Inequality in a model of capitalist economy

Abstract

We analyze inequality aspects of the agent-based model of capitalist economy named 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 Boltzmann-Pareto 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.