"Entrepreneurs, Chance, and the Deterministic Concentration of Wealth"

[Dunk]

http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0020728

Abstract

"In many economies, wealth is strikingly concentrated. Entrepreneurs–individuals with ownership in for-profit enterprises–comprise a large portion of the wealthiest individuals, and their behavior may help explain patterns in the national distribution of wealth. Entrepreneurs are less diversified and more heavily invested in their own companies than is commonly assumed in economic models. We present an intentionally simplified individual-based model of wealth generation among entrepreneurs to assess the role of chance and determinism in the distribution of wealth. We demonstrate that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%. Specifically, concentration of wealth results when the rate of return on investment varies by entrepreneur and by time. This result is robust to inclusion of realities such as differing skill among entrepreneurs. The most likely overall growth rate of the economy decreases as businesses become less diverse, suggesting that high concentrations of wealth may adversely affect a country's economic growth. We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels."

Interesting article, no?

[Die Neue Zeit]

It's a liberal paper, though. Usually it's liberals who combine "entrepreneurship" and inheritance taxation.

[Dunk]

It's not their solution to the problem I thought interesting - especially because their solution is impossible, it's the implications of the article that I think strengthen notions Marxists already understand; proletarization and the concentration of wealth into the control of fewer capitalists. It also implies that if there are indeed fewer and fewer capitalists, then the decrease in competition over time will necessarily lead to stagnation. While productivity remains high, unemployment and underemployment have increased, demand thus decreases (not need, of course), and more frequent crises of overproduction seems inevitable.

I also find it useful in discussions with liberals, because it "speaks" in a liberal framework, but tells them things Marxists have been saying for a long time.

[Vladimir Innit Lenin]

U.S. Supreme Court Justice Louis Brandeis: “We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.”

A great admission of wealth there.