David F. Ruccio — Capital and distributions of the surplus in the 21st century

Solow seems to be onto something: the source of the salary incomes of the top 1 percent is just as much capital as are the other sources of their income, such as profits, dividends, interest, rent, and capital gains. All of them—including the salaries of “supermanagers”—represent distributions of the surplus initially appropriated by capital.

Therefore, as Solow concludes, “it is pretty clear that the class of supermanagers belongs socially and politically with the rentiers, not with the larger body of salaried and independent professionals and middle managers.”

Ya think? As we've been saying here for a long time. Power, including corporate power, is the basis of rent extraction. Solow sees the situation but it seems he can't really admit to himself why, since power and rent don't figure in conventional models.

Maybe now that Piketty has pointed out somethings of interest, the investigation will get real and go deeper. but I doubt it. Conventional economics is shown to be vapid speculation about a fantasy world as soon as power and economic rent are introduced. They just are not going to go there.

Real-World Economics Review Blog
Capital and distributions of the surplus in the 21st century
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame