Development and Underdevelopment in the History of Economic Thought

Income distribution in the history of economic development theories

Santarcangelo Juan Santarc√°ngelo, PhD in economics (New School University), Associate Professor at the Universidad Nacional de Quilmes and the National Council for Scientific and Technical Research (CONICET)

The aim of the paper is to analyze the role that income distribution has had within the theories of economic development from its origins in the mid-1950s until the present-day. The goal is to review the historical place that income distribution has had in the main theories of economic development such as the neoclassical linear stage development theory, Latin American structuralism, dependency theory, unequal exchange, imperialism, and world-system analysis: and how this place has been changing through the years. The central hypothesis of the paper is that if we study the evolution of development theories through the lens of the income distribution, one can distinguish two very different stages. The first one goes from the beginning of development theories in the 1950s to the early and mid-1970s. During these years the concept of economic development began to transform itself and started to evolve, going from being a simple synonym with the concept of economic growth, to gradually incorporating new layers or dimensions. Among the most important dimensions we can point out the generation of employment, increasing productivity, modifying the productive structure, promoting technological change, and progressively income distribution was gaining relevance. However, from the mid-1970s the rise of neoliberalism brought about enormous economic and political transformations that had a direct impact on the way economic development was thought; and in particular, in the role of income distribution in it. As a result of the economic policies applied in the last decades, income distribution was gradually abandoned as the core element in economic development theories and I believe that putting it back to its proper place is a necessary condition to achieve economic development in the future.

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Keywords: income distribution, economic development, history of economic thought