Inequality in a model of capitalist economy

TL;DR

This paper examines how an agent-based model of capitalism reproduces wealth and income inequality, showing that increased wealth per capita correlates with greater inequality in a simplified economy.

Contribution

It introduces a detailed analysis of inequality dynamics within the Social Architecture of Capitalism model, highlighting how wealth accumulation impacts inequality.

Findings

Wealth and income distributions match real-world macroeconomic patterns.

Increasing wealth per capita leads to higher inequality levels.

Model parameters significantly influence the distribution outcomes.

Abstract

We analyze inequality aspects of the agent-based model of capitalist economy named it Social Architecture of Capitalism that has been introduced by Ian Wright. The model contemplates two main types of agents, workers and capitalists, which can also be unemployed. Starting from a state where all agents are unemployed and possess the same initial wealth, the system, governed by a few simple rules, quickly self-organizes into two classes. After a transient, the model reproduces the statistics of many relevant macroeconomic quantities of real economies worldwide, notably the two regimes of the distributions of wealth and income. We perform extensive simulations testing the role of the model parameters (number of agents, total wealth, and salary range) on the resulting distribution of wealth and income, the social distribution of agents, and other stylized facts of the dynamics. Our main finding is that, according to the model, in an economy where total wealth is conserved and with a fixed average wage, the increase in wealth per capita comes with more inequality.