Will Limited Needs Kill Capitalism?

Capitalism and Society, Volume 1, Issue 1, Article 4, 2006

36 Pages Posted: 27 Aug 2012

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

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Date Written: August 27, 2012

Abstract

This paper argues that a number of "unorthodox" analyses of capitalism can be understood from the point of view of orthodox economic theory. Our argument is based on the assumptions of monopolistic competition and that utility derived from consuming an individual good is bounded. The model's predictions are consistent with some popular heterodox views, such as "In modern capitalist society, productivity is so high that many people are nearly saturated with goods;" "Productivity growth reduces the real consumption wage of workers;" and "The benefits from growth are appropriated by symbol manipulators." Furthermore, depending on relative levels of product diversity and physical productivity, globalization may harm poorer workers in LDCs, rather than unskilled workers in developed countries, as is usually predicted.

Keywords: Growth, income distribution, bounded needs, monopolistic competition, inequality, wages, globalization, innovation

Suggested Citation

Saint-Paul, Gilles, Will Limited Needs Kill Capitalism? (August 27, 2012). Capitalism and Society, Volume 1, Issue 1, Article 4, 2006. Available at SSRN: https://ssrn.com/abstract=2137147

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
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Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

IZA Institute of Labor Economics

P.O. Box 7240
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Germany

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