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^[1] Subtitle: Total and Relative Price

Two analysis of traditional distribution theory

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Distribution theory has always been

The classical analytical tradition was established by Adam Smith, and after the development of Ricardo and Marx, it was revived in Slafa. The neoclassical analysis tradition was established by the marginal revolution since 1870, and developed and perfected by Marshall and Clark. The classical distribution theory of classical analysis uses the remaining method to distribute the total output among the various classes of society. "Uniform profitability" is a sign of this tradition, which is caused by the competitive relationship of capitalism.

Various heterogeneous products are added up to a total amount on the basis of a uniform profit rate. Therefore, the traditional distribution theory of classical analysis is the aggregate theory. Neoclassical analysis of traditional distribution theory uses marginal and equilibrium methods to determine the prices of different products and factors of production. ^[1]

This tradition only has a "different rate of profit", it is an index of the scarcity of different capital goods, caused by the technical relationship of production. Heterogeneous products cannot be added together due to differences in technical performance and other aspects. Therefore, the traditional theory of neoclassical analysis is relative price theory. The two analysis of traditional distribution theories are in stark contrast. This contradiction and antagonism was finally fully revealed in the "Cambridge Capital Controversy" that occurred in the 1950s. One side of the dispute is the Cambridge school of England, which represents the classical traditional analysis method; the other side is the Cambridge school of the United States, which represents the neoclassical traditional analysis method. ^[1]

The controversy revolves around the paradoxes of "capital measurement" and "technology reconversion" and "capital backflow" in neoclassical theory, exposing many logical problems in neoclassical capital and distribution theory. The neoclassical theory of marginal productivity is also questioned. The root of the paradox in the Cambridge Capital Controversy is the introduction of social relations into the neoclassical technical analysis, and the neoclassical relative price theory is used blindly for aggregate analysis.

This article uses the unified research method of historical materialism and dialectical materialism to compare the two analysis of traditional distribution theory, aiming to explain the differences between the two, and to facilitate the search for a theoretical system that can better guide reality. The conclusion of the research in this paper shows that the traditional distribution theory of neoclassical analysis is a set of relative price theory determined by technical relations, which can only be used to guide the allocation of resources in the micro-domain. Classical analysis of the traditional distribution theory is a set of theories determined by social relations, which is more suitable for explaining income distribution in the macro field. ^[1]

The innovations of this paper are as follows: (1) This paper abandoned the traditional method of discussing the distribution theory in the chronological order. According to the inherent logical consistency of the theory, this article divides the distribution theory of the two centuries into two analysis traditions: the classical analysis tradition and the neo-classical analysis tradition. (2) This article clearly states that the traditional distribution theory of neoclassical analysis is a set of relative price theory, while the traditional distribution theory of classical analysis is a set of total theory.

The former applies to the microscopic domain, while the latter applies to the macroscopic domain. (3) The "Cambridge Capital Controversy" has shown that the relative price system determined by technological relations and the aggregate system determined by social relations are incompatible. The practice of mixing the two can only lead to logical paradoxes. (4) The analysis of this article concludes that the "unified profit rate" is an important symbol that distinguishes classical and neo-classical analysis traditions. Classical analysis has a "uniform profit rate" in the traditional distribution theory, which reflects the social relations of capitalism. It is the basis for the sum of heterogeneous products and the key to guiding macro analysis. The neo-classical analysis of traditional distribution theory only has a "differential profit rate", and cannot perform total analysis. Therefore, the establishment of a balanced system based on the "uniform profit rate" is a theoretical system closer to the macro reality. ^[1]