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A Review of Rent-seekers, Profits, Wages and Inequality, The Top 20%, 2019 by Peter Mihalyi and Ivan Szelenyi

Author

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  • Mehrdad Vahabi

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

Abstract

The authors, Péter Mihályi and Iván Szelényi, set themselves the ambitious task of formulating an alternative discourse about inequality in which the extent of inequality per se is not the problem but rather where inequalities stem from? Herein lies their fundamental divergence with Piketty (2014) for whom the excessive growth of “profits” is assumed to be the source of inequalities. The problem with mainstream economics and Piketty is that “profit” and “rent” are lumped together. A critical distinction between the two is warranted to grasp the relationship between inequalities, innovation and economic growth. In line with Kornai’s criticism of Piketty (2016), the authors insist on the source of inequality. Are they engendered by wages and profits earned on competitive markets or are they originated from rents due to imposed restrictions on market competition? In contrast with Piketty, the general assumption of the authors is that higher profits and wages often add to the annual growth or national income. Rents on the other hand lower annual growth. Although some forms of rent may even be useful, excessive rents breeds economic stagnation.

Suggested Citation

  • Mehrdad Vahabi, 2019. "A Review of Rent-seekers, Profits, Wages and Inequality, The Top 20%, 2019 by Peter Mihalyi and Ivan Szelenyi," CEPN Working Papers 2019-07, Centre d'Economie de l'Université de Paris Nord.
  • Handle: RePEc:upn:wpaper:2019-07
    as

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    References listed on IDEAS

    as
    1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    2. Mehrdad Vahabi, 2011. "Appropriation, violent enforcement, and transaction costs: a critical survey," Public Choice, Springer, vol. 147(1), pages 227-253, April.
    3. Vahabi,Mehrdad, 2019. "The Political Economy of Predation," Cambridge Books, Cambridge University Press, number 9781107591370, February.
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    More about this item

    Keywords

    Inequalities; rents; profits; wages; patrimonial capitalism; political capitalism;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E14 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Austrian; Evolutionary; Institutional
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • P10 - Economic Systems - - Capitalist Systems - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P29 - Economic Systems - - Socialist Systems and Transition Economies - - - Other
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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