Will Limited Needs Kill Capitalism?

36 Pages Posted: 23 Jan 2013

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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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.

Comments on this paper can be found at: http://ssrn.com/abstract=2205773

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

Suggested Citation

Saint-Paul, Gilles, Will Limited Needs Kill Capitalism?. Capitalism and Society, Vol. 1, Issue 1, Article 4, 2006. Available at SSRN: https://ssrn.com/abstract=2205770

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
+33 5 6112 8544 (Phone)
+33 5 6122 5563 (Fax)

Centre for Economic Policy Research (CEPR)

United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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