Distribution of Income and Expenditures across Nations

By Nissan, Edward; Niroomand, Farhang | Journal of Economics and Finance, April 2010 | Go to article overview

Distribution of Income and Expenditures across Nations


Nissan, Edward, Niroomand, Farhang, Journal of Economics and Finance


Abstract

This paper outlines a premise that state social and economic planning in recent decades were the outgrowth of Marxist doctrine, even though Marxism as an economic system failed to materialize. The paper addresses the rise of the New Left with its doctrine of radical economics and its influence for state planning. For this purpose, the paper compares 126 countries grouped by income distribution and income inequality. The findings indicate that richer economies perform better than economies of lesser income in the distribution and equality of income.

Keywords Marxism * State Planning * New Left * Radical Economics

Classification JEL P31P51P21

1 Introduction

According to Dean (1978), the theory of value and its associated theory of distribution are key features of any methodological or philosophical approach in economics. But it was Karl Marx who conceived the idea of surplus value that emerges from the process of production. It is the difference, according to Mandel (1968a), between the product of labor and its cost. Labor produces surplus above its wages. So, in an exchange economy such as the capitalist system where population is divided into owners of capital and sellers of labor, labor becomes alienated because of exploitation, resulting in revolution, with the ultimate goal of a communist system.

Marxism spawned a great variety of ideas that seem plausible to correct for the exploitation of labor. This article intends to explore one of them, state planning. The paper will proceed after this introductory section with Section 2 undertaking a discussion of the rise of the New Left, (radial economics), followed by Section 3, which undertakes state planning. The final section provides conclusions.

2 The new left

A new current of Marxism is the rise of the new left with its break with communism, according to Bell (1980). The intellectuals of the new left felt that the working class was no longer the historic agency of change. The intellectual class did not develop specific propositions; their strategy was the use of rhetoric rather than argument. Kolakowski (1978) provides another look at the new left by stating that it is a universalization of Marxist phrases and at the same time inadequate as a doctrine to modern social problems. There is no common ideology and no alternative model for socialism except in general terms. The characteristic tendencies of the new left may be listed as (1) any organized group can make revolution with statements such as "revolution here and now," (2) existing orders deserve destruction and the revolution must be worldwide, (3) the working class cannot be relied on for the revolution, and (4) the new revolution patterns are found in the Third World, and that the United States, for instance, should be transformed into the likeness of China and Cuba.

Nevertheless, the new left brought into public view severe problems that can only be solved on a worldwide basis, such as overpopulation, environmental pollution, poverty, backwardness and economic failures in poor countries. This sense of crisis all over the world is made intense by the speed of communication where local problems and disasters produce a general sense of defeat. In essence, the ideology of the new left has very little in common with Marxism: a revolution without the working class, hatred for modern technology, primitive societies as the source of progress, and hatred of education and specialized knowledge. For the new left, it is possible to transform the world into paradise. The obstacles are monopolies and university professors.

Ward (1979a) contends that confidence in the victory of socialism centers around three facts. The first is the existence of a number of socialist countries. The second is the size and power of socialist movements worldwide. The third is the upsurge in radical economic thought exemplified by Paul Baran (1957), Baran and Sweezy (1966), Mandel (1968a, b), Horvat (1968) and a variety of journals. …

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