The Economics and Sociology of Distribution

Abstract

The knots in the threads of theoretical thinking that cause the most confusion are to be found in distribution theory. There is an assumption today among a whole group of writers from various countries about marginal utility theory — I use this term for the theory held by most present-day theoreticians even though it is in frequent use only by a small group of them, on the grounds that it does at least represent the nucleus of this theory. The assumption is that this theory does give an accurate account of the foundations of value and price formation¹ and that it does give an adequate account of the world of consumption goods, but that it fails to cope with the problem of distribution. I shall begin with a discussion of this assumption. As a starting-point it offers the great advantage that it frees the discussion from a large number of methodological and factual preliminaries, because it assumes an understanding and recognition both of the essence of economic theory generally and of the foundations of the marginal utility theory in ]particular. Taking as an illustration the problem of wages I then want to ask whether in fact the explanatory principle offered by the theory of marginal utility can indeed adequately account for as much of the social process of distribution or income formation as can generally be explained by a purely economic theory.