Inequality and the Capital Controversy : A Cambridge-Cambridge View of Technological Progress in Piketty and Marx

This paper analyzes the similarities and differences of the recent evidence of inequality from Piketty's Capital in the Twenty-First Century and the older Marxist debate on the falling rate of profit in comparison to the development of the modern growth and distribution literature in the Cambridge tradition. Marx-biased technological progress and Piketty's formula are two different theories explaining the same phenomena of instability and inequality in the distribution of income. In contrast, the Cambridge-Keynesians focus on the balanced growth path, which leaves the profit rate as the only degree of freedom formalized in the "Cambridge equation." The two Cambridges from England and Massachusetts inherit the spirit of Keynesian adjustment for the long-period full-employment capitalism. There is no theoretical conclusion of an inequality trend in the Cambridge-Cambridge framework in comparison to Piketty's Capital in the Twenty-First Century and Marx's falling rate of profit. This paper evaluates, and provides background for, technological progress theories from each perspective regarding the dynamic of economic progress and the distribution of income