Capitalist-Worker Wealth Distribution in a Task-Based Model of Automation

I integrate the notion of task-based automation into a two-class economy with capitalists and workers, and subsequently study the interaction between the degree of automation and the wealth distribution between capitalists and workers. I find that, as the economy becomes more automated, the possibility of a sustained capitalist class naturally arises. In a laissez-faire scenario, a stable steady state with partial automation can occur both in a dual context (where workers own all wealth) or Pasinetti context (where both capitalists and workers have a strictly positive wealth share). In contrast, the fully automated scenario only occurs in case of an anti-dual economy where capitalists own all wealth. In the case of capital income taxation, the stable fully automated case can also occur in the dual or Pasinetti context. I show that Piketty’s citation of a rising capital-output ratio as an explanation for an increasing capital income share and rising wealth inequality does not require the contested ‘sigma > 1’ assumption.