December 11, 2015

Wages and profits are NOT the components of income

Comment on ‘Wages, profits, and inequality’

Blog-Reference

The trouble with distribution theory started with Ricardo who got the distinction between wage, profit, and rent wrong (2011). Then Marx got the class theory of profit wrong (2014a). Neoclassical distribution theory, of course, hit rock bottom, but Keynesianism did not perform much better, and Heterodoxy alone has multiple profit theories that do not fit together.*

Yes, distribution theory has always been the deepest morass of economics. For the correct approach see (2014b).

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2011). When Ricardo Saw Profit, He Called it Rent: On the Vice of Parochial Realism. SSRN Working Paper Series, 1932119: 1–19. URL
Kakarot-Handtke, E. (2014a). Profit for Marxists. SSRN Working Paper Series, 2414301: 1–25. URL
Kakarot-Handtke, E. (2014b). The Profit Theory is False Since Adam Smith. What About the True Distribution Theory? SSRN Working Paper Series, 2511741: 1–23. URL

* See ‘Heterodoxy, too, is scientific junk

For details of the bigger picture see cross-references Profit