Research On Relationship Of Wages And Profits

The theory of wages and profits distribution has always been one of the most fundamental and important theory in economics, which originated from Adam Smith who built Classical economics. After the evolution of more than 200 years, it formed into a completed theoretical system. This study attempts to provide a systematic analysis of the evolution of the relationship of wages and profits distribution from the perspective of the history of economic thought. The study roughly divides them into two kinds of thoughts:one is the opposition theory that the relationship of wages and profits distribution is shifting to be opposite, the other is the harmony theory that the relationship of wages and profits distribution is co-rotating to be harmonious. The thought of opposition theory originated from the analysis tradition of Classical school which was built by Adam Smith and David Ricardo, developed by Marxism, recently revived by Neo-Ricardian which is represented by Sraffa. The harmony theory mainly is Neo-classical analysis tradition which was founded by Malthus, Zaire, who were representatives of vulgar Classical economics, developed and consummated by Marshall and Clark. The thought of Marxism opposition theory inherited the traditional analysis of Classical school, which make total output distributed between social classes with rest methods, and conclude that realistic capitalist production mode and the relative production relations determine distribution relation. Neo-classical harmony theory applies marginal and equilibrium method to determine the prices of products and factors. The analysis method suggests that the distribution relation is caused by technical production relations. This analysis of the distribution relation is widely used by the mainstream economics. Until the 1950’s, as a branch of Keynesian, Neo-Ricardian came out which criticized Neo-classical distribution theory and put forward that all the income came from the capitalist economic relations or specific monetary financial relations, which was not related to the Neo-classical analysis of the technical relations. Neo-Ricardian discussed remaining and allocation continuously with the concept of prepaid capital of Classical school, which confused the production of physical products and factors of marginal productivity, and two incompatible theories of technical relations determining distribution relations and social relations determining distribution relations. This makes the analysis ignore the decisive role of production relations on distribution relations and form the theory of the opposition of wages and profits only originating in the distribution fieldThis study sets the evolution and development of the theory of wages and profits as the principal line, combines, compares and evaluates the thought of wages and profits distribution of Marxism, Neo-classical and Neo-Ricardian, explores the relativity of different distribution relations in history and in reality, and uses the empirical data to verify the results of the theory analysis. The whole study consists of 7 chapters, including Chapter 1 of introduction, Chapter 2-5 of the theory analysis, Chapter 6 of the experience proof of theory analysis, and Chapter 7 of research significance. Firstly, the study reviews the theory of the wages and profits distribution relations comprehensively and systematically in two different dimensions. Horizontally, it systematically analyzes the distribution theories of Marxism, Neo-classical and Neo-Ricardian, discusses the development and criticism of the theory of different schools and economists on distribution relations. Moreover, through the comparative analysis it interprets decisive factors in wages and profits distribution relations. Vertically, the study researches and states particularly theoretical source, development thread and the evolution in different historical periods of the relations of wages and profits distribution. It represents different development and evolution of wages and profits distribution relations, and excavates historical and realistic roots of the opposite thought. Secondly, in the experience proof of theory analysis of Chapter 6, from statistical analysis on the changes of the income of labor and capital in the transition of China, it is found that the adjustment of the ownership structure mainly affects the income distribution of labor and capital in China. The conclusion verifies the accuracy of Marxism which the production relations determine the distribution relations. Finally, the study explains the difference of the different distribution thought, through combing and analyzing comparably wages and profits distribution relations, which has the following conclusions:Firstly, the harmony theory of wages and profits distribution relations of Neo-classical is a theory of technical relations determining optimal resources in markets. When optimal resources is allocated and the distribution bread gets bigger, it must follow the elements marginal product equaling to the price in order to form the relative price of Neo-classical. The relative price determines wages and profits distribution. However, the realistic distribution is based on the economic relations, and Neo-classical analysis lacks logical consistency. So, it is only suitable to guide the resource allocation issues in micro-economy.Secondly, although the opposite theory of wages and profits distribution relations of Neo-Ricardian reflects the analysis of realistic social relations, it ignores the decisive role of the social relations to the distribution relations, which makes them analyze the social relations just staying on the surface of expressed in monetary quantity relationship, and acknowledges the opposition of wages and profits distribution relations in the field of distribution. It holds that the distribution proportion of wages and profits is uncertain in macro-economy, not constrained by any objective boundary. So, it makes the important economic variables independent of the economic system, which is difficult to be convinced.Thirdly, the opposition theory of Marxism abstracts away all factors associated with technological relationship or physical objects. It analyzes wages and profit distribution with the social relationship expressed in "abstract labor" embodied by value. Marxism economics studies the fact that the historic changes of the production modes cause the change of distribution relations, which is better suitable to explain the income distribution issues in macro-economy.In summary, all sorts of economic theories provide valuable theoretical factors to comprehend the distribution relations. We should absorb and use the positive factors in all the theories, and comprehensively and scientifically grasp the distribution relations, which can better guide the practice. Through comprehensive analysis of various theories, the study suggests that the present income distribution in China should insist on the basis of Marxism distribution theory, absorb and draw lessons from scientific factors in the other theories. The only way of avoiding widening income gap, gradually achieving Chinese socialist construction goal of justice, social harmony and common prosperity depends on guaranteeing the subject position of public ownership and distribution according to work, and market allocation resource and the macro-regulation.