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Price Theory
It is worth mentioning here that in modern economic theory of distribution is only a special case of the theory of price. As the price of producers are explained with the interaction of the demand for and support for them, similarly distribution is conceived as the determination of prices of the factors which are also explained with interaction of demand for and supply of them. The income which a factor will obtain depends on the price determined by market, i.e. demand and supply and the amount will be used or employed of that factor. In other words, it is the forces of free market, that is, demand and supply that go to determine the prices and incomes of various factors and not any institutional framework such as ownership of property. Further, the association of various factors of particular social classes, such as ownership with land owning classes, such as land with owning class, capital with capitalists, and labour with the working class is also not emphasized. In fact, the factors are conceived merely as contribution to production. In other words, the contemporary theory of distribution merely explains functional distribution of income and not personal distribution of income.
Prof. A. K. Das Gupta describes the nature of contemporary distribution theory very clearly remarks, “distribution appears an extension of the theory of value being just a problem of pricing of factors of production. The two aspects of the economic problem are then integrated a unified and logically self consistent system. Value of a commodity is derived in the productivity imputed by the commodities which they help in producing. The old tripartive division of factors into land, labour and capital is retained but their old association with social classes is lost. Factors conceived as just productive agents independently of the institutional framework within which they operate.”
In the opinion of the present author, the contemporary theory of distribution of income, that is, who gets what share of the national cake in a society cannot be explained merely by the mechanism of the impersonal forces of the market, by the equilibrium between the demand for and supply of factors. The production functions governed by the ownership of property or means of production, power structure in the society play a vital role in the distribution of national income. The contemporary theory by asserting that everybody or its marginal product under is, what it contributes to general output of industry is that tactic approval of the present distribution of income as just and right. But this far from truth, since the present day highly skewed distribution of uneven ownership of property, production relations based on it and the power structure in the society. This is not to say that marginal productivity as a determinant of incomes is quite unimportant but the importance of the institutional factors just mentioned above cannot be glossed over.
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Prof. A. K. Das Gupta describes the nature of contemporary distribution theory very clearly remarks, “distribution appears an extension of the theory of value being just a problem of pricing of factors of production. The two aspects of the economic problem are then integrated a unified and logically self consistent system. Value of a commodity is derived in the productivity imputed by the commodities which they help in producing. The old tripartive division of factors into land, labour and capital is retained but their old association with social classes is lost. Factors conceived as just productive agents independently of the institutional framework within which they operate.”
In the opinion of the present author, the contemporary theory of distribution of income, that is, who gets what share of the national cake in a society cannot be explained merely by the mechanism of the impersonal forces of the market, by the equilibrium between the demand for and supply of factors. The production functions governed by the ownership of property or means of production, power structure in the society play a vital role in the distribution of national income. The contemporary theory by asserting that everybody or its marginal product under is, what it contributes to general output of industry is that tactic approval of the present distribution of income as just and right. But this far from truth, since the present day highly skewed distribution of uneven ownership of property, production relations based on it and the power structure in the society. This is not to say that marginal productivity as a determinant of incomes is quite unimportant but the importance of the institutional factors just mentioned above cannot be glossed over.
Services:- Price Theory Homework | Price Theory Homework Help | Price Theory Homework Help Services | Live Price Theory Homework Help | Price Theory Homework Tutors | Online Price Theory Homework Help | Price Theory Tutors | Online Price Theory Tutors | Price Theory Homework Services | Price Theory
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