The Capitalist Spirit and Endogenous Growth

The aim of the study is to investigate the influence of the capitalist spirit in conjunction with the distribution of income on economic growth. The capitalist spirit is represented by the fact that savings rates increase with increasing relative income. We extend an endogenous AK growth model in an overlapping generational framework by implementing imperfect competition and Cournot competition. Using this model, we investigate the influence of profits on the intra- and inter-generational distributions of income and economic growth. While increasing incomes lead to a more unequal intra-generational distribution and to a redistribution of income from the old to the young generation, the impact on economic growth is in general ambiguous, although under specific assumptions it becomes positive. Furthermore, the model shows that increasing market power of firms is associated with declining labor and capital shares, declining interest rates, and an increased wealth-to-income ratio.

The Solutionist Ethic and the Spirit of Digital Capitalism

Why do tech elites believe they are the world’s greatest do-gooders and why does it matter what they say and (claim to) think? In this paper, we use the concept of the spirit of capitalism to shed light on the ways in which normative beliefs inform and justify the business models of tech companies. We first reconstruct, systematize and operationalize the concept of the capitalist spirit. We then argue that solutionist ideas have become central to the (self-)image of today’s tech companies. Solutionism refers to the idea that the use of technologies – by inventive and cunning entrepreneurs – is the royal road to fixing social problems. We use a classification algorithm trained on handcoded documents to empirically trace the relative importance of solutionist vis-`a-vis other normative beliefs in three novel text corpora. We find that solutionist ideas are indeed central to the worldview of tech elites, and that they are also gaining ground in the broader tech milieu, although not yet in the normative discourse of capitalism at large. Finally, we theorize and illustrate the motivating, legitimizing, and orienting role of the capitalist spirit. In doing so, we contribute – conceptually, theoretically, and empirically – to the budding debates on the moral embeddedness of economic action and on thenature and trajectory of digital capitalism.

Notes on Competition and Justum Pretium Theory and Practice in Medieval Italy

Medieval Italian Comuni are often considered as one of the cradles of the modern capitalist spirit. Comuni introduced economic legislation in an attempt to counteract restrictions to competition on the one hand and to control the price of certain goods and services on the other. Price control of basic commodities was often motivated by reasons of public order – such as preventing commoners’ riots. Despite some loose analogies with the modern European Union competition law approach to pricing – namely in the area of excessive pricing – the Italian medieval Comuni pricing theory and practice substantially differed from the modern European Union one. Medieval theory struggled in reconciling market mechanisms with costs analysis and missed the distinction between efficiency and distribution. Moreover, medieval Comuni market variables were substantially divergent from the modern European ones. Despite Comuni being the wealthiest areas in Europe in those days, their consumers had significantly lower buying power, they were affected by different cognitive biases than modern consumers and they were highly segmented from a gender perspective. Medieval producers, that is artisans, did not enjoy the degree of market power that characterizes modern oligopolists. Artisans produced goods for merchants who were the main promoters of trade and economic development. Merchants often succeeded in squeezing artisans’ profits, granting consumers lower prices for manufactured goods, at times also thanks to free trade policies pursued by Comuni administrations.

Should the Interest Rate Really Be the Unique Motive to Save in the Ramsey Model?

<p>By assuming that the individual derives utility from consumption only, the resulting optimal decision to save in the Ramsey model depends on the rate of return, given a certain time preference. If therefore the production function is such that this rate of return remains relatively low, the individual reacts unconsciously by refusing to save despite the capital depreciates and the household grows. We argue that it is conceptually necessary in that framework to assume a direct preference for saving (or for thriftiness) in the utility function, not only to make the individual behave as a real human being who cares about the survival of the household, but also to account reasonably for any other motives to save or accumulate than the rate of return. We show it generalizes the model in a way to recover static properties of the exogenous Solow version and to extend results of capitalist spirit models following Zou (1994).</p>