| Abstract: | This article examines the connection between economic growth and the capital-to-income ratio in the context of the work done on wealth distribution by Thomas Piketty and Emmanuel Saez. The article employs a simple mathematical formulation to understand the key influences on the capital-to-income ratio, and uses the stage theory of capitalism to conceptualize the long term theoretical relationship between growth and wealth concentration. The article contends (i) that inequality and growth are negatively related, (ii) that high wealth concentration can lead to low growth rates and vice versa, and (iii) that high inequality augments savings and speculation which, together, undermine growth and financial stability. |
