Chapter 44 Chapter 1 Introduction to Distribution

The gist of the first section. The purpose of this chapter is to show the fact that free men cannot be brought up for work on the same principles as machines, oxen, and slaves.If the same principle could be applied, there would be little difference between distribution and exchange of value; Match demand and supply.But in fact, with the improvement of human ability to control nature, in addition to the necessities of life, it can often provide an increasing surplus; and this surplus cannot be absorbed by the infinite growth of population.The question, therefore, is, what are the general reasons for deciding to distribute this surplus among the people?What is the role of the customary necessities, that is, the degree of comfort in life?What role do consumption and lifestyle generally play on efficiency?What is the role of needs and activities, that is, of living standards, of the multifaceted role of the principle of substitution, of the struggle for existence between classes and types of physical and mental labor?What is the role of the powers given to the owners of capital by the use of capital?What portion of the general pool goes to rewarding those who work (including adventures of all kinds) and "wait" compared with those who work and then consume the fruits of their labor?To these and some of the same questions, an attempt is made to give a broad answer.

In a preliminary examination of the problem of distribution, we shall first observe how, a century ago, English and French scholars held that value is determined almost entirely by the cost of production, while demand is only subordinate.Next, we will show how closely the results of this study are true in static societies; and what modifications are necessary to bring them into agreement with real life and working conditions; Labor demand. In the second chapter we shall examine first the supply of labor under modern conditions; and proceed generally to the causes which determine the approximate limits of the distribution of the national income among workers, capitalists, and landowners.In this fleeting examination, many details will be omitted, some of which will be supplemented by the rest of this chapter, but other details will have to be left for the sequel.

Section 2 The Physiocrats assumed the lowest possible level of wages according to the special conditions in France at that time, and this lowest possible level also applied to the interest on capital.These strict assumptions were later partly discarded by Adam Smith and Malthus. Adam Smith's predecessors, the French economists, discussed in a very simple way the reasons for determining the distribution of national income.And this discussion is based on the special circumstances of the second half of the eighteenth century in France.The various exorbitant taxes and miscellaneous taxes levied on the French peasants were only limited by their ability to pay.Few of the working classes are free from starvation.The French economists (then called the Physiocrats) therefore assumed, for the sake of simplicity, that there was a natural law of population, according to which the wages of labor were kept at the lowest possible level.They did not assume this to apply to the entire working population, but the exceptions were so rare that they took the general view implied by their assumption to be true; protrude, but the degree of protruding from the ground is not large, which does not prevent us from saying that the earth is elliptical.

Moreover, they knew that during the previous five centuries the rate of interest in Europe had fallen due to the fact that "savings generally overwhelmed luxury."But the sensibility of capital, and its quickness to escape the oppression of the tax-collectors, impressed them, and they asserted that it was not too much to suppose that, if its profits were less than before, it would soon be consumed or flowed to other countries. .They again assume, for the sake of simplicity, the existence of some natural or necessary rate of profit similar to the natural rate of wages.If the present rate of profit exceeds this necessary rate of profit, capital grows rapidly until it forces the rate of profit down to the level of the natural or necessary rate of profit.If the present rate of profit falls below the necessary rate of profit, the capital shrinks rapidly, and the rate of profit rises.Thus the Physiocrats hold that wages and profits are determined by the laws of nature, and that the natural value of things is determined purely by the sum of wages and profits used to remunerate producers.

The conclusions drawn by Adam Smith are more substantial than those of the Physiocrats. Although it remains to be clarified by Ricardo, the labor and capital used in production must be estimated at the farming margin, so as to avoid the ground rent factor.But Adam Smith also knew that in England labor and capital were not on the brink of starvation, as they were in France.The wages of the greater part of the laboring class in England have more than enough than what is necessary for subsistence.The capital of England has a very secure and favorable field of employment, which seems unlikely to be destroyed or diverted to other countries.Hence, when he chooses his words carefully, he does not use the terms "natural rate of wages" and "natural rate of profit" as narrowly and rigidly as the Physiocrats say.He goes a long way in explaining that both are determined by constantly changing conditions of demand and supply.He even thinks that good wages for labour, can increase the industry of the common people”; Work like hell.Hence we always find the workman more active, more industrious, and quicker where wages are high than where wages are low.This is the case, for example, in England and Scotland, in the suburbs of the cities and in the backcountry." But he sometimes repeats old formulas, leading the unwary reader to think that he believes that the average level of wages of labour, to decide.

