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Economics 333
distribution is largely determined by the political and institutional organization.
Here, accordingly, the main purpose of economics must be to trace the influence
of socio-political conditions and institutional factors on the choice of a form of
income distribution that facilitates the full utilization of existing production
capacities and their further expansion.
This is a particularly important matter for the developing countries where the
skewed social distribution of income inherited from outdated socio-political
systems constitutes a major obstacle to accelerated development.
The influence of the socio-political system and institutional factors on the
choice of a distribution system that wil ensure optimal development opportunities
is also reflected in the discussions on economic surplus, that is, the difference
between the volume of national output and the costs necessary to achieve it. Not
only economists but anthropologists regard the notion of economic surplus as
pivotal to a proper understanding of the mechanisms of growth. Some time ago,
P. A. Baran, an American Marxist, wrote as follows of the concepts of actual
and potential economic surplus (Political Economy of Growth): ‘actual economic
surplus, i.e. the difference between society’s actual current output and its actual
current consumption.. . ; potential economic surplus, i.e. the difference between
the output that could be produced in a given natural and technological environment
with the help of employable productive resources and what might be
regarded as essential consumption’. This kind of reasoning is subject to criticism
on many counts (which is probably why Baran omitted the distinction between
actual and potential surplus in his later book Monopoly Capital, written jointly
with P. A. Sweezy), and clearly goes beyond distribution in the strict sense. The
mere fact that the question is raised, however, is of great importance as, once
again, it demonstrated the need of including non-economic issues in economic
analysis. With this in mind, it seems absolutely essential to continue to investigate
the capitalist economy on the lines followed by Kalecki in his Theory of
Economic Dynamics, i.e. to continue the study of the inter-relations between the
economic power and the political power of certain institutions (Kalecki concerned
himself with the impact of the degrees of monopoly power on the relative
share of wages in income); the relative shares of the different classes and social
groups in the national income; and the distribution of the national income as
between accumulation and consumption. This approach to distribution theory,
replacing the ‘objective’ criterion of marginal productivity by the idea of the
power structure, could be extremely useful in analysing the specific but crucial
problems of the distribution of income on an international scale, especially as
regards relations between the developing countries and the major industrial
powers. What has been referred to as the ‘non-equivalent’ conditions of trade
(and this is closely associated with the degree of monopolization) undoubtedly
becomes an essential element in analysing international economic relations.
Work on long-term dynamics has shed new light on the age-old questions of
egalitarianism and income differentiation, hitherto treated almost exclusively in
the context of social philosophy and political doctrines. Unequal distribution of
income influences the intensity of accumulation and the application of innovation
(understood in the widest sense). There was a time when economists be-