. Rents on the other hand lower annual growth. Although some forms of rent may even be useful, excessive rents breeds economic stagnation.

Keywords: Inequalities; rents; profits; wages; patrimonial capitalism; political capitalism (search for similar items in EconPapers)
JEL-codes: E02 E14 E25 F60 H27 P10 P16 P29 Z13 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-his, nep-mac and nep-pke
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