(OPE-L) Re: tendencies for equalization

From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Tue Oct 05 2004 - 09:00:35 EDT

> I have never claimed that a tendency would manifest as a long-term
> decline in income dispersion, because I think that income inequality
> is a property of the statistical equilibrium state of the economy, and
> therefore invariant over time.


So income inequality as such is an invariant characteristic of a
capitalist economy? That's what I read the above to mean.  So
what? I don't think that there is a single economist anywhere of
any theoretical persuasion who would disagree. What many
_would_ disagree with is whether there is a tendency for wage

> I mentioned in a previous post that the exponential distribution is a
> reasonable fit for 90-95% for the income of all groups in
> industrialised countries over a period of several decades.

One has to then ask whether:

a) given the time period, do the statistics reflect some phenomena
for a _conjuncture_ rather than for capitalism as such?  In
other words, how do we know that this statistical relation is
valid across capitalist history rather than an empirical
characteristic associated with a Neo-Liberalism (or whatever
other term you want to use to describe the last several decades)?

b) given the fact that the distribution is claimed to represent a
reasonable fit for industrialized nations (which means that the
data only refer to a sub-set of the capitalist economy), doesn't
one have to examine what is happening in the rest of the
capitalist social formations in the world to determine whether
there is a different  statistical distribution when one examines the
issue globally?

Without addressing these questions, then we can not infer
_any_ meaning for those statistics for capitalism as such. All
that we could say, without doing so, is that *during some
specific time period and for some nations* inequality among
workers has been relatively stable.

> I provided a theoretical explanation for this fact, that it is a
> maximum entropy distribution under a money conservation constraint.
> This kind of explanation is probabilistic, and so it can take a little
> getting used to. The important point, however, is that this
> explanation is intended to include many if not all of the concrete
> determinations that have been mentioned as causal factors that affect
> wages.

It doesn't -- and can't -- include some of the most important
determinations that I mentioned (such as the income of guest
workers, undocumented workers, documented workers who
are employed in the underground economy).  For many of the
nations that you are referring to (the 'industrialised countries')
these workers and their income represent a *very* significant
percentage of the total amount of workers and wages. This
is very germane to the question under consideration.

In solidarity, Jerry

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