INEQUALITY AND CONCETRAТION OF CAPITAL

Abstract

Inequality in capital, property and income is a major determinant of modern society. An enormous concentration of the capital is accomplished.The number of the rich, and extremely rich, is increasing. On the other hand are those who have less and the poor. There is also an increase in the number of global plutocrats. Growth dynamics is slowing down. The future is uncertain. The purpose of this paper is to see the growing social inequality as a problem nowadays. Historical, deductive-inductive, structural and comparative analysis are applied. The distribution of wealth is one of the most debated issues today. But do we know enough about its long-term development? Does the dynamics of accumulation of private capital inevitably lead to a strong concentration of wealth and power in the hands of a few? Do equalization of growth rate, competition and technical progress lead to less inequality and greater stabilization in the advanced stages of development? What do we know about income and wealth development and what lessons can we learn from it?

The history of the distribution of wealth is always deeply political and cannot be reduced to pure economic mechanisms. The history of inequality depends on the way economic, social and political actors see what is unfair and what is not, as well as on their relative power and the resulting common choices: distribution is a common product of all actors.

The dynamics of wealth distribution reveal powerful mechanisms that alternate between convergence and divergence, so there is no natural spontaneous process that would prevent destabilizing, non-egalitarian tendencies from permanently prevailing.

We start with the mechanisms that move towards convergence, i.e. towards reducing inequality. The main force of convergence is the process of disseminating knowledge and investing in training and education.

The law of supply and demand, as well as the mobility of capital and labor, which is a variant of that law, can be equally relied upon in that direction, but the impact of this law is less powerful than the spread of knowledge and skills and is often ambiguous and contradictory. The process of disseminating knowledge and skills is a key mechanism that simultaneously enables general productivity growth and reduction of inequality.

From a strictly theoretical point of view, there are potentially other forces moving towards greater equality. Technological rationality should automatically lead to the victory of human capital over financial capital and real estate, capable managers over shareholders, skills over nepotism. Somehow it would automatically lead to democratic rationality.

The issue of wealth distribution will always have a subjective and psychological dimension. The answers offered are always imperfect and unfinished.

Changes are logically possible and to some extent real, but their impact is far smaller than we can imagine.