Applying the personal income distribution relationship in a socialist-oriented market economy to Vietnam Electricity Group

labor, technology... are brought into the economic process. These factors are coordinated with each other in certain ways, when the value of F is largest, reaching the extreme

In terms of welfare, the choice of the combinations is accepted through the choice decisions of individuals. This implies that social welfare is promoted by the laws of the market in relation to increasing efficiency in economic activities, but welfare is also subject to the macro-level influence of the state . But social welfare is ultimately enjoyed by individuals, so the government while regulating the economy should not restrict the choice of individuals.

1.3.5. Lorenz curve theory and Gini coefficient.

The issue of social welfare needs to be identified and measured. This was of interest to two American statisticians, Lorenz and Gini.

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The Lorenz curve is derived by measuring the cumulative share of people in each class (starting with the poorest) in relation to the cumulative share of income they receive in the total national income. If the income distribution is absolutely equal, the Lorenz curve will be a straight line forming a 45-degree angle. On the contrary, if the income distribution is not absolutely equal, that is, one person has all the income, the Lorenz curve will have the bottom and right sides forming a square; any actual distribution situation is within the assumption of these two extremes, manifested as a downward sloping curve (see figure).

Lorenz curve

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Income ratio

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A statistical measure using the Lorenz curve to express the unevenness of income distribution is to use the ratio of the area between the curve and the diagonal (A) divided by the total area under the curve and the diagonal (A+B), this ratio is called the Gini coefficient. When the Gini coefficient is close to 0, the income distribution will approach absolute equality, when the coefficient approaches 1, the income distribution will approach absolute inequality.

Area (A)

Gini coefficient = --------------------------------------- (1-1)

Area (A+B)

The Lorenz curve and the Gini coefficient as analytical tools reflect the inequality of income, which has a broad meaning. Especially in the situation of income distribution of two types of income, labor income and exploitation income, which have different characteristics, existing in capitalist society. Through this specific description, visualization and quantification, we can see the serious inequality in social income distribution, that is, the polarization between rich and poor. For example, in the US, in 1967, the rich only accounted for 20% of the population but had an income of 41% of the total national income, while the poorest, although also accounting for 20% of the population, had an income of only 5.4% of the national income, the contrast is really obvious. But in the conditions of socialism, do the Lorenz curve and the Gini coefficient still have any meaning? There is still disagreement among theorists on this point. However, many opinions are whether it is possible to apply this analytical tool in the conditions of socialism or not.

The key point is what needs to be clarified. If you simply want to clarify the phenomenon of equality in income distribution or income gap, this analytical tool can be used. Especially in the situation where multiple forms of distribution coexist, in addition to each person's labor income, some people also have property income and other mobile income, there is a

The distinction between the so-called "high income goes to the circle" and "low income goes to the floor" also appears, and there is also a trend of equal income.

If studied carefully, from the movement and transformation of the Lorenz curve and the Gini coefficient, it is possible to detect the trends, dynamics and characteristics of income distribution. On this basis, it provides information about equal or unequal distribution states for the state's macro management, allowing the state to grasp the level of income distribution gap from the macro level.

to make timely adjustments, in order to prevent egalitarianism and serious injustice in distribution. What needs to be noted here is that the measurement of social welfare through the Lorenz curve and the Gini coefficient approaches the quantitative aspect of the distribution state. It only speaks more or less of the equality in distribution. But equality and fairness are two different concepts, equal distribution in terms of quantity does not fully express the values of fairness, and even less shows much about efficiency and optimal welfare. Obviously, the Lorenz curve sags, but how it is moved is considered a good combination of fairness and efficiency, at the same time, with a large curvature and a Gini coefficient is the most reasonable. In other words, the Lorenz curve and Gini coefficient methods are quantitative methods, giving us an idea of the importance between efficiency and fairness, from which to study efficiency and fairness in depth.

From the notion of social welfare, we have the following observations:

1 , In a competitive market economy, the producers' competition and the consumers' freedom of choice allow for allocative efficiency, or Pareto optimal efficiency, to be achieved. Therefore, the assessment of competition is based on the efficiency of the production system in satisfying needs.

