by From Andri Stahel and RWER issue 93 As will be argued, a great part – and increasingly so – of the capital gains result from an inflationary increase in the monetary value of given financial assets and not from productive employment of capital, generating both capital-income and new wealth on its wake. Thus, we overlook the effect of the different kinds of capital both in fostering or not overall economic activity and the effect of that which has been termed “financialisation” on the wealth-inequalities in our contemporary world. “A pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production”, as defined by Greta Krippner following Arrighi (Arrighi 1994; Krippner 2005, p. 174). While in the case of capital
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from Andri Stahel and RWER issue 93
As will be argued, a great part – and increasingly so – of the capital gains result from an inflationary increase in the monetary value of given financial assets and not from productive employment of capital, generating both capital-income and new wealth on its wake. Thus, we overlook the effect of the different kinds of capital both in fostering or not overall economic activity and the effect of that which has been termed “financialisation” on the wealth-inequalities in our contemporary world. “A pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production”, as defined by Greta Krippner following Arrighi (Arrighi 1994; Krippner 2005, p. 174).
While in the case of capital invested in productive and commercial activities we may observe a larger appropriation of newly created wealth by some in proportion to that gained by others, but still growing wealth for all in global terms; a completely different picture emerges when we look at the speculative financial gains obtained from buying and selling financial assets at a profit. Here, no new wealth is created and thus, at the aggregate level, we have a net transfer of the existing wealth to those who managed to effectively obtain speculative gains from their capital at the expenses of those who don’t and who do not possess speculatively invested savings.
A second aspect which is not considered by Piketty and by economists at large even when talking about “wealth distribution” issues has to do with the very definition of wealth and what we are talking about in the first place. read more