December 29, 2016

The distribution theory is false because the profit theory is false

Comment on Lars Syll on ‘New study shows marginal productivity theory has only a “negligible” link to reality’

Blog-Reference and Blog-Reference and Blog-Reference on Dec 31

Every economist can know from the Palgrave Dictionary that the profit theory is false (Desai, 2008). Or, as Mirowski put it, “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” In other words: the confused confusers of economics have NO idea what the pivot of their subject matter is. In still other words, this bunch of scientific deplorables does not know how the market economy works and is talking nonsense since Adam Smith.

It is pretty obvious that without the true profit theory there is no true distribution theory.#1 So everybody can know without bothering much about the insane behavioral assumptions of utility and profit maximization that the marginal theory of income distribution must be dead wrong.

The trouble with distribution theory started with Ricardo who got the distinction between wage, profit, and rent wrong.#2 Then Marx got the class theory of profit wrong.#3 Neoclassical marginal distribution theory, of course, is unsurpassable idiocy, but Keynesianism did not perform much better, and Heterodoxy has actually multiple profit theories that do not fit together.#4

Distribution theory has always been the deepest morass of economics. Do not expect that the brotherhood of orthodox and heterodox muddleheads will find a way out any time soon.

Egmont Kakarot-Handtke

#1 See ‘Essentials of Constructive Heterodoxy: Profit
#2 See ‘When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#3 See ‘Profit for Marxists
#4 See ‘Heterodoxy, too, is scientific junk