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THE FUNDAMENTAL CONTRADICTION OF CAPITALISM REVISITED
Author(s) -
Gómez Marcos,
Parro Francisco
Publication year - 2018
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/boer.12147
Subject(s) - contradiction , economics , capitalism , capital (architecture) , neoclassical economics , inequality , capitalist economy , economic system , state (computer science) , market economy , keynesian economics , economy , political science , law , mathematical analysis , philosophy , mathematics , archaeology , epistemology , algorithm , politics , computer science , history
We build an overlapping generations model to analyse the evolution of inequality as an economy develops. Our model economy resembles a ‘very capitalist society’. Initially, wealth is exclusively concentrated in a rich dynasty. We ask whether or not this type of capitalist economy contains a fundamental contradiction, as claimed by Piketty in his recent book. We derive a condition under which the economy is driven to a state of perpetual inequality. However, we also show that an economy where capital deepening triggers the development process is very unlikely to be absorbed in that state.