Chapter 17 Chapter One Introduction

Chapter One Introduction The first section factors of production. The factors of production are usually divided into three categories: land, labor and capital.Land refers to the material and power bestowed by nature in land, sea, air, light and heat in order to help human beings.Labor refers to human economic work—whether with the hands or the brain.Capital means all the equipment stocked up for the production of material goods, and for the benefit usually counted as a part of income.Capital, the chief source of wealth, should be regarded as an element of production rather than as an immediate source of desire-satisfaction.

Capital consists largely of knowledge and organizations, some of which are privately owned and others not.Knowledge is our most powerful productive force; it enables us to conquer nature and force it to satisfy our desires.Organization contributes to knowledge and takes many forms, such as the organization of a single enterprise, the organization of various enterprises in the same industry, the organization of various industries related to each other, and the national organization for the safety of the public and the assistance of many people . The distinction between public and private knowledge and organization is of great and growing importance; in some respects even more important than that of tangible things; partly for this reason organizations are sometimes divided into It seems most appropriate to count it as an independent factor of production.It is not until a very late stage in our research that we shall be able to examine this element of organization in detail, but it must be said in this chapter.

In a sense, there are only two factors of production, nature and human beings.Capital and organization are the result of man's work with the help of nature, under the guidance of man's ability to predict the future and his willingness to prepare for the future.If nature and human nature and forces are fixed, then growth in wealth, knowledge, and organization follows just as cause begets effect.But, on the other hand, man himself is to a large extent formed by the QI2 environment in which nature takes place: thus man is at the center of the problem of production, as well as of consumption, from every point of view. and further the problem of the relation between production and consumption, also known as the problem of distribution and exchange.

The development of man in number, in health and strength, in knowledge and power, and in richness of character, is the end of all our investigations: but to this end economics can do nothing more than contribute some important factor only.From the broad side of economics, therefore, the study of this development should come last, if it were part of economics writings: but even it would be inappropriate.At the same time, we cannot ignore the direct role of man in production, and the conditions which determine his efficiency as producer.It is, therefore, perhaps most convenient, and indeed most consistent with the tradition of English economics, to include, as a part of the general study of production, some accounts of the development of man in number and character.

The second section marginal anti-utility.Work is sometimes its own reward, but under certain assumptions we may think that the supply of work is governed by the price available for it.supply price. At this stage we can only give a sketch of the general relation of demand and supply, and of consumption and production.But while the study of utility and value is fresh in our minds, it may not be unhelpful to say a few words about the relation of value to counter-utility or negative commodities.To get goods of value—goods that have value because they are both needed and unavailable—we must overcome this counterutility, or negative commodity.All that we can say now is necessarily provisional; it may even seem to cause difficulties rather than resolve them: but it is good to have before us an outline of the field of study, even if insufficient and incomplete.

Demand is based on the desire to obtain commodities, while supply is mainly determined by overcoming the psychology of not wanting to suffer from "negative commodities".Such negative commodities generally fall into two categories: labor and the sacrifices incurred by the slowdown of consumption.It will suffice here to give an outline of the part which ordinary labor plays in supply.A similar—though not identical—discussion will follow of managerial work and of the sacrifices (sometimes but not always) that arise from waiting for the accumulation of means of production. Negative commodities of labor may arise from physical or mental fatigue, from continuing to work in an unhealthy environment, from working with unwelcome colleagues, or from occupation of recreational, social or intellectual activities. the time required.But whatever the form of this negative commodity, its intensity almost always increases with the intensity and duration of labour.

There is, of course, much effort for the work itself, as is the case with mountaineering, competitions, and the pursuits of literature, art, and science; but much hard work is done under the influence of the desire to benefit others. . But the chief motive of the greater part of labor, so far as we use the term labor, is the desire for some material advantage; which in the state of the world generally takes the form of obtaining a definite sum of money.It is true that even when a man is hired to work, he often derives pleasure from it: but he is usually so poor until the work is done that he takes pleasure in stopping it.Perhaps after being out of work for some time, he would have preferred, so far as his immediate comfort was concerned, to work without pay than to be unemployed; but I am afraid he would not sell his strength so much lower than the normal price as to ruin his employment. market, just as a manufacturer does.This will be discussed in detail in another book.

In academic terms this may be called the marginal counter-utility of labour.For with every increase in the quantity of the same commodity, the marginal utility of QI2 falls; with every decrease in demand, the price available not only for the last part of the commodity, but for the whole of QI2 falls; Utility always increases as the amount of labor increases. The reluctance of any man already employed to exert himself more depends, in general, on fundamental principles of human nature, which the economist must admit as an ultimate fact.There are often, as Jevons puts it,1 some resistance to overcome before starting work.The beginning of work often involves a little painful effort, but this painful effort gradually decreases to nothing, and is followed by pleasure; the pleasure increases for a short time until it reaches a certain low maximum the limit; then dwindles to zero, and is followed by ever-increasing fatigue and a desire for rest and change.In intellectual work, however, pleasure and excitement, once produced, tend to increase until necessary or prudent.Every healthy man has a store of energies which he can use, but which are restored only by rest; therefore, if he perpetually exerts himself more than he rests, his health will be ruined.Employers often know that a temporary increase in wages, when the need is great, will cause the workman to do more work, but the workman cannot long keep doing so much work, whatever the remuneration.One reason for this is that with every increase in labor time beyond a certain limit, the need for rest becomes more acute.The aversion to the increased portion of work increases partly because the liking for the increased portion of space-time increases as the time left for rest and other activities decreases.

In consequence of these and other limitations, it is generally true that the effort of any class of workman increases or decreases as his remuneration increases or decreases.Just as the price required to attract buyers to a definite quantity of a commodity is called the required price of that quantity during a definite period of the year, so is the price required for the effort necessary to produce a definite quantity of a commodity. The price may be called the supply price for that quantity during the same period.If we assume for a moment that production depends entirely on the efforts of a given number of workers already existing and trained, we obtain a list of supply prices which corresponds to the list of demand prices which we have considered before.In theory, a table of supply prices shows in one column of numbers the various quantities of work, that is, the quantity of production, and on the other side the various prices which must be paid to induce available workers to supply the various quantities of work . 1 But this simple method of studying the supply of any kind of work, and thus of the goods made out of it, assumes a fixed number of persons qualified for it; adopted within.Because the total population changes under the influence of many reasons.Only some of these causes are economic, of which the average income of labor occupies a prominent place; though its influence on the growth of population is uncertain and irregular.

But the distribution of the population among the various trades is more strongly influenced by economic causes.The supply of labor in any trade is, after all, more or less closely adapted to the needs of labour: prudent parents bring up the most profitable occupations for their children, that is to say, by giving them the skills required by labor which is less intense in quantity and nature. A career that is not too difficult to learn and has the best rewards in terms of wages and other benefits. The adaptation between the supply and demand of labor, however, is never so perfect; changes in want may make this reward temporarily—even for many years—better than just enough to induce parents to choose for their children one trade over others of the same kind. That pays a lot more or a lot less in industry.So the pay available for any kind of work at any time does have something to do with the ease with which the necessary skills are acquired, and with the problems of intensity, tedium, lack of space, etc. involved in the work itself; Great hindrance.The study of this hindrance is a difficult task; this issue will be addressed in a later stage of our research.But this article is mainly narrative, and does not raise any difficult questions.