مالیات، رشد، و روحیه سرمایه داری

This paper uses a general two-sector model of endogenous growth to examine how the spirit of capitalism affects the relation between public finance and growth. The spirit of capitalism is defined as acquisitive personal objectives. We find that if the spirit of capitalism is present, an increase in the share of government spending in output reduces the long-run growth rate. The negative relationship between fiscal spending and growth is consistent with empirical evidence.

The effects of tax and fiscal spending policies on an economy have long been studied in the macroeconomic literature. The analysis within the past two decades has focused on this issue predominantly from the viewpoint of intertemporal optimization. Previous studies (for example, Atkinson and Stiglitz, 1980, Abel and Blanchard, 1983, Chamley, 1981 and Chamley, 1985, among others) suggest that an increase in income tax rates depresses economic activities in the long run. In their basic neoclassical growth model with inelastic labor supply, Barro (1981), Judd (1985), and Blanchard and Fischer (1989) examined the effect of government spending and concluded that a permanent government spending shock has no effect on investment and real output. A common finding in these studies is that taxation and government spending policies do not affect economic growth. A number of papers have extended the focus to analyze fiscal policies and economic growth in models in which the long-run growth rate is endogenous. As noted by Stokey and Rebelo (1995, p. 519), “Growth models with endogenously determined rates of technical change provide a useful framework for studying the effects of fiscal policy on the long-run growth rate.” Using a two-sector model of endogenous growth with joint accumulation of physical and human capital, Mino (1989), King and Rebelo (1990), Rebelo (1991), Devereux and Love (1994), Stokey and Rebelo (1995), and Milesi-Ferretti and Roubini (1998) examined the effects of tax policies on economic growth in the long run. Specifically, these studies focused on the growth rate effects of factor taxation, consumption taxation, and/or income taxation. Two key factors in determining the growth rate effects of tax policy are found in the literature: a general production function for human capital that uses not only human capital but also physical capital and endogenous labor supply. It is, however, curious that there has been very little investigation of how government spending affects the economic growth rate in the endogenous growth literature. To our knowledge, Devereux and Love (1995) are the only exception, in their examination of the impact of government purchases through alternative forms of tax financing (lump-sum taxes and income taxes) on an economy's balanced growth rate.1 One of their major propositions is that a rise in government spending financed by a lump-sum tax has a positive effect on economic growth if there is endogenous leisure–labor discretion, but has a zero effect on growth if there is no leisure–labor discretion. In contrast to Devereux and Love (1995), this paper introduces the role of the spirit of capitalism to analyze how spending policy affects economic growth. The spirit of capitalism is defined as acquisitive personal objectives. The importance of the spirit of capitalism has long been recognized as the underlying driving force for economic growth (see, for example, Smith, 1776, Weber, 1958 and Keynes, 1971). In capitalist societies, individuals accumulate wealth not only for the consumption reward, but also for social status. As stressed by Veblen (1922) and Weber (1958), and further elaborated by Cole et al. (1992), Robson (1992), Zou, 1994 and Zou, 1995, Bakshi and Chen (1996), Corneo and Jeanne (1997), Futagami and Shibata (1998), Corneo and Grüner (2000), and Chang et al. (2000), individuals care about their social status in a market economy. People therefore accumulate wealth in order to advertise their wealth and achieve higher social position and power. This status-seeking motive induces individuals to undertake growth-enhancing economic activities. As a consequence, the spirit of capitalism is a driving force of economic growth. Given that endogenous growth theories concern themselves with the determinants of economic growth, the analysis of fiscal spending on balanced growth should take account of the spirit of capitalism. The analytical framework we use is an extension of the models of Bond et al. (1996) and Mino, 1989 and Mino, 1996. The extension is that accumulating stocks of wealth (being the sum of physical and human capital) act as an argument in the utility function to capture the capitalistic spirit. The rationale is justified in two respects. First, most of the existing literature, for example, Zou (1994), Corneo and Jeanne (1997), and Futagami and Shibata (1998), emphasizes the role of the spirit of capitalism in the so-called ‘AK’ endogenous growth model in which output grows in proportion to broad-concept capital. While this simplified framework has the virtue of tractability, it cannot capture well wealth-induced social status originating from the joint accumulation of physical and human capital in the actual world. Second, in modern societies, an individual's wealth includes tangible and intangible assets. In a two-sector model of endogenous growth that stresses the joint accumulation of physical and human capital, physical capital consists of tangible assets while human capital is intangible. Moreover, having a higher level of human capital reveals higher social status, just like having a higher level of physical capital. In accordance with these observations, we thus properly utilize the sum of physical and human capital to represent the individual's wealth that captures the spirit of capitalism. In contrast to the existing literature such as Devereux and Love, 1994 and Devereux and Love, 1995, Stokey and Rebelo (1995), and Milesi-Ferretti and Roubini (1998), the model that we develop is general in the sense that we do not use explicit functional forms of the production function to analyze the effect of fiscal spending on economic growth. On the other hand, we follow Devereux and Love (1995) to assume that the government collects lump-sum tax revenue to fully finance its fiscal spending at all times. From this perspective, the policy analyzed in this paper is equivalent to taxation policy. Within this amended framework, it can be shown that the spirit of capitalism may become a key factor determining the effect of spending policy on long-run growth even if there is no leisure–labor discretion. Specifically, when the desire for wealth-induced social status is present, an increase in the share of government spending in output reduces the long-run growth rate. The negative relationship between government spending and growth is consistent with empirical results reported amongst others by Landau (1983), Grier and Tullock (1989), and Barro, 1990 and Barro, 1991. The fundamental reason for this result is as follows. A rise in government spending through financing by lump-sum taxes withdraws the amount of resources from the agent, thereby possibly depressing investment and/or consumption demand. As the joint accumulation of physical and human capital constitutes the major engine of growth, people have no incentive to change investment demand for physical and human capital when they do not care about pursuing their social status through wealth accumulation and only reduce the share of consumption. As a result, fiscal spending has no effect on economic growth. When people are concerned with wealth-induced social status, government spending distorts the marginal wealth value of physical and human capital and hence discourages investment demand for physical and human capital. As a consequence, there is less physical and human capital accumulation, which decreases the balanced growth rate. The remainder of the paper is organized as follows. Section 2 presents a general two-sector model of endogenous growth with the spirit of capitalism. Section 3 investigates the effects of public spending on the balanced growth rate of the economy. Finally, Section 4 concludes the major findings of our analysis.

This paper has examined the effect of government spending with lump-sum taxes financing on the balanced growth rate with the spirit of capitalism proposed by Weber (1958). We have shown how the spirit of capitalism may become a key factor in determining how public spending financed by lump-sum taxes affects economic growth. When individuals do not care about their wealth-induced social status, government spending has a neutral effect on growth. However, if the spirit of capitalism is present, the balanced growth rate of the economy decreases with the share of fiscal spending in output, which is consistent with empirical findings.