- Sep 16, 2000
- Basic Beliefs
Of course the share that goes to "capital" has gone up. The problem is that the model is wrong. It is not capital/labor, but capital/tooling/labor. When you look at how much labor gets you inherently lump tooling with capital and get a distorted picture. At this point in the amount of money invested in means of production is several years of median income per worker. (Obviously, some fields have more, some have less.) Until you model three divisions rather than two your numbers will be nonsense.I think that IS how capitalism works. Production is always going to be divided among unskilled labor, skilled labor, land and capital. Today's pay discrepancy between unskilled labor and highly skilled labor is huge. And high populations naturally push down the amount of scarce land the average person can hope to own.
There has been huge increase in accumulated capital (factories, robots, etc.). Figure 6.2 in Piketty's book shows the split of income between capital (incl. land) and labor in France. In 1860 it was 57/43 — labor still got almost half the "pie." In 2010 it was 74/26 — capital's income was almost thrice labor's. And a lot of the labor income goes to highly-skilled labor. A lot of "capital" is intellectual or intangible property: I don't know how Piketty handles this.
In the olden days, wheat, barley and eggs were a large share of income; and the farm laborers who produced this food got a largish share of its value. But today a smart-phone is almost a necessity: people expect more than cereal, bread and eggs.
I hope the developed democracies come to their senses soon and realize some form of UBI is needed to cope with new economic realities. (Europe is already well along this path; in European countries both rich and poor tend to be relatively content.) Otherwise the gap between haves and have-nots will bring dystopia.
Note, also, that skilled labor is actually subject to this same thing--just count education as tooling. The skilled worker has to pay the costs of their education and they get fewer working years because some of their time is spent learning rather than working. An unskilled worker gets about 45 years in the labor force, a field that requires a PhD is more like 35.