If the accumulation of physical capital (tools, machinery, and buildings) is a major driving force behind growth, then the degree of equality will affect growth through its effects on investment in physical capital. There are two opposite ways for the degree of equality to affect investment. Much of neoclassical economic growth theory is built upon the notion that savings constrains investment. If savings constrains investment, then taking from the poor and giving to the rich will increase savings, investment, and growth. I will call this the anti-equality view. Under an alternative, pro-equality, view, taking from the rich and giving to the poor will increase consumption, which drives investment, and, thus, growth. Both of these views accept that the rich save more out of additional income than the poor and the poor consume more out of additional income than the rich. Both views accept that increasing physical capital drives growth. The key difference between the two views is what constrains or drives investment (Leightner 1992a).
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