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The Classical ‘Surplus’ Approach and the Theory of the Welfare State and Public Pensions

Sergio Cesaratto ()

Chapter 4 in Sraffa or An Alternative Economics, 2008, pp 93-113 from Palgrave Macmillan

Abstract: Abstract The theory of ‘market failures’ provides the conventional answer to the existence of the welfare state institutions. By contrast, the Classical ‘Surplus’ approach to the theory of income distribution strongly emphasizes the role of class conflict and of public institutions in regulating the conflict. It is therefore wide open to the mass of analytical and historical studies proposed, in particular, by the Scandinavian scholars of the social state. While neoclassical economics proposes a two-stage approach in which the welfare state intervenes ex post on market-determined income distribution to make up for market failures, the Classical ‘Surplus’ approach proposes a one-shot procedure by regarding the state, in its capacity to generate and control part of the social resources, as a field of social conflict and, therefore, as an important factor in the regulation of income distribution among conflicting social classes.

Keywords: Income Distribution; Welfare State; Real Wage; Public Debt; Nominal Wage (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1057/9780230375338_5

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