5. (2014 July-August) Good Press: Inequality from Quesnay to Piketty

Adam Smith and the Physiocrats “knew perfectly well where inequality came from. It was simply a fact of life that most land and other natural resources belonged to a small hereditary nobility. In England, some 2% of the population owned most of the land. This nobility, or their ancestors, gained their estates by force, favoritism, or fraud: that is, conquest, gifts from the king, or bribes to magistrates.”

Polly Cleveland in this two part article outlines what later economists thought about future poverty and inequality. Here’s a summary:

  • Malthus: Higher wages →  higher population → outstriping available resouces/ starvation wages
  • Ricardo: Only improved technology and trade can stave off Malthusian catastrophe.
  • Marx: Growing inequality→ collapse of the capitalist system →  new socialist society→ equality
  • George: Economy grows→ landlords amass surplus→ collapse →repeats (sans intervention)
  • Clark: Inequality is a result of differences in labor and capital contribution.
  • Pareto: Inequality follows natural law, the 80:20 rule (prime example land)→ nothing to fix
  • Solow: Richer economies grow slower than poor ones → rising equality
  • Piketty: less growth + no change in investment → capital investment exceeds growth → growing inequality

Part 1: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-contxt-1.html
Part 2: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-context-2.html

 

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