CultureCitizen
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- Jun 1, 2013
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The current productivity / income gap is an echoes an event which had already occured in the past. The event is called Engel's pause by economist Robert C. Allen.
"The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital’s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity."
The pause lasted roughly 50 years ( I guess that's what economist call "long run" ) .
Will the current situation be fixed by the market "in the long run" as it was fixed in the past ?
In this case the salary stagnation might last another 25 years.
Or, are we facing a very different situation with a dramatically different increase in productivity , and in all likelihood the market will not self correct this situation.
Share your thoughts ( and your links ).
Today s Economic History Robert Allen Engels s Pause
"The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital’s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity."
The pause lasted roughly 50 years ( I guess that's what economist call "long run" ) .
Will the current situation be fixed by the market "in the long run" as it was fixed in the past ?
In this case the salary stagnation might last another 25 years.
Or, are we facing a very different situation with a dramatically different increase in productivity , and in all likelihood the market will not self correct this situation.
Share your thoughts ( and your links ).
Today s Economic History Robert Allen Engels s Pause