Morning Must Read: Amartya Sen 32 Years Ago Had the Last Word on “Just Deserts” Theories of Distribution

The brilliant and very thoughtful Amartya Sen (1982): Just Deserts: “The personal production view is difficult to sustain in cases of interdependent production…

…i.e., in almost all the usual cases…. A common method of attribution is according to ‘marginal product’…. This method of accounting is internally consistent only under some special assumptions, and the actual earning rates of resource owners will equal the corresponding marginal products only under some further special assumptions. But even when all these assumptions have been made… marginal product accounting, when consistent, is useful for deciding how to use additional resources… ut it does not “show” which resource has “produced” how much…. The alleged fact is, thus, a fiction, and while it might appear to be a convenient fiction, it is more convenient for some than for others….

The personal production view… confounds the marginal impact with total contribution, glosses over the issues of relative prices, and equates “being more productive” with “owning more productive resources”… is richer in powerful rhetoric than in substance…. An Indian barber or circus performer may not be producing any less than a British barber or circus performer–just the opposite if I am any judge–but will certainly earn a great deal less…. The smaller earnings… need not, in fact, reflect only failure of what [P.T.] Bauer calls [the Indians’] “aptitudes and motivations for economic achievement…