Abstract
In Marx's explanation of functional income distribution, wages are given as a basket of goods needed for the reproduction needs of the working class. Profits are then the remaining part of income creation. Marx's explanation of functional income distribution has several theoretical and practical shortcomings. The Keynesian paradigm in the traditional works of Keynes and Kalecki provides alternative explanations of functional income distribution. Here the profit rate is given by processes in the financial market and the degree of financialisation. Also the degree of monopoly influences functional income distribution. The Keynesian and Kaleckian approach allows a plausible interpretation of the changes in functional income distribution during recent decades.
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