Neo-Classical Macro-Distribution Theory

Abstract

Macro-distribution is about the relative shares of various classes in functional income distribution, as distinguished from micro- or ‘pseudo-’ distribution, which is about the prices of productive inputs or ‘factors of production’. Neo-classical macrodistribution has, however, been based on two major notions derived and adapted from micro-distribution; these are the production function and the elasticity of substitution. It also accepts and applies some form of the marginal productivity theory of demand for inputs.

My principal debts in preparing this paper are to M. I. Kamien and Michael Nicholson (both of Carnegie) and to unpublished notes by Y. T. Kuark (University of Denver). The National Bureau volume The Behavior of Income Shares (Studies in Income and Wealth, vol. 27); Princeton: Princeton University Press, 1964) unfortunately appeared too late for more than patchwork utilization here.