Mainstream economics is based on a theory of distribution which is utterly irrelevant to the real world and is incoherent when applied to capital. This would not be so important except for the fact that it is used to justify the unequal distribution of income in the real world. For example, the widening gap between rich and poor (it is argued), simply reflects "a market efficiently rewarding more productive people." Thus the compensation for corporate chief executives climbs so sharply because it reflects their "marginal productivity." Except, of course, the theory supports no such thing — except in a make believe world which cannot exist, and so is therefore no more than tautology, a redundant use of words. The concept that capital goods can become non-tangible and can be remoulded into the profit maximising form from day to day was invented in order to prove that labour and capital both receive their contribution to society, to show that labour is not exploited. It is not meant to be taken literally, it is only a parable, but without it the whole argument (and defence of capitalism) collapses.
Posted on: Fri, 02 Aug 2013 22:53:44 +0000
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