Abstract
Changes in firm strategy and structure partially explain the sources and consequences of rising wealth inequality in America. Combining use of state-created monopolies around intellectual property rights (IPRs) for profitability and firm-level strategies to transform their industrial organization by pushing physical capital and noncore labor outside the boundaries of the firm leads to rising levels of wealth and income inequality among firms as well as individuals. Income inequality among firms in turn reduces growth in productive investment and thus in aggregate demand. Slower growth reflexively deters firms from new investment, aggravating the shortfall in aggregate demand. Decreased protection for IPRs and increased protection for subcontracted workers would help increase aggregate demand and thus push growth back to its prior level, as well as reducing wealth and income inequality among individuals.
- Copyright © 2016 by Russell Sage Foundation. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Reproduction by the United States Government in whole or in part is permitted for any purpose. The author would like to thank John Echeverri-Gent, Lindsay Flynn, Ronen Palan, Bent Sofus Tranøy, and the anonymous reviewers for comment and criticism. Earlier versions presented at the Russell Sage Foundation, the University of North Carolina, Harvard University, the University of Virginia Batten School of Public Policy, and Yale-National University of Singapore also benefited from audience comments and questions. Responsibility remains with the author, however. Direct correspondence to: Herman Mark Schwartz at schwartz{at}virginia.edu, Politics Department, University of Virginia, PO Box 400787, Charlottesville VA 22904.
Open Access Policy: RSF: The Russell Sage Foundation Journal of the Social Sciences is an open access journal. This article is published under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
In this issue
Jump to section
Related Articles
Cited By...
- No citing articles found.