The Institutional Justice of the Market Process: Entrepreneurship, Increasing Returns, and Income Distribution.
28 Pages Posted: 19 Mar 2018 Last revised: 25 Mar 2018
Date Written: March 15, 2018
We argue in this chapter that the transformation in the vision of economics from one in terms of processes to one in terms of equilibrium would in turn yielded public policy implications regarding the role of government and distributive justice. Although classical political economists had made a case regarding the institutional justice of the market process, this argument became overshadowed in the late 19th century and early 20th century by early neoclassical economists, who defended the market in terms of the equilibrium pricing of factor payments. Justice according to the early neoclassical economists was defined in terms of market outcomes that approximate the marginal valuation of the productive contribution of each factor of production. The persistence of this equilibrium paradigm today, among both proponents and critics of the market, has led to the notion that income equality is a substitute, not a complement to economic prosperity.
Keywords: Distributive Justice; Entrepreneurship; Increasing Returns
JEL Classification: B1; B21; D33
Suggested Citation: Suggested Citation