ABSTRACT

This chapter describes and briefly analyses how growth rates and socio-economic inequalities are related. The difference between the average annual rate of return on capital and annual economic growth has been growing, because gross domestic product (GDP) growth has slowed and because financialization and related deflationary consequences have in effect increased the average annual rate of return on capital. Deindustrialization and the changing composition of the economy have diminished GDP growth potential, especially in high-income countries. The chapter argues that the deceleration of growth is due mainly to economic policy and cumulative causation related to the geo-economic shifts of uneven growth. It also argues that the concentration of wealth and the rising importance of past and inherited wealth are making a major economic and political disaster more likely under current conditions. The chapter concludes that Piketty’s inequality expression captures some of the essential dynamics of the disintegrative tendencies in the global political economy.