AN INVISIBLE HAND FOR INCOMES?
We have now sketched how a perfectly competitive economy distributes total product among the different factors in a simplified world. We have been observing how hardheaded competition works under simple neoclassical conditions.
People naturally ask, Do people get their just rewards under market capitalism? We might as well ask whether animals get their fair food supplies in the jungle. Just as the jungle has its laws without regard to right or wrong, so does the competitive market have its brute facts of income distribution.
Is there an invisible hand in the marketplace that ensures that the most deserving people will obtain their just rewards? Or that those who toil long hours or nights and weekends or in tedious or dangerous work will receive a decent standard of living? No. In fact. competitive markets do not guarantee that income and consumption will necessarily go to the neediest or most deserving. Malaise afire competition ‘ might lead to massive inequality, to malnourished children who grow up to produce more malnourished children, and to the perpetuation of inequality of income~ and wealth for generation after generation.
The rich may get richer as the poor get poorer. In a market economy, the distribution of in- . come and consumption reflects hard work. ingenuity. and cunning. along with initial endowments of inherited wealth and a variety of factors such as race, gender. location. effort, health, and luck.
Those who tout the wonders of the: market point to the major gains in efficiency that have come with the deregulation, privatization, reduced trade barriers, and decline in unions over the last two decades. But movement outward greater marker competition has been accompanied b) of incomes in countries as different as III, United States, Sweden, and Russia, In many “winner-take-all” markets. the rewards have gone predominantly to a tin}’ group of superstars who won patents, lawsuits, elections, software contests, or athletic races by a hair’s breadth. ‘””hill’ the market call work wonders in Producing a growing of J,sandstone services in the most efficient manner, there i~ no invisible hand which ensures that a economy will produce a fair and equitable distribution of income aim property.
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