Income Distribution
Regarding the controversies around value, the starting point of the French classical economists was the opposition between Say and Ricardo. The same opposition is to be found about distribution of income.
However, on this last point what is at stake is different. The liberals are reluctant to accept Say’s assertion that rent is a monopoly income, and they refuse Ricardo’s idea that a rise in wages lowers the profit rate: it is their opinion that both assertions undermine the idea of an harmony of interests between men.A first difficulty arises when it comes to defining the different kinds of income. In Say’s works, the entrepreneur is central. Regardless of whether or not he has a share of the capital of the firm, what matters is that he manages the business, buying productive services to provide the goods as requested. It is thus necessary to distinguish the income that pays for his work from the interest he draws from his capital. To state this idea, Say abandoned the Smithian trilogy of wages, profits and rents. He contrasted the “profits of industry” - that is, labour incomes - with territorial incomes and capital incomes. He also put the incomes of the entrepreneur, the scientist and the worker at the same level: they are all rewards of labour. Labour is not simply nor primarily a physical activity. It requires different abilities, skills, intelligence or organizational talent. It is fundamentally heterogeneous and the theory of distribution must explain the rewards of these different types of workers.