Here is the short-history of 21st century capitalism. Despite global savings glut, ultra-low interest rates, and massive corporate surpluses, the dynamics of modern capitalism has delivered business concentration and declining competition, regulatory capture, resource misallocation away from productive investments towards financial market speculation, higher profits and wage stagnation, greater share of income going to capital and away from labour, and widening of inequality. The evidence continues to mount.
The latest comes from Gauti Eggertsson, Ella Getz Wold, and Jacob Robbins who argue that the driving force behind this dynamic is "an increase in monopoly power together with a decline in interest rate". They find,
An increase in firms’ market power leads to an increase in monopoly rents - economic parlance for profits in excess of competitive market conditions - and thus an increase in the market value of stocks (which hold the rights to these rents). This leads to an increase in financial wealth and to what’s known as Tobin’s Q, the ratio of a firm’s financial value (market capitalization) to the value of its assets (book value)... With an increase in market power, the share of income consisting of pure rents increases, while the labor and capital shares both decrease. Finally, the greater monopoly power of firms leads them to restrict output. In restricting their output, firms decrease their investment in productive capital, even in spite of low interest rates.
Their suggestion carries great relevance,
Greater monopoly power tends to depress economic growth and increase income and wealth inequality. With high levels of monopoly profits, it may be optimal to have higher taxes on corporate income than would be suggested by analyses that assume perfect market competition.
If businesses are anyways unlikely to invest and most certain speculate in financial markets, higher levels of taxation can both curb such speculation and also generate more public revenues without crowding out any productive economic activity.