Distribution in the Long and Short Run

Abstract

The object of long-run theories of distribution, which is almost the only kind we have, is to explain the slow trend behaviour of the shares of wages and property income (‘profits’ for short) in the national product. It used to be thought that the long-run trend was adequately described by Bowley’s Law of constant relative shares. More recent statistical work has suggested that, in the United States at least, the share of wages has been increasing slowly at the expense of profits.¹ Whatever one believes about these complicated facts, they are what the theory is supposed to explain.