Philip Arestis and Malcolm Sawyer — A Reflection on Capital in the 21st Century

In summary, the problem is capital share versus labor share.

Piketty’s book has documented the widening inequality, which scars industrialised economies, and generally draws the implication that rising inequality has not been justified by enhanced economic performance. He has identified the relationship between the rate of return on wealth and the rate of growth as a major issue. In our view, an excess of savings out of return on wealth and the rate of growth is unsustainable. It may lead, following Piketty, to rising wealth inequality. But we have argued that the difference would be deflationary and cause high levels of unemployment. There is a need to reduce the effective rate of profit—and this can be attempted through enhanced worker power or a corporation tax (on a co-ordinated basis to reduce tax competition).

Triple Crisis
A Reflection on Capital in the 21st Century
Philip Arestis, Director of Research at the Cambridge Centre for Economic & Public Policy and Senior Fellow in the Department of Land Economy at the University of Cambridge, UK, and Professor of Economics at the University of the Basque Country, Spain, and Malcolm Sawyer, Professor of Economics, University of Leeds, UK, and Managing editor International Review of Applied Economics