Is an increasing capital share under capitalism inevitable?

Yew-Kwang Ng ()

European Journal of Political Economy, 2015, vol. 38, issue C, 82-86

Abstract: Piketty's influential book Capital in the Twenty-First Century and its prominent review by Milanovic in the Journal of Economic Literature both assert the inevitability of an increasing share of capital in total income, given a higher rate of return to capital than the rate of growth in income. This paper shows by a specific example, a logical argument and its intuition that the alleged inevitability is not valid. Even just for capital to grow faster than income, we need an additional requirement that saving of non-capital income is larger than consumption of capital income. Even if this is satisfied, the capital share may not increase as the rate of return may fall and non-capital incomes may increase with capital accumulation.

Keywords: Capital; Capitalism; Distribution; Income; Income share (search for similar items in EconPapers)
JEL-codes: D3 P1 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Is an Increasing Capital Share under Capitalism Inevitable? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:38:y:2015:i:c:p:82-86

DOI: 10.1016/j.ejpoleco.2015.02.001

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