October 20, 2014

The profit theory is false since Adam Smith. What about the true distribution theory? {62}

Working paper at SSRN

Abstract  All popular schools lack a consistent profit theory. Economists have no true conception of the most important phenomenon in their universe. This methodological defect persists since Adam Smith. Therefore, the theories of income and wealth distribution are wrong by logical implication. If the conclusions of a theory do not find any counterpart in reality the fault lies in the premises. In order to rectify distribution theory, it is necessary to substitute the conventional subjective-behavioral axioms with objective-structural axioms. A major result of the present paper is that distribution is not governed by marginal productivity but by the distributed profit ratio.

The Structural Profit Law for the elementary consumption economy is on Wikimedia AXEC08 and for the investment economy on Wikimedia AXEC42.