| jmcph4 |

Towards a Principled, Intuition-Capturing Model of Economic Class

[2022-08-25 18:00:00 +1000]

I've recently concerned myself more and more with thinking about the (rather loose and eclectic) set of ideas surrounding status, class, wealth, and influence. Particularly, distilling some meaningful and concrete definitions of what they are, how they work, and what we mean when we refer to them. This article is the product of the most recent iteration of this thinking.

Note that my statements here are strictly not normative and that my title - whilst clumsy - is careful to avoid the ever-divisive socio- prefix. I may address this in later works.

Definition 1: Factors of production

The set of all factors of production: $$\mathcal{F}=\left\{\text{Land}, \text{Labour}, \text{Capital}\right\}$$

Definition 2: Principal factor of production

(Of a person) the possessed factor of production with the highest value.

Definition 3: $F$-class

The set of all people whose principal factor of production is $F\in\mathcal{F}$.

Our aforementioned set of factors of production, $\mathcal{F}$, is taken directly from the school of thought called classical economics, of which we've all come to know and love! A (very obvious) consequence of Definition 2 is that it emits three distinct economic classes: the land class, the capital class, and the labour class.

One mildly interesting observation is that, the more valuable your labour, the larger quantity of capital necessary to escape the serfdom of the labour class and graduate into the capital elite. Simultaneously, the more valuable your labour, the easier it is for you to acquire and thus grow your surplus capital base.

Another observation derives from recalling the earnings associated with each factor of production:

Again, our intuition says that, in today's economies, dividends are by far the highest yielding form of earning one can hold. This of course ignores the painfully obvious possibility of appreciation of each of these factors of production. Again, appreciation of labour seems to be the least likely of all possible forms of appreciation in the modern economy -- at least Piketty would agree (whether this is a positive or negative sign remains unclear). In the local case, Australia has experienced vast appreciation of the slither of land inhabited by what is virtually its entire population.

Statistical estimation of the exact size of this class (and the others, for that matter) remains an open problem and will most likely be the subject of future works. Nonetheless, our intuition (of which we are trying to capture, after all) suggests that the sizes of each class are power law distributed, with the labour class comprising the overwhelming majority of our entire population, followed by the capital class, and then finally the land class. This observation is of course well-supported by the existing body of economic literature: specifically, in the form of Pareto's distribution.

By now, I've wracked up quite the bill with respect to what future work on this topic must address. Let's review: