|A Wage-Rate Of Profits Fontier|
One might infer the following from Sraffa's book, The Production of Commodities by Means of Commodities: A Prelude to a Critique of Economic Theory:
- The distribution of income is not determined by the supply and demand for factors of production. Instead, it is determined by power, politics, and the evolution of social norms.
- The returns to capital are not determined by consumers rationally choosing to trade-off consumption today for consumption sometime in the future.
1One might even argue that certain empirical trends (and an emerging worldwide political movement) should be giving Sraffian research more salience.
2Over a decade ago, James Galbraith provided empirically-supported arguments about the importance of politics in determining income distribution.
3Over a decade and a half ago, Paul Davidson was citing a 1982 study by Danziger, Van der Haag, Smolensky, and Taussig on savings during retirement. Their empirical results were not consistent with a model of lifecycle saving built on a foundation of intertemporal utility-maximizing.
- George A. Akerlof and Robert J. Shiller (2009). Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism, Princeton University Press.
- Paul Davidson (1994). Post Keynesian Macroeconomic Theory: A Foundation for Successful Economic Policies for the Twenty-first Century, Edward Elgar.
- James K. Galbraith (1998). Created Unequal: The Crisis in American Pay, Free Press.
- Jacob S. Hacker & Paul Pierson (2010). Winner-Take-All Politics: How Washington Made the Rich Richer - And Turned Its Back on the Middle Class, Simon & Schuster.