What distinguishes feudal lords from capitalists is that whereas the former consume all the surplus they extract, the latter reinvest at least some of the surplus.
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As long as capitalists reinvest most of the surplus income rather than engaging in conspicuous consumption, people will tolerate capitalists. Conversely, ostentatious displays of conspicuous consumption by the rich are fundamentally corrosive—political poison to the system.
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Maybe we need to bring back sumptuary laws, or their modern equivalent: punitive (Pigouvian) taxes on every kind of positional good.
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Replying to @nils_gilman
Consumption is also inverse to investment.
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Replying to @BuddyYakov @nils_gilman
Are you both are familiar with Nordhaus' work on this, and the extent to which the general public radically overestimates the rent-to-surplus ratio in modern schumpterian capitalism? https://papers.ssrn.com/sol3/papers.cfm?abstract_id=820309 …
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Replying to @vgr @nils_gilman
1) I often disagree with Nordhouse. 2) this paper is very outdated and uses a data source that doesn't cover the mid to late 2000s 3) the problem is not the consumption but investment share
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I should say for two the new state of the art is both the labor and capital share are down relative to the rent share.
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it would be great to see the thesis reworked with better numbers then, seems like an important set of summary statistics to get right about the capitalist process
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