The rising inequality with rising rate of return on capital



The scarce capital, prerogative of some to possess, flourished even in the earlier agrarian economies by the high rate of return on the capital and slow or nearly stagnant growth rates of economy. 

The scarce capital in possession of some who are deriving the higher rate of return by lending it ,thereby multiplying it very sharply and in the process are accumulating more and more wealth at the expense of others.

Before the world war-1 the majority of economies were falling in these categories, as the industrial revolutions were just budding to get out, the service sector was for select few,who can ask for the services ,pay for it and command the services. To provide services to them was a matter of pride for the deliverer. 

Today capital is formed for the few ,labor becomes the more prominent component of possession, and seldom  the capital is destroyed by wars,poor governance,droughts/calamities .
The capital is cultivated by primordial means by a small authority,the large and commanding authority as not exists in such period,hence the goodwill/credit element of capital expansion not present.



The concerted effort to boost the gross domestic product can be made only by a government with vision and backing of institution in a stable environment.
In a economy where the growth rate are not high,but the explosion in population and weak institutional framework of government machinery,which includes its tax officers,judiciary and bureaucracy perpetuate the cycle of destruction of capital and rising inequality ,the few one exploits the situation at the expense of others.

The issue of growth rates could be addressed by a stable government whose writ runs over the whole territory,by building a pool of common capital for investing in promising project, thereby multiplying its formation and attracting the capital from all parts of globe .

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