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Heterodox Economics

Foundations of Alternative Economics

Hasan Gürak

Mainstream economic textbooks propose a kind of economic world which can only exist in fictitious markets where producers and consumers interact like robots, relations are mechanical and assumptions utopian. Accordingly, the expositions are, in substance, nothing but sophistry. Yet, many economists are becoming more and more discontent with the sophistries of mainstream doctrines. The book presents some realistic alternative approaches to the conventional ‘unrealistic’ attitudes of mainstream economists in order to pave the way for a further development of new ideas.

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Chapter 6: FUNCTIONAL INCOME DISTRIBUTION

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Unequal distribution of income has always been one of the major problem areas and often a cause of embarrassment for both economic science and economists. The problem does not refer only to income distribution and the related inequali- ties among individuals, households, and classes but also to global income distri- bution and inequalities among nations. Global income distribution is especially disappointing when one considers it in terms of the expectations from globaliza- tion. So called “leftist” economists have always tended to emphasize income ine- qualities and supported redistribution of income in favor of less favored groups in society. The conservative right wing economists, on the other hand, tended to give priority to capital accumulation rather than income redistribution which they believed would enlarge the cake to be shared out and as a result, all income groups were expected to be better off. The critical question in regard to the long term economic interests of society is whether priority should be given to more fair income redistribution or to capital accumulation. Perhaps a combination of two policies would have a more positive impact in the long term. The individual or household distribution of income has always been a sub- ject of lively debate amongst economists, because the problem has always re- mained unresolved. It refers, basically, to the incomes of individuals and house- holds. Functional income distribution, on the other hand, has been the subject to endless arguments ever since the appearance of economics as a separate disci- pline. Functional income...

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