Since 2015, Baidu, Alibaba, and Tencent (the so-called BAT) have constructed an empire in the Chinese Internet content industry via mergers and acquisitions. However, little is known about how professional Internet workers are experiencing this process of accumulation and consolidation. This article focuses on how social relations are reconfigured and subsumed in the capital accumulation process in the realm of the Internet content industry, using the Chinese case. It argues that fresh graduates are subsumed into the accumulation process as immaterial resources in the circulation of capital. It also offers a general critique of the capital accumulation process, as it shifts risks and costs of failure on to independent start-ups entering the industry.

This year marks the 200th anniversary of the birth of Karl Marx, the last of the classical political economists. This article aims to mark the occasion by drawing attention to some of his key works in economics and to present some of his ideas in a way that will make sense to readers not familiar with or very much interested in the complexities of the labour theory of value. I begin with a brief biography and a summary of his main works in economics. I then explore in some detail ideas related to the economic surplus, unpaid labour and exploitation, and attempt to tease out the implications of his analysis for the determination of the wage share. While I argue that Marx has not succeeded in providing adequate theoretical support for his prediction that the wage share will fall as capital accumulates, he has nonetheless provided a very interesting and insightful collection of ideas by which we may, even today, approach a wide range of issues relating to production and distribution.

This study explores the linkage between the labor force participation of the elderly and the long-run performance of the economy in the context of a two-period-lived overlapping generations model. We assume that the old agents are heterogeneous in their labor efficiency and they continue working if their income exceeds the pension that can be received in the case of full retirement. We first inspect the key factors that determine the retirement decision of the elderly. We then examine analytically as well as numerically the long-run impact of labor participation of the elderly on capital accumulation and income distribution.

In light of the emergent “history of capitalism” field in Euro-American history, this article reviews and critically situates how the category “capitalism” has been debated within the historiographies of China and South Asia. In discussions paralleling European historiography, Sinologists and Indologists explored whether the “prime mover” of capitalism was changes in production or in circulation. The example of South Asian studies shows how, from the 1960s through the 1980s, the dominant production-centered approach—drawing upon Marxist theory—produced stories of economic “failure” in Asia. The example of Chinese history since the 1990s points to the resurgence of a Smithian circulation-centered approach that challenges the Eurocentric story of failure. Each of these approaches emerged out of distinct eras of capital accumulation in the twentieth century: mid-century state-supported industrialization and late-century deregulated globalization. The tension between these approaches points towards a more integrative reinterpretation that sees the core dynamics of capitalism as a cyclical process of “capital accumulation,” one that integrates both production and circulation-centered approaches and also challenges Eurocentric histories of capitalism. This article's conclusion provides speculative thoughts on writing the histories of capitalism for China and South Asia today.

This study explores the welfare effects of patent protection in a Romer-type expanding variety model in which R&D and capital accumulation are both engines of growth. It shows that the comparison between the productivity of R&D and that of capital plays an important role in the welfare analysis. When the relative productivity of R&D compared to capital is high (low), social welfare takes an inverted-U shape for (is decreasing in) the strength of patent protection, and the welfare-maximizing degree of patent protection is no greater than (identical to) the growth-maximizing degree. Moreover, the model is calibrated to the US economy and the numerical results support these welfare implications.

In a general equilibrium framework, this paper studies the properties, in terms of labour market distortions and capital accumulation, of three social security systems: a pay-as-you-go notional defined contribution (PAYG NDC), a fully funded (FF), and a novel modified FF (MFF) system, which includes an intragenerational redistributive component to guarantee minimum living standards to future low-income retirees. We show that while PAYG NDC depresses labour supply and physical capital accumulation, FF is neutral on both dimensions. Conversely, MFF slightly increases physical capital accumulation, without significantly reducing labour supply incentives. Moreover, it reduces the burden of future intergenerational redistribution, and increases social welfare.

We study production functions with capital and labor as arguments that exhibit positive, yet diminishing marginal products and constant returns to scale. We show that such functions satisfy the Inada conditions if (i) both inputs are essential and (ii) an unbounded quantity of either input leads to unbounded output. This allows for an alternative characterization of the neoclassical production function that altogether dispenses with the Inada conditions. Although this proposition generalizes to the case of n > 2 factors of production, its converse does not hold: 2n Inada conditions do not imply that each factor is essential.

