ABSTRACT

Economic inequality is jointly caused by two sets of factors, one structural and the other dynamic. Structurally, there is a big asymmetry between capital and labour both productivity-wise and income-wise. Dynamically, economic growth results in the structural factors being deepened and worsened over time. Generally speaking, inequality is caused by the rich getting more powerful and influential and conversely by the mass being impoverished. The latter process comes about by way of a higher rate of unemployment or of stagnation in wage rate growth or as a result of cyclical financial crisis, which in turn are caused by factors such as technological progress, globalisation, the financialisation of the economy etc. The phenomenal rise of big corporations and their "financialisation" and rent-seeking activities have resulted in big profit, much of which stays within the corporation as retained profit, or as reserve for further leveraged financialisation activities, or as dividend going into the hands of the shareholders (capital owners).