Fabella's Capitalism and inclusion under weak institutions: Lessons on inequality for a new generation of economists

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The book tackles the issues of inequality and growth, acknowledging the widely-held belief that there is a trade-off between inequality and growth. In his seminal paper in 1955, Simon Kuznets observed that a developing country experiencing economic take-off will likely first undergo increasing inequality, after which this tapers off and eventually declines as the country reaches higher levels of economic development [Kuznets 1955]. Kuznets’ Inverted U Hypothesis has become received wisdom for decades, producing economists that tend to tolerate (or perhaps even celebrate) rising inequality with the view that this is the “price nations pay” for economic growth and development. (See also Acemoglu and Robinson [2002]). Dr. Fabella himself boldly lays out this view. Referring to China’s proliferation of billionaires, he notes: “…the ‘Jack Ma phenomenon’ may be argued to have helped rather than impede poverty reduction in China. If so, I call it a fair exchange”. [Fabella 2018:4]