Is There an Institutional Theory of Distribution?

Abstract

Income distribution is a primordial question. “Who gets what” is a universal, unremit-ting source of resentment and social discord. Economic science is nominally concernedwith the “positive” aspects of the problem. That is, what forces regulate the apportion-ment of the social dividend? Or, what assumptions must be made about the nature ofreality to logically demonstrate that a given distribution of income is Pareto optimal?Does institutionalism offer a coherent and surpassing alternative to the standardmodel of distribution? The issue is clouded by several factors. For one thing, there is nosingle piece of scholarship that can be pointed to as the authoritative or definitive insti-tutional treatment of the subject. The problem of relative rewards does figure materiallyin the works of Thorstein Veblen, John R. Commons, and Clarence Ayres. However,with the exception of Veblen’s critique of John Bates Clark’s marginal productivity the-ory (Veblen 1908), the views of these economists with regard to distribution are nestedwithin their respective analyses of related phenomena such as the nature of technology,theevolvingsubstanceofproperty,orthemeaningofcapital.Anextensiveliteraturehasaccumulated in the past three decades wherein specific institutional sources of risingincome inequality have been identified and explicated.