2 , Fair distribution increases welfare not only by sharing and moving low welfare income to high welfare areas, but also depends on the growth rate of total income, thus depending on increasing productivity and improving the efficiency of the economic process.

3. The increase in social welfare is the result of fair distribution on the basis of well-solving macroeconomic relations, thereby increasing the amount of income value for distribution, while increasing the general level of satisfaction of the income amount for society.

1.3.6. Distribution in modern economics.

Modern economics is the economics of a modern market economy, a macro-market economy, mixed and global. The center of modern economics is the study of the laws of interaction of macroeconomic relations in the implementation of growth, employment, investment and price goals. It lays the theoretical basis for the domestication of the economic cycle, aiming at economic growth and increasing efficiency, stability and improving social welfare.

J.Keynes is the founder of modern economics. Regarding the issue of income distribution, J.Keynes argued that the two basic postulates of classical economics: 1 , Wages are equal to the marginal product of labor. 2 , When a certain amount of labor is used, the utility of wages is equal to the marginal disutility of that amount of work, based on the postulate: production creates consumption, and supply

The classical demand-side theory is no longer suitable in modern development conditions . According to Keynes, the amount of employment is at equilibrium, so wages are determined depending on: a , Aggregate supply function; b , Propensity to consume; c , Investment volume. Under the encouragement of Keynes' "general theory of employment, interest rate and money", modern economists have gradually clarified the reasons why wages and prices tend to be linked together, and nominal variables such as money have real effects and the monetary and fiscal policies of governments have strong effects.

to the macro economy. In a modern market economy, national income growth, employment and prices (inflation) are closely related.

The greatest concern and intellectual focus of modern economists is to clarify the relationship between these macroeconomic variables, in order to overcome stagnation, unemployment and economic crisis.

Based on studies on the correlation between growth, employment and inflation, AWPhillips has proposed a graph showing the function between prices, employment and the appropriate wage rate. The curve on the graph is called

Phillips curve. Through this curve we see that prices and employment are inversely proportional to each other. In this correlation, labor is a commodity, so the less work, the higher the wage price, but higher than the inflation rate . This shows us that, in a market economy, to reduce inflation, increasing unemployment or reducing employment becomes inevitable. But the more important thing in the relationship between prices, inflation and employment is the numerical relationship with economic growth . Modern economics has introduced the concept of potential output to understand the correlation between growth, employment and prices. When output and employment are high, or unemployment is low, inflation, or the rate of price increase, begins to increase sharply. Similarly, when unemployment is high, inflation decreases. Between these two extremes is the pivotal unemployment level, called the natural unemployment rate, estimated at about 6%. If unemployment falls below this tipping point, inflation begins to rise. We call potential output “the output at which the actual GNP equals the total natural rate of unemployment. That potential output is the highest level of output that the economy can sustain without pushing up the inflation rate” [50,99] . According to Okun’s law, the economic process is cyclical, as the actual gross national product (GNP) expands or contracts. If it expands, the economy is growing or prosperous. If it contracts, it is declining or in recession. According to Okun, if GNP falls by 2% from the initial GNP of 100% of potential and falls to 98% of potential, the unemployment rate will increase from 6% (the natural unemployment rate) to 7%.

This is a numerical relationship, and is called Okun's law. From the Phillips curve and Okun's law, we can see the price of reducing inflation. To reduce inflation, unemployment must increase. According to Okun's law, for deflation to decrease by 1%, unemployment must increase by 2%, and when unemployment increases by 2% of the natural rate, that means that the gross national product must decrease by 4% . What a puzzle. The relationships between inflation (prices), employment and growth

Such growth shows us that, to increase the gross national product, unemployment or employment must be reduced, but this inevitably leads to price increases and inflation. The above analysis of the correlation between growth, employment, wages and prices of modern economics gives us a comment that the decision of employment and wages is no longer the work of production, of business owners alone, but rather macroeconomic relations, outside the scope of businesses .

This is the decisive basis in determining the main goals of the macro economy, growth, employment, and prices.

