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Dual-Polarization Box and Economic Regimes

Summary: The present study has the objective to compare different capitalist systems by focusing on specific distributional features of the latter. Particularly, the distribution of income sources, notably of profits and wages, as well as the distribution of total consumption and savings across the population will be considered. In order to make the analysis possible, the article hinges on a recent work by Ranaldi (2017a, 2017b) on the distribution of functional income. In particular, the methodology proposed by Ranaldi, which develops an index of income factors polarization, is adopted to shed new light on the distribution of savings and consumptions among people. Therefore, a measure of saving and consumption polarization is introduced, together with a new instrument called Dual-Polarization Box. The latter allows for a joint analysis of the two polarization issues. Indeed, the Dual- Polarization Box is a 1 × 1 box which displays all possible combinations of the two indexes for a given society at a point in time. According to their position in the box, societies can be classified as Classical Capitalism, or Representative Agent Capitalism. It is shown that the box provides further insights on the capital accumulation process underlying several models of capitalism.

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