Malthus, in his excellent survey of the evolution of wages in England from the thirteenth to the eighteenth centuries, also showed how the average level of wages fluctuated from generation to generation, sometimes dropping to about half a peck of corn a day, sometimes falling to It rose to one and a half pecks, and in the fifteenth century, even to about two pecks.Although he says that "an inferior way of life may be the result as well as the cause of poverty," he ascribes this effect almost entirely to the resulting increase in numbers; What scholars emphasize is the influence of habits of life on efficiency, and thus on the ability of the laborer to be well paid.

Ricardo's language is even far less rigorous than that of Smith and Malthus.Indeed, he clearly said: "The natural price of labor measured by food and necessities cannot be understood as absolutely fixed and invariable;...the natural price of labor is mainly determined by the customs of the people"; however, once he said Afterwards, he doesn't bother to repeat it so often; most of his readers forget that he said it.In his arguments, he often adopts a statement similar to that of Tuguet and the Physiocrats, as if, as soon as wages exceed the range of only the means necessary for subsistence, there is a tendency for population to increase rapidly, and this tendency is through "Natural The "law" is fixed at the level that only the material necessary for survival can be maintained.In Germany especially, this law was once called Ricardo's "iron law" or "bronze law" - many German socialists believe that this law is still at work even in the countries of Western Europe; and believe that as long as "capitalism" or " The "individualistic" mode of production exists and will continue to function.They even asserted that Ricardo was the authority in their ranks.

But in fact Ricardo not only knew that the necessary or natural limits of wages cannot be fixed by iron laws, but also that they are determined by the local conditions and habits of life in each place and period—and, moreover, his The importance of a high "standard of living" is very sensitive, and the humanitarian friends are called upon to endeavor to bring about the growth of the determination of the various working classes, that wages will not be reduced to levels approaching those necessary for subsistence. The insistence of many scholars on his belief in "iron laws" can only be explained by the fact that he liked to "conceive strong illustrations," and the habit of suggesting once and not repeating it, and for the sake of simplicity, Eliminate the conditions and limitations necessary to make his findings applicable to real life.

Although Mill devoted all his energy to emphasizing the human element in economics, he did not surpass his predecessors to make any significant contributions to the theory of wages.Following Malthus, he argues exclusively historically that if a fall in wages lowers the level of comfort of the working class, "the damage they suffer will be permanent, and the worsening of living conditions will become a new minimum." , often perpetuates itself, like the formerly higher minimum." Serious studies of the effects of higher wages on the efficiency not only of wage recipients but of their offspring have only begun in the last century.In this regard, Walker and other economists in the United States are the first to be recommended.The comparative study of the industrial problems of European and American countries has continually drawn greater and greater attention to the fact that well-paid labor is generally efficient and, therefore, not expensive.This fact, though more promising for the future of mankind than any fact known to us, has extremely complicated implications for the theory of distribution.

It now appears that the distribution problem is much more difficult than previously imagined by economists, and any self-conceived simple solution cannot be taken for granted.Many previous studies have given easy answers to the assignment problem, and these answers are actually answers to imaginary problems that might arise in other worlds with much simpler living conditions than ours.But the work done in answering these questions has not been in vain.For a most difficult problem is best solved in parts.Each of these easy problems contains a part of the big hard problem we have to solve.Let us draw upon this experience, and proceed through the successive sections of this chapter, to understand the general causes which determine the demand for capital and labor in real life.

