Income Distribution, Profit, and Real Shares
13 Pages Posted: 2 Mar 2012 Last revised: 9 Jun 2014
Date Written: February 28, 2012
This paper clarifies first the nature and significance of monetary profit by applying the structural axiom set as consistent point of departure. As a crucial result the fundamental theorem of income distribution emerges. It states: profit is no factor income. Since the individual firm is blind to this structural fact it subjectively interprets profit as some kind of reward. As a matter of fact, firms do not ‘make’ profit, they only redistribute it among themselves. With profit consistently defined it is possible to determine the nominal and real shares of the elementary income categories wage income and distributed profit.
Keywords: new framework of concepts, structure-centric, axiom set, monetary profit, distributed profit, retained profit, key ratios, period core, invisible redistributor, nominal wage share, real wage share
JEL Classification: E20, E25
Suggested Citation: Suggested Citation