Inequality and the phases of capitalism
Luiz Carlos Bresser-Pereira
Forum for Social Economics, 2014, São Paulo.
We live in a capitalist world characterized by economic inequality. Inequality is a real curse, but it does not have to always increase. In different phases of capitalism, it may be increasing, constant, or decreasing, depending on the dominant type of technical progress (capital-using, capital-neutral, or capital-saving), on the organizational capacity of the workers, on the competition from other countries with lower wages, and on the prevailing degree of democracy. But distribution faces an economic constraint: the expected profit rate must remain attractive to business entrepreneurs. From the mid-20th century we would expect technological progress to change from neutral to capital-saving, which would allow wages to increase at a faster rate than productivity. Indeed, this happened in the Golden Years of capitalism, but such progress stalled in the succeeding Neoliberal Years, dominated as they were by a class coalition of rentier capitalists and financiers.