Inequality of Wealth Distribution of Labor Income and Capital Ownership in South Africa

Devyn Folk

Student thesis: Master thesis

Abstract

Income and wealth are important determinants in the wellbeing of individuals, organizations, and
nations and their economies. This thesis attempt to investigate the relationship between
capitalism and inequality in the case of developing South Africa. With most developing nations
there is a lack of transparency or data collection with regards to income, wealth and taxation,
however, South Africa is among the first developing nations to begin collecting this kind of
economic data. Calling upon Piketty’s work Capital in the Twenty-First Century and these new
South African economic datasets, this thesis will study the context of economic development and
extreme inequality. Not arguing that Pikettys proposed global tax or “confiscatory tax” as some
put it is the correct answer, because many would argue that the wealthy and poor have and
important role in the economy. That many wealth individuals “create businesses, jobs, and
wealth for all” (Anti-piketty 42). Thomas Piketty’s thesis argues that when the rate of returns on
capital exceed that of economic growth and the saving rate, that the long-term accumulation of
wealth is unequally distributed. This paper utilizes Pikettys arguments and apply them to the
current developing neo-liberal economy of South Africa.
First this thesis will focus on inequalities and some of the several questions that surround
inequality similar to; if inequality is bad, is equality what should be strived for? It will determine
what inequality has the most influence on South African individuals and their wellbeing. Next,
the thesis will turn to an international perspective and investigate different international
economic theories and their position on inequality. Using Thomas Piketty’s persuasive book
Capital in the Twenty-First Century (2014), and other literature and theories in attempt to
determine what the best way for a nation and its economy to grow, without fostering extreme
inequality. Thomas Piketty finds that wealth gains to the rich of top decile (10%) and top centile
(1%) of wealth nations increases between 1970 and 2010 but seems to only begin in South Africa
in the mid-1990s to 2010 (Possibly why Pikettys argument is better than neo-liberalized
economic approach?). Finally, this thesis will apply the findings to South Africa. The political
economy theories are typically general and Piketty arguments lie with an illustration of advanced
economies. Therefore, this thesis with apply the findings of what is the best way for a nation and
its economy to grow, without fostering extreme inequality and especially inequality that is most
effecting contemporary South Africa. Using a dataset similar to Pikettys, however, with new
South African data collection on incomes and wealth, it can compare the effect of Pikettys thesis
and other international political economy theories to South Africa’s developing economy and
already extreme inequalities.

EducationsGlobal Studies, (Bachelor/Graduate Programme) Graduate
LanguageEnglish
Publication date2019
Number of pages73
SupervisorsOlivier Rubin