The third section explains the impact of demand on distribution step by step from a society where there is no problem of labor-capital relations. Let us first examine the effect of demand on the remuneration of labor in an imaginary world in which each individual possesses the capital which assists his labor; so that there is no question of labor relations here.That is to say, let us suppose that only a small amount of capital is to be employed; that the capital employed by each man is his personal property; and that the bounty of nature is abundantly available for man to use freely and at no cost.Next let us assume that individuals not only have the same ability but also the same willingness to work, and in fact do work equally hard.Next let us assume that all labor is simple labor, or labor without special training, which means that if two persons exchange jobs with each other, there will be no influence on the quality or quantity of the work.Finally, let us suppose that everyone produces things for sale, without a middleman, who sells things directly to their ultimate consumers—thus, the demand for things is immediate demand. In this case the question of value is quite simple.Things are exchanged in proportion to the labor expended in their production.If the supply of any one thing is insufficient, it can be sold temporarily above its normal price.The thing it exchanges requires more labor in its production; but if it does, men will at once leave other employments for its production, and in a very short time its price will fall to its normal level.Some temporary minor interruptions are possible, but generally speaking, any one's reward will be equal to the other's reward.In other words, everyone gets an equal share of the net total of goods and services produced, which we may call national income, which constitutes the demand for labour. If there is now a new invention that doubles the efficiency of work in a certain industry, so that someone can double the production of something every year without adding tools, then the exchange value of these things will be equal to the previous exchange value. half.The effective demand for each individual's labor will be somewhat greater, and each individual will draw slightly more than before from the common source of revenue.If he wants, he can take twice as much on this special thing, and the other old things remain unchanged; Or he can get slightly more of various things than before.The source of public revenue, or national revenue, would be greatly increased if the efficiency of production in many industries increased; the goods produced in those industries would constitute a greater demand for those produced in other industries, and increase the purchasing power of everyone's income. The fourth quarter continues. Other things being equal, that is to say, if the workman is of the same ability and industry, and the trades are equally desirable and easy to learn, the above argument does not have much weight if we suppose that each trade requires some special skill. big change.The normal rate of income remains the same across industries.For if the sale of a day's labor in one trade produces more than the sale of a day's labor in another trade, and this.If inequality has a persistent tendency, people will give priority to their children to learn this advantageous trade.Indeed, some small irregularities are possible.Time is bound to be taken up in passing from one trade to another, while some trades receive for a time a greater share than their normal share in the source of income, while others receive a smaller share, or even lack work.Notwithstanding these disturbances, the present value of each thing will fluctuate about its normal value; which in this case, as in the previous one, is determined purely by the quantity of labor expended in producing that thing; For the normal values ​​of all kinds of labor will still be equal.The productive forces of society will necessarily increase through the division of labour; the general national income, or source of public revenue, will increase; except for momentary disturbances, everyone will have the same share, and what each can buy with the fruits of his own labor, as if It is to his advantage that he produces for himself. At this stage, as at the preceding stage, the proposition remains true, that the value of things is in proportion to the quantity of labor expended on them; Each person's income is determined purely by the bounty of nature and the progress of production technology. The fifth section continues. In the second place, let us still leave aside the effect of the great expenditure on the training of workers on their efficiency, and leave it for the next chapter, together with other questions of the supply side of distribution.What we want to observe is the effect of changes in the number of people on the income provided by nature.Let us assume that the rate of population growth is constant, or at any rate unaffected by wage rates.It can be affected by changes in habits, ethical concepts and health knowledge.At the same time, we still assume that all labor is of the same grade, and that the national income distributed to each family is also equal, except for a slight unevenness for a while.In this case, the development of the technique of production, the progress of communications, new discoveries, and new achievements in the conquest of nature, will lead to an equal increase in the comforts and luxuries at the disposal of each family. But this case is different from the former; for in this case the increase of population, if prolonged, must eventually outpace the improvement of the technique of production, and the law of diminishing returns will manifest itself in agriculture.That is, those who farm will receive less wheat and other agricultural products in return for their labor and