Economic distribution as a social process

This article examines the role of extramarket and other noneconomic variabl es in the pricing of the factors of production or income distribution. The documented presence and salience of premarket variables in factor valuation makes economic distribution an eminently social process. In particular, ev en under a modem free-market economy, income and wealth distribution repres ents a process of institutionalization through the creation and imposition of social rules and sanctions as distinguished from inexorable natural laws . For instance, wage formation and dispersion (inequality) is reportedly mo re a function of the institutional structure of labor markets than of the a utomatic operation of some iron market laws of wages. To that extent income /wealth distribution becomes a matter of, in economic terms, discretionary decision making, rather than of an objective valuation of productive factor s according to their (marginal) productivity or merit. In retrospect, the a rticle supports the Keynesian hypothesis about the economically arbitrary a nd inequitable distribution of income and wealth in capitalism.