Intrinsic Rationale of Functional Distribution and Quantitative Distribution

―International Experience and Reference of Income
Zhang Juwei (张车伟) and Zhao Wen (赵文)
Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing, China
Abstract: The issue of income distribution in the modern sense emerged with the
creation of the capitalist mode of production – a process characterized by income gaps, at
first widening, then narrowing, and widening once again. In the classical economic stage
featuring dual economy, income distribution was dominated by capital due to scarce capital
and cheap labor, which led to widening income gaps. Entering the neoclassical economic
stage, income distribution was dominated by the game between capital and labor due to
diminishing marginal return to capital and relatively scarce labor, which led to the growing
share of labor compensation and narrowing income gaps. Yet since the 1970s, the deepening
of financialization of capital has once again magnified the effect of capital-dominated
income distribution, which, together with working class polarization, led to another round
of widening income gaps. An observation of the long-term evolution of world economic
development and income distribution gives us a clearer view on the intrinsic rationale of
change in income distribution: The mode of production determines the mode of distribution
and functional distribution shares intrinsic consistency with quantitative distribution.
Keywords: international experience, functional distribution, quantitative distribution
JEL Classification:

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