Social Institutions, Imperfect Information, and the Distribution of Income: A Comment

Abstract

In a recent article in this Journal,1 David Starrett notes that, in addition to the traditional marginal productivity theories of neoclassical economists, there has recently emerged a quite distinct theory of distribution as presented by radical economists. In particular, Starrett refers to the work of Samuel Bowles and Herbert Gintis.2 As a neoclassical economist, Starrett claims he understands the radical viewpoint and there sufficient common ground between the neoclassical and radical theories to justify an attempt at synthesizing the two. An important conclusion to be drawn from this attempt, says Starrett, is very minor changes in the neoclassical framework are sufficient to imply quite radicalsounding conclusions (p. 262). As a Marxist economist, I find this attempt at synthesis interesting; there all too little intellectual communication between neoclassical economists and radical economists. Moreover, Starrett not communicating from a position of ignorance. It seems Starrett did make a sincere and genuine attempt to familiarize himself with the radical point of view.3 The general conclusion of Starrett's article the key to understanding inequality the relation between different types of workers, and not between capitalists and workers as Marxists argue (p. 284). He bases this conclusion on a number of hypotheses about distortions in the nonproperty distribution due to unequal access to jobs and misperceptions about job opportunities. Starrett agrees with the radicals that marginal productivity theory tells us very little about the distribution of income (p. 282), and social institutions play a crucial role in determining distribution. However, his basic assumptions about the operation of social institutions are very different from, and in some ways diametrically opposed to, the radical analysis. The economic role of education the main issue on which Starrett actually makes an explicit attempt to utilize the radical analysis. Yet he distorts the essential point of Bowles and Gintis' work on education when he states that, Radical economists have ... been arguing ... the educational responsible for much of the inequity in the system (p. 264). The whole thrust of Bowles and