Distribution

Abstract

Alfred Marshall distinguished four inputs, four ‘agents of production’¹ — land, labour, capital and organisation — and argued that, despite ‘important differences of outward feature’, nonetheless there is a ‘fundamental unity between them’,² making it possible to utilise the same body of theory to explain value in all four cases. That body of theory with respect to inputs, moreover, is in its essentials the same as the synthesis which he developed with respect to outputs: ‘The theories of Distribution and Exchange are so intimately connected as to be little more than two sides of the same problem.’³ As Marshall put it in The Economics of Industry, identifying himself as a Newton in search of similarity amidst diversity, ‘there is a unity underlying all the different parts of the theory of prices, wages and profits. The remuneration of every kind of work, the interest on capital, and the prices of commodities, are determined in the long run by competition according to what is fundamentally the same law.’⁴