Is an Increasing Capital Share under Capitalism Inevitable?

Yew-Kwang Ng ()

No 1410, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

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; wealth (search for similar items in EconPapers)
JEL-codes: D3 P1 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2014-08
New Economics Papers: this item is included in nep-ger, nep-gro, nep-his, nep-hme, nep-hpe and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Is an increasing capital share under capitalism inevitable? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:1410

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