I am not sure whether I would draw exactly the same conclusion about the validity of Picketty’s. However, this article summarises an important analysis of what big corporations, in particular, do with the surplus created by workers (after their wages have been paid).
If one looks at what is happening with corporate investment in Australia you have to wonder what the research would show up here. My hunch is, much the same.
Does anyone know of this sort of analysis being done for Australian corporations?
by Harold Meyerson
In corporations, it’s owner-take-all
Labor Day — that mocking reminder that this nation once honored workers — is upon us again, posing the nagging question of why the economy ceased to reward work. Was globalization the culprit? Technological change? Anyone seeking a more fundamental answer should pick up the September issue of the Harvard Business Review and check out William Lazonick’s seminal essay on U.S. corporations, “Profits Without Prosperity.”
Like Thomas Piketty, Lazonick, a professor at the University of Massachusetts at Lowell, is that rare economist who actually performs empirical research. What he has uncovered is a shift in corporate conduct that transformed the U.S. economy — for the worse. From the end of World War II through the late 1970s, he writes, major U.S. corporations retained most of their earnings and reinvested them in business expansions, new or improved technologies, worker training and pay increases…
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