Christopher Brown

Does income distribution matter for effective demand? Evidence from the United States

This article examines the influence of income distribution in the determination of effective demand in the US. A simple model is developed to simulate the effects of changing income inequality on the aggregate propensity to consume. The simulation results illustrate that income inequality has a substantial negative impact on consumption when household spending is assumed to be income‐constrained. Econometric evidence is presented that rising private sector wage inequality had a dampening effect on the time path of consumption in the United States between 1978 and 2000. The methodology entails time series estimation of consumption specifications with a measure of income inequality (the Theil index) included among the explanatory variables. The argument is made that, ceteris paribus, rising income inequality creates a need for greater reliance on debt to sustain a given level of household spending.

Rise of the Institutional Equity Funds: Implications for Managerialism

Two salient features of fin de siecle economy in the United States and Western Europe are (1) the hollowing out of social relations between major corporations, their employees, and the communities in which they are located; and (2) the failure of the body politic to evolve socially protective responses to this change. Institutionalists and other concerned parties are moved to wonder: what combination of forces gave rise to the contemporary brand of hard-edged, shareholder value-oriented corporatism? And what might be done about it?1 The purpose of this article is to examine the following issue: to what extent has the growing concentration of control overfinancial assets in the postwar era (but especially since 1974) contributed to the (apparent) single-minded pursuit of shareholder value among many top-level corporate decision makers? Adolph Berle and Gardiner Means [1934] claimed that the separation of ownership and control of tangible assets was a critically important aspect of the corporate revolution. The argument is made here that a widening fissure between the ownership and control of financial or intangible assets is a distinctive characteristic of the postwar era in the industrialized world. Moreover, a serious consequence of the rising concentration of control over the disposition of intangible assets has been a shift in the distribution of economic and political power in favor of the custodians of giant pension and mutual funds. The following sections argue that the expanding concentration of control over

Is There an Institutional Theory of Distribution

Income distribution is a primordial question. “Who gets what” is a universal, unremit-ting source of resentment and social discord. Economic science is nominally concernedwith the “positive” aspects of the problem. That is, what forces regulate the apportion-ment of the social dividend? Or, what assumptions must be made about the nature ofreality to logically demonstrate that a given distribution of income is Pareto optimal?Does institutionalism offer a coherent and surpassing alternative to the standardmodel of distribution? The issue is clouded by several factors. For one thing, there is nosingle piece of scholarship that can be pointed to as the authoritative or definitive insti-tutional treatment of the subject. The problem of relative rewards does figure materiallyin the works of Thorstein Veblen, John R. Commons, and Clarence Ayres. However,with the exception of Veblen’s critique of John Bates Clark’s marginal productivity the-ory (Veblen 1908), the views of these economists with regard to distribution are nestedwithin their respective analyses of related phenomena such as the nature of technology,theevolvingsubstanceofproperty,orthemeaningofcapital.Anextensiveliteraturehasaccumulated in the past three decades wherein specific institutional sources of risingincome inequality have been identified and explicated.

Ayresian Technology, Schumpeterian Innovation, and the Bayh-Dole Act

A main implication of C.E. Ayres tool-combination principle is that the goal of technical progress is best served by a non-proprietary, open science public policy. Joseph Schumpeter claimed that new combinations are consequential only when they have been successfully commercialized. The capacity to privatize knowledge is, moreover, a powerful stimulus to innovation. This paper reexamines the Ayresian and Schumpeterian positions using evidence from the Bayh Dole experiment. The Bayh Dole Act, which gave universities title to inventions resulting from federally-sponsored research, created a laboratory wherein the trade-offs between diminution of the appropriable knowledge fund (due to patenting) and incentives to commercialization can be appraised.

The Distribution of Wealth

(2006). The Distribution of Wealth. Journal of Economic Issues: Vol. 40, No. 1, pp. 226-228.