The Economics Of Income Distribution: Heterodox Approaches

Journal of Economic Issues, Sept, 2000 by William M. Dugger

THE ECONOMICS OF INCOME DISTRIBUTION: HETERODOX APPROACHES. Edited by Joep T.J.M. van der Linden and Andre J.C. Manders. Northampton, Mass.: Edward Elgar, 1999. Pp. 209, ix.

The editors of this work are from the Department of Social Economics, Utrecht University, the Netherlands. They are also organizers of the 1996 annual conference of the Belgian-Dutch Association of Post-Keynesian Studies, from which this volume came. The conference was held at Utrecht University in honor of Professor Yehojachin S. Brenner's retirement from the university. In addition to an introduction by the editors, the volume contains three reminiscences by Martin Bronfenbrenner, Warren J. Samuels, and Yehojachin S. Brenner; three case studies by Victoria Chick, Jan A. Kregel, and Bouwe R. Dijkstra and Andries Nentjes; and one gem of an article by Bas de Gaay Fortman. These contents are quite mixed in quality.

Three Reminiscences

Bronfenbrenner's reminiscence is titled "Bronfenbrenner Revisited." It is an attempted re-examination of his 1971 book, Income Distribution Theory. Bronfenbrenner died before he could send the editors the full and revised version of his presentation, so it was published in the same oral form in which it was delivered at Utrecht. Because it was probably Bronfenbrenner's last public address, the editors thought they should publish it in its imperfect form. They erred.

Samuels's reminiscence is titled "An Institutionalist Approach to Income Distribution." He focuses on his own work and on the work he has done with several of his colleagues at Michigan State University. Principal among them have been A. Allan Schmid, Nicholas Mercuro, and Steven G. Medema. They have been carrying forward the Wisconsin School Approach pioneered by John R. Commons. Central to Samuels's work has been the elaboration of the cumulative causation among institutions, income distribution, and government.

Brenner's farewell address to Utrecht University is titled "Looking Back." It is a thoughtful review of his books on the nature of and prospects for economic progress. In the 1970s, he defined economic progress as "the augmentation of freedom of choice" [p. 173]. Back then, he believed that the modem welfare state would address the question of "Why ... should we not be able to restructure our social institutions to banish involuntary unemployment, poverty and destitution for all time?" [p. 174]. He was optimistic because he thought that, just as reason slowly replaced revelation in the transition from the faith of the Middle Ages to the science of modern times, so too the unbridled materialism of raw capitalism would be moderated under the influence of the institutions of the welfare state.

But alas, it is taking longer than he thought. Brenner's optimism has turned into a still hopeful but more pessimistic view. Over the last 20 years, he argues, corrupt politicians have pandered to the increasingly selfish strata of our acquisitive society as together they submerged the institutions of the welfare state under a tidal wave of Thatcherism and Reaganomics. How long must these institutions hold their breath? Brenner also argues, that over the last 20 years, the globalizing economy has begun to generate growth without employment. Its increasingly monopolistic structure and feudal behavior make government intervention on behalf of full employment more necessary every decade. Brenner is saddened by our failures but is still hopeful. He concludes, "it is not mankind's objective inability to sustain full employment and abundance for all but perverted institutions which prevent it" [p. 195].

Three Case Studies

The piece by Dijkstra and Nentjes is titled "Income Distribution and Environmental Policy Instruments." Using what they call the neoclassical and the Post Keynesian models of the industrial firm, Dijkstra and Nentjes set up hypothetical comparisons of how profits and wages are affected by a number of different pollution control policies. Kregel's case study is titled "Income Distribution in the Transition: Some Reflections and Some Evidence." In spite of extraordinary problems (comparable and trustworthy data on income distribution are almost nonexistent), Kregel tries to figure out how the transition from "command" to "market" has affected the distribution of income in the Central and Eastern European countries. He finds that the transition has resulted in rapid rises in gini coefficients toward the levels found in most Western capitalist economies. He makes some interesting observations, but Kregel says little about what Marxists are calling the process of primitive accumulation through gangster capitalism .

Chick's contribution is "Deflation and Distribution: Austerity Policies in Britain in the 1920s." It is an exceptional historical work that carefully compares the British pursuit of sound money in the 1920s after the Great War to the Thatcherism in the 1980s and to the convergence criteria for joining into a single currency under the Maastricht Treaty. It shows the distributional effects of sound money policies in different historical situations. Chick shows that, in spite of the continued belief in the neutrality of money, money is never neutral. Inflation and deflation always affect labor, entrepreneurial, and/or rentier interests, and usually all three.