EXTENDED SUMMARY

The phenomenon of income inequality is one of the issues economists and policy makers are most interested in. The sharp separation of social classes in the context of income inequality in parallel with the development of technology, has led to an increase in interest in the subject. Considering the struggles between labor and capital, in the light of technology, and analyzing technological developments through income distribution, makes it possible to observe the socio-economic structure of capitalism that is based on inequality. Moreover, this unequal economic structure arises not only between labor and capital, but also within both the labor class and the capital class. Therefore, the income inequality that may arise due to technological development manifests itself both between and within classes. Consequently, capitalism represents not only an economic order in which classes are separated from each other, but also an order in which classes are separated in themselves. In this order, depending on the technological development, the labor class is divided into unqualified and qualified, while the capital class is divided through the mechanism of concentration and the connection between social classes is completely disconnected. The only remaining link is the exploitation of labor by the surplus-value mechanism, the concentration of capital, and hence the acceleration of the exploitation process.

D. Ricardo, who carried out one of the first theoretical studies on how the national income is distributed among the factor owners, is remembered for his pioneering work investigating the income distribution process. Focusing on how the economic growth process changes the incomes of factor owners in his work, Ricardo states that the share of labor and capital in national income decrease with growth, while the share of landowners increases, and he has revealed clues regarding income distribution. Following Ricardo’s analysis, the supporters of the classical school generally state that labor productivity would increase depending on the developments in technology, that increased productivity would stimulate the demand for labor, that the wage level would rise as a result of productivity, and therefore income inequalities among factor owners would gradually decrease. One of the most important thinkers drawing attention to this phenomenon is Kuznets. Emphasizing that there is an inverted-U relationship between economic growth and income inequality depending on the level of development, Kuznets states that the increases in the supply of qualified labor in urban labor markets as a result of the economic development that manifests itself based on technological progress would eliminate wage inequalities and a more equitable income distribution process would emerge.

The proposition that technological development causes functional income inequality is emphasized much more dominantly in Marxist theory. Stating that the technological developments that make the labor class more dependent on the capital class are the main source of exploitation, Marx shapes the theory of surplus-value depending on the technological developments. Claiming that the productivity of labor would increase with technological developments and the working time spent for the capitalist would increase, Marx based his work on the idea that most of the product produced by labor would be confiscated by the capitalist. On the other hand, in Marxist theory, it has been emphasized that the reserve industrial army is the most fundamental factor that ensures the continuity of the system, and it is concluded that the existence of this army suppresses wages and even decreases them gradually. Herein lies one of the main differences between the propositions of Marx and Ricardo. While it was stated in Ricardo’s analysis that wages would remain at the subsistence level, in Marx’s analysis it was argued that wages tended to decline. In addition, although both thinkers agree that capitalist profits would decrease gradually, Ricardo explained the decrease in profits with the increase in rents, while Marx explained this phenomenon with the help of the increase in surplus-value. In this process functional income inequality is inevitable.

Therefore, the main motivation of the paper is to investigate effects of technological progress on the functional distribution of income using quantile regression analysis in the period from 1980 to 2021 in Turkish economy. The findings of the analysis reveal that both intra-labor and intra-capital income distribution deteriorate due to technological development, however, as the share of labor from national income deteriorates much more, the functional income distribution changes in favor of capital. In addition, the results point out that the national income share of the qualified labor force increases with the technological development, the unqualified labor force remains idle, this idle labor force is used by the capitalist for surplus value, and hence intra-labor income inequalities accelerate. On the other hand, it is also determined that the investments made in technology in order to be victorious from the competitive race driven by capitalism lead to the concentration of capital and in this context, it is observed that the income inequality among the capital class increases. In general, it can be said that the capital class gets richer and the labor class gets poorer with the technological progress.