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Roughing Out a Piketty Framework
Descriptions
Symbols
The Belle
Epoque,
circa 1900
Social
Democratic
Age, circa 1970
Future Second
Gilded Age,
2050
(1) Annual rate of population and labor force growth
n:
0.5%
1.0%
0.0%
(2) Annual rate of labor productivity growth
g:
0.5%
2.0%
1.0%
(3) = (1) + (2): The warranted annual rate of accumulation
r
a
:
1.0%
3.0%
1.0%
(4) The wedge between the rates of accumulation and net profi t
ω:
4.0%
7.0%
4.0%
(5) = (3) + (4): The warranted annual rate of net profi t
r
w
:
5.0%
10.0%
5.0%
(6) The physical capital-annual national income ratio at the
warranted rate of net profi t
K/Y:
3.39
2.13
3.39
(7) The rent-seeking property-annual national income ratio at the
warranted rate of profi t
R/Y:
5.21
0.64
5.21
(8) = (6) + (7): The total wealth-annual income ratio at the
warranted rate of profi t
W/Y:
8.60
2.77
8.60
(9) The income from wealth share of total income
rW/Y
43%
28%
43%
—————
(10) The physical net annual marginal product of capital at K/Y = 3
ρ
K
:
6%
6%
6%
(11) The annual net return on rent-seeking capital at R/Y = 3
ρ
R
:
6%
6%
6%
(12) The elasticity of the rate of profi t on physical capital
λ
K
:
1.50
1.50
1.50
(13) The elasticity of the rate of profi t on rent-seeking capital
λ
R
:
0.33
0.33
0.33