Is there an economic justification for why technical change is by assumption labor-augmenting in dynamic macroeconomics? The literature on the endogenous choice of capital- and labor-augmenting technical change finds that technical change is purely labor-augmenting in steady state. The present paper shows that this finding is mainly an artifact of the underlying mathematical models. To make this point, Uzawa's steady-state growth theorem is generalized to a neoclassical economy that, besides consumption and capital accumulation, uses current output to create technical progress or to manufacture intermediates. The generalized steady-state growth theorem is shown to encompass four models of endogenous capital- and labor-augmenting technical change and the typical model of the induced innovations literature of the 1960s.

We explore the roles of subsidies in the Matsuyama model [K. Matsuyama, Econometrica 67 (1999), 335–347] of growth through cycles with a Solow investment phase and a Romer innovation phase when innovation and intermediate goods production rely on existing capital. We show that subsidies to R&D investment or to the purchase of new intermediate goods can arbitrarily reduce the threshold level of capital per type of intermediate good beyond which the economy moves to the innovation phase. Sufficient subsidization can eventually eliminate cycles. For plausible parameterizations, optimal subsidies can achieve significant welfare gains equivalent to as much as 10% rises in consumption at all times.

This paper investigates how the inclusion of capital in the workhorse new open economy macro model affects its ability to generate volatile and persistent real exchange rates. We show that capital accumulation facilitates intertemporal consumption smoothing and significantly reduces the volatility of the real exchange rate. Nonetheless, monetary and investment-specific technology (IST) shocks still induce more real exchange rate volatility and less consumption comovement than productivity shocks (with or without capital). We find that endogenous persistence is particularly sensitive to the inertia of the monetary policy rule even with persistent exogenous shocks. However, irrespective of whether capital is present, productivity and IST shocks trigger highly persistent real exchange rates, whereas monetary shocks do not. Moreover, we point out that IST shocks tend to generate countercyclical real exchange rates—unlike productivity or monetary shocks—but have the counterfactual effect of also producing excessive investment volatility and countercyclical consumption.

The paper analyzes an endogenous mechanism leading perfectly symmetric economies to diverge in the long run after unifying their financial asset markets. The standard growth model with overlapping generations of consumers (OLG) is extended to include uncertainty and a financial asset. In the absence of an international asset market, the two autarkic economies converge to the same globally attracting steady state under rational expectations dynamics. When the two asset markets are unified internationally, additional asymmetric steady states appear, implying that the steady state with equal levels of capital becomes unstable, causing symmetry breaking. The paper derives general sufficient conditions for a saddle node bifurcation of the symmetric steady state. A numerical example shows that these effects occur, in particular when the production function and the function of absolute risk aversion are isoelastic.

Recent literature on the design of optimal monetary policy has shown that deviations from price stability are small whenever prices are sticky. This paper reconsiders this issue by introducing capital accumulation in the model. Optimal monetary policy in this setup implies small deviations from price stability. The monetary authority optimally uses inflation as an explicit tax on monopolistic profits to reduce the price markup across states. Variable markup is achieved in this setup because the share of investment demand over output varies across states and in response to TFP shocks.

We set out a framework for measuring the adequacy of saving in the United Kingdom by assessing the absolute level of savings based on individual preferences of different ages. We examine this relationship between age and savings using data from the Expenditure and Food Survey 2004–5. We show that, while the level of national saving is about 8.4 percentage points of net national income lower than is required if one assumes that each cohort pays its own way, wealth holdings are considerably higher than are required on the same basis. Looking at household, rather than national saving, the current pattern of benefits on public sector pensions removes the need to save for old age. While perhaps £4000m of household wealth holding can be accounted for by bequest and other transfer motives, our results suggest excess wealth holding of around £1600m in 2004.

This paper provides evidence that domestic opportunities to share risk have contributed to slower growth. We first provide a simple model economy that demonstrates how a country's ability to diversify risk is linked to its growth rate. In the context of the model economy, we then investigate empirically whether there is any systematic relationship between domestic opportunities to diversify risk and growth. We employ two econometric procedures: (1) traditional instrumental variables estimation and (2) dynamic panel methods. Interpreted in the context of the model economy, the empirical analysis reveals a robust negative relationship between domestic opportunities to diversify risk and both capital stock and output growth.