‘Capital’ Accumulation, Economic Growth and Income Distribution: Different Theories and 20th and 21st Century Evidence

Abstract

In present article both different theoretical approaches to linkages between income distribution, capital accumulation and economic growth and an introductory analysis of those variables evolution during 20th and 21st century in main market economies were presented. In first section mainstream approach to income distribution and capital accumulation was analysed, pointing out that according to this school of thought a positive linkage between high income inequalities, high capital accumulation and high economic growth can be expected to exist. Second section considered heterodox arguments contesting various mainstream arguments based on the role of capital (or investment and saving) supply and demand functions. It was, then, pointed out that, in an integrated Keynesain-Classical approach, rather a positive link-age between low income inequalities, high capital accumulation and high economic growth can be expected to exist. Third section presented data about income inequalities, capital ac-cumulation and economic growth evolution in France, Germany, United Kingdom and United States in the period 1900–2010. Basing on data it was possible to point out that low income inequalities registered in the 1950–1979 period were paralleled by high capital accumulation and economic growth. Higher income inequalities registered in the 1900–1949 and 1980–2010 periods coupled, instead, with lower capital accumulation and economic growth. Hetero-dox authors’ reasoning was, then, argued to be more in line with 20th and 21st century experience. In the conclusions, integrated inquiry of income distribution, capital accumulation and economic growth linkages and parallel evolution was, thus, argued to be a very fruitful and particularly open to debate field for future researches.