IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti & John Maynard Keynes

Thomas Piketty attributes increasing wealth inequality to the characteristics of a neoclassical aggregate production function, which is known not to exist. A more plausible narrative is that wage repression can lead to secular stagnation by enriching the rentier. Lower economic activity decreases labor’s bargaining power so that the share of profits in output (pi) tends to rise. Activity (or the output/capital ratio u) is stimulated by increased investment due to a higher pi. Wealth distribution is measured à la Luigi Pasinetti by the ratio Z of capital owned by a capitalist rentier class to the total. Suppose that Z goes up. Rentiers have a high saving rate implying that in a demand driven Keynesian economy u goes down. With the reduction in u the profit share increases, pushing up the growth rate of Z. Depending on economic structure (in particular, differences in saving rates between the classes), this positive feedback may or may not destabilize the system. If stability reigns, there will be a persistent steady state level of Z. If not, there may be euthanasia or triumph of the rentier. In the long run Z is reduced and increased by a downward shift in pi, i.e. less wage repression improves economic performance overall.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Schwartz Center for Economic Policy Analysis (SCEPA), The New School in its series SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. with number 2014-7.

in new window

Length: 25 pages
Date of creation: Jun 2014
Handle: RePEc:epa:cepawp:2014-7
Contact details of provider: Postal:
6 East 16th Street, New York, NY 10003

Phone: 212-229-5901
Fax: 212-229-5903
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:epa:cepawp:2014-7. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bridget Fisher)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.