Home > The Economics Profession, upward income redistribution > Parem delinquentis et suasoris culpam esse

Parem delinquentis et suasoris culpam esse

from David Ruccio

labor share

The downward trend of labor’s share is not a recent phenomenon. It has been taking place (albeit not evenly or without disruption) since the mid-1970s.

Be that as it may, Paul Krugman now recognizes that the old storyline (of skills and education) no longer works to explain the obscene levels of inequality in the United States. 

So the story has totally shifted; if you want to understand what’s happening to income distribution in the 21st century economy, you need to stop talking so much about skills, and start talking much more about profits and who owns the capital. Mea culpa: I myself didn’t grasp this until recently. But it’s really crucial.

Absolutely. We need to talk much more about profits and who owns capital. And, in addition, who appropriates and distributes the surplus and to whom that surplus is subsequently distributed. And then how they use that surplus to create the conditions whereby profits continue to rise and more capital deployed so that they get and keep even more profits.

Missing these elements of the story is not just Krugman’s mistake. The fault lies with an entire group of mainstream economists who assume—and, for generations, have attempted to persuade others—that the distribution of income corresponds to the choices people make, and that attempting to change the existing distribution of income would require changing human nature.

  1. Peter Radford
    December 13, 2012 at 4:16 pm


    I agree.

    What is capital?

  2. BFWR
    December 13, 2012 at 8:36 pm

    The entire problem of inequality as well as the free flowing of the system would be addressed by
    1) Breaking up the monopoly on credit of the triopoly of the Central and Private Banks and their captured governments.
    2) The direct Distribution to individuals of a citizen’s dividend reflective of the wealth of the particular nation.

    #2 in sufficient quantity actually accomplishes #1 as well as eliminating a very large amount of the additional monies needed to by created in modern economies where 80% of the economy is actually consumer spending which of course is very loan intensive

  3. December 14, 2012 at 2:55 pm

    “Attempting to change the existing distribution of income would require changing human nature”.

    What would change the existing distribution of income? An inversion of its interpretation and legal significance would: “Those who have more owe more”. Which is not to say they shouldn’t owe but shouldn’t owe more than they need for themselves and what they are responsible for doing – which may well be honourable caring or achievement.

    But do we require to change human nature anyway? The physiological explanation of Jung/Myers-Briggs personality typing explains why people are not all the same and why it is only a few half-baked adolescents and under-evolved still would-be top dogs who need to be familiarised with the rules, to understand both the good and the bad of themselves, and/or to be controlled by others. The vast majority of us, given half a chance, learn to go with the flow and do what we can see needs doing.

  4. Alice
    December 15, 2012 at 8:33 pm

    To me the solutions are relatively simple
    Bring back strong labour protection laws and make it expensive to fire people (redistribute the surplus that way)
    and for gods sake raise taxes on the now obscenely wealthy owners of capital and redistribute that way.
    Either way redistribution is the answer given the imbalance between capital and labours share, so why arent they getting on with it?
    Why must we keep hearing all this tripe about “labour has to become more flexible. Labour has to become more productive. Labour market rigidities must go. Labour must be able to be used for an hour here and there and be thrown out the door at no cost when not needed.

    Capital should be whipped at this point.

  5. AFC
    January 9, 2013 at 7:19 pm

    “Attempting to change the existing distribution of income would require changing human nature”.

    We need to change human nature back to what it was in 1970.

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