"Marginal Productivity Theory and the Mainstream"

Marginal productivity theory gives an explanation for why income is distributed in a particular way. The question is whether it provides an adequate theory for understanding the flow of income to the factors of production, and I think it does provide such a basis. So it helps us to understand why income is distributed as it is, but arguing about whether the result is equitable or not is fruitless since it will depend upon the definition of equity used to evaluate the outcome, and the definition can differ across individuals.

My own view is that we don't need, at least not yet, to discard the standard theoretical model....more>>