Chapter 8 – Distribution

On a country-by-country basis, the highest level distribution is that of total income between saving placement income and labor income. Year after year, what is the share of overall income that the market economy tends to maximize? Is it saving placement income or income from work?

• If it is that of labor income, then the increase in average labor income is not only faster than that of total saving placement income, but also even faster than that of total income.

The study of the distribution of total income, based on definitions that are acceptable in the logic of finite sets, shows which is the most important economic aggregate, country by country. It is conceptually simpler and fiscally more honest than GDP.

This objective economics handbook examines two other distributions.

• One is in the next chapter, Chapter 9, the distribution of total labor income. It is more and less and less unequal. But the evidence that makes it so is not part of the doctrine in force. A power that the economic system confers on the social body is usurped.
• In Chapter 11, the other distributions are, in the selling prices of the undertakings, those of common costs and contributions to the final result.

A new way of examining the problem of the latter distributions finally solves a problem of principle and identifies a general law. The problem is that of the objective exchange value of most of the services and goods sold by firms.

• This general law is that of the tendency, engendered by competition when the market authorities want it, to equalize the profitability of the same membership. Many prices then become closer to their target level.

The distribution of private wealth gradually becomes less unequal when each of the three distributions studied in chapters 8, 9 and 11 follow their normal course.

• But this normal course is inherent only to the market economy in a regime of full trade, first of all both in terms of shareholders and wages.

Propositions

• 8.1 Let's call Total income (TI) the sum of total income from savings placements and total income from labor.
• 8.2 The total saving placement income can be made sufficient.
• 8.3 Two refusals of long-term change govern the distribution of overall income.
• 8.4 Total labor income (LI) is what remains of total income (TI) after total saving placement income (SI) is accumulated.
• 8.5 An equation other than LI = TI - SI regulates the distribution of total income.
• 8.6 Let's call profitability only a rate of income or margin on inventory.
• 8.7 Let's call productivity only a ratio between the monetary amounts of a sales flow and an inventory.
• 8.8 Let's only call profitability a rate of income or margin on flows.
• 8.9 Let's call the RPP relationship the fact that all profitability is equal to productivity multiplied by profitability.
• 8.10 On a country-by-country basis, total labor income is determined by the profitability and productivity of investments.
• 8.11 The normal trend in investment returns is one of stability.
• 8.12 The normal trend in investment productivity is upward.
• 8.13 The normal trend in the profitability of total income is downward.
• 8.14 The dynamics of the distribution of total income lend themselves to the maximization of total labor income.
• 8.15 A "pay-as-you-go" pension only provides its beneficiaries with a substitute income because it is in reality a transfer.
• 8.16 Total income is the most significant economic aggregate.