From Keynes's way of posing the problem of macroeconomics and the microeconomic achievements depending on macroeconomic relations, a fundamental problem of macroeconomics that has a decisive influence on distribution is the new function and role of the state in the process of economic development and in terms of equity . It can be said that equity, or social welfare, is a variable, or a decisive factor of modern development. Of course, equity here is placed in relation to growth, efficiency and stability.

Above we have seen that it was not when the modern market economy was established, and therefore modern economics appeared the issue of fairness, or the issue of social welfare was raised, but as above we have seen, right from the end of the 19th century, W. Pareto, and in the 1920s of the 20th century, Pigou proposed the theory of social welfare, and gave explanations that formed the first foundations for welfare economics. But only when modern economics on the macro economy developed did it really have principles to solve macro issues: growth, employment and prices. And from here, we can better understand the relationship between growth, efficiency and welfare, and at the same time seek solutions to improve social welfare on the basis of economic growth and improve the efficiency of the economy.

One of the contributions of modern economics is to find out the relationship between market, enterprise and state in influencing macroeconomic relations and achievements, which ultimately affect efficiency and welfare. In particular, it is worth emphasizing the developmental function of the state, and the impact

The use of the state in regulating the economy, through fiscal, monetary, and investment policies to promote growth, improve stability, and enhance equity, or improve welfare.

1.3.7. The views of K.Marx and V.Lenin on income distribution for individuals. Category of distribution according to labor.

* K.Marx analyzed capitalist production or capitalist market economy, finding the economic law of this production. That means, while analyzing the mode of production of the market economy, the main point is to analyze the relations, laws, mechanisms and forms of distribution of that production. He wrote: “Capital - profit (business profit plus interest), land - rent, labor - wages, that is the triune formula that covers all the mysteries of the capitalist production process” [47,535] . If this relationship and form of distribution cover the mysteries, then the nature and mystery of the market economy lies in the law of surplus value production, and the transformation of surplus value into profit and rent. This law is expressed as if the ownership, and therefore, the owner of capital and land decides, or determines the distribution. But in fact, it is the law of distribution of a mode of production based on the market economic system, in which all relations are based on value and equivalent exchange, and therefore what, how and for whom to produce is determined by the market. Of course, if only direct ownership determined such distribution, one could easily abolish that ownership and replace it with any kind of distribution one wished. But ownership is ultimately only the legal expression of an objectively necessary relationship and therefore an objective economic law, therefore, “in each historical epoch, ownership develops objectively and in a series of completely different social relations. Therefore, the definition of bourgeois ownership is nothing other than the presentation of all the social relations of capitalist production” [46,234-235] .

If we want to define ownership as an independent relationship, a separate category, an abstract and eternal idea, we are falling into a metaphysical or juridical illusion. Distribution is an economic category with adaptive laws determined by the mode of production. In other words, it is not an ethical or political category.

In his ideological legacy, K. Marx left a comment on the Gotha program, a program of the German Workers' Party, drafted by Lassalles, later called "Critique of the Gotha Program". Marxists, that is, those who follow Marxism, consider this to be the basis for the formation of the principle of personal income distribution of socialism - distribution according to labor.

The principle of distribution according to labor is based on the principle that labor is the source of wealth creation, and therefore, wealth must belong to labor. This principle is transformed into the principle of distribution according to labor: income is created by labor, so only laborers can participate in distribution, and the amount of income that each participant in distribution receives is appropriate to the quantity and quality of labor they put into creating income. K. Marx criticized this distribution principle of the Gotha program in the following points:

Firstly , considering labor as the basis of distribution, the Gotha platform has two fundamental errors: 1, Labor is only one element in the process of creating wealth; 2, Individual labor creates use value, while social labor creates wealth. This implies that in a developed society, the process of creating wealth is a social process, at which time labor creates wealth. Here , wealth is specific use values that can satisfy certain needs and are exchange products, or commodities . In other words, in commodity production, labor

Labor is divided into private labor and social labor, in which the product of labor has the form of value and the labor accumulated in commodities has the form of value. Here , once value is the basic economic relationship, which labor is useful labor? It is labor with the form of value, it is necessary social labor.

Applying the personal income distribution relationship in a socialist-oriented market economy to Vietnam Electricity Group - 7

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