476. Why economic theory has little to say about the causes and effects of inequality

Brendan Markey-Towler and John Foster, School of Economics Discussion Paper No. 476 February 2013, School of Economics, The University of Queensland. Australia.

Full text available as:
PDF - Requires Adobe Acrobat Reader or other PDF viewer.

Abstract

In this paper we discuss and critique the theory (and lack thereof) on inequality in economics. We suggest that the discipline is uncomfortable on the whole with analysing the phenomenon and that those theorists who have asked how inequality arises and what its economic consequences are do so without analytical depth. This, we hazard, is because of a fundamental constraint on what phenomena standard economic theory can address, stemming from the core assumption that the economy can be studied as if it functions like a classical mechanical system, not a complex adaptive system.