On the Causes of Growing Inequality: Piketty, Pasinetti and Taylor

Edward J. Nell

International Journal of Political Economy, 2014, vol. 43, issue 3, 26-34

Abstract: Lance Taylor, in this issue, offers a solid critique of Piketty’s account of the causes of the changes in inequality over the past centuries and especially its recent increase. Piketty’s analysis relies on the neo-Classical aggregate production function, and the relationship r > g; Taylor’s critique hits the mark on the first, but seems to miss on the second, and his alternative account also appears flawed. He invokes Pasinetti, but the Pasinetti model gives very different results if some realistic changes are introduced. In particular, if high executive pay is taken into account, as realism demands, an apparently opposite conclusion or a contradiction may be reached. But dropping the requirement that growth be balanced (‘uneven development’) allows a Pasinetti approach to establish a simple, though still abstract and partial, model of the growth of inequality in wealth.

Date: 2014
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DOI: 10.1080/08911916.2014.1001702

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