capital.In agriculture, and thus in all other trades, an hour's labor will represent a smaller quantity of wheat than before; and as all labor is supposed to be of the same order, the revenues will generally be equal in all trades. In addition, we must pay attention to the fact that there is an upward trend in the residual or rental value of land.For the value of any kind of product must be equal to the value of the labour, which, on our supposition, whether on better or worse land, is always supplemented under only favorable, i.e., marginal, conditions, such as are necessary for its production. amount of capital.The labor and stock employed in the production of a quart of wheat, etc., at the margin of cultivation are greater than before; and therefore the natural recompense of the labor employed under favorable conditions in wheat, etc., will be higher than before in relation to this labor and stock. the value of; In other words, the value afforded by the wheat has a greater surplus than the value of the labor and capital employed in its production. The sixth section continues. Let us set aside for now the assumption that labor is so mobile throughout society as to ensure equal pay for equal efforts.In order to be closer to real life, let us assume that in industry there is not only one level, but several levels of labor.Assume further that parents tend to train their children to be employed at this level; they can choose freely at this level and cannot leave this level.Finally, we assume that the increase in numbers at all levels is not governed by economic reasons.It can be fixed, or it can be affected by changes in habits, ethics, etc., as has been said.In this case the total national income is determined by the abundance of remuneration which nature bestows on the labor of man in the present state of production technology.But the national income allocated to each level will vary.It is determined by the needs of the people themselves. The more extensive and urgent the needs of those who receive a large share of the national income are met by those in any trade, the greater their share will be. For example, it is assumed that the artists alone form a grade or rank, or form a line; Next, assuming that their numbers are constant, or at least less influenced by factors unrelated to income; their income will then depend on the funds and enthusiasm of the inhabitants of those classes which prefer to be gratified by artists. Section 7 illustrates the net product of a given labor from the perspective of a worker with normal efficiency, whose employment adds no indirect costs, but whose work reaches just the margin from which the employer does not derive any net benefit. Now we can leave the imaginary world where each person has the capital to assist his labor, and return to our real world where the relationship between labor and capital plays a huge role in distribution.But let us still concentrate on the distribution of the national revenue to the various factors of production according to the quantity of each factor and the service it provides, leaving the reaction of the return of each factor to the supply of that factor. Discussed in the next chapter. We have seen how the astute entrepreneur is constantly looking for the most advantageous employment of his funds, and tries to employ the various factors of production up to that margin or limit at which he can divert a small part of his expenditure to other elements, would be to his advantage; and thus, so far as its effects are concerned, he is the medium through which the principle of substitution operates, by which the employment of the elements is so arranged that, in its marginal application, its The cost is proportional to the net product added by its use.We must apply this general principle to the employment of labour. A question that is constantly on the mind of the prudent entrepreneur is whether he has the right number of people to do his job.On some occasions, his equipment solved the problem for him: there must be one driver on each locomotive, and there can only be one driver.But several express trains have only one traffic management; in times of heavy traffic, they will be a few minutes late, and this time can be saved by a second traffic management.An astute manager, therefore, is always measuring the pure product of the time and troubles saved for passengers by the help of a second stewardship on important trains, and considering whether this pure product will be compared with its Cost commensurate.This question is the same in nature as that of whether an extra train will compensate it for its greater outlay in equipment and labour, but it is simpler in form. Moreover, it is sometimes heard that a farmer has left his land uncultivated for want of labour.Perhaps he had enough horses and implements; but "if he had hired one more man, he would have recovered his funds, and had more than enough".That is to say, the net product supplied by the additional person has a surplus in addition to replacing his wages.Let us assume that a farmer has the problem of how many grazers to employ.For the sake of simplicity, we may assume that the addition of an additional person requires no additional outlay in equipment or capital; Generalized solution, even including risk insurance premium, etc.).In the end, the farmer thought that besides preventing the death and injury of the sheep, this person could increase the number of sheep by 20 every year.That is, he considers the net product of this additional man to be twenty sheep.If the man could be hired at less than the equivalent price of twenty sheep, he would certainly hire him; but if he could only be hired at about the same price, the farmer would hesitate; And this man may be called a marginal stockman, because he is employed on the margin. It is best always to assume that he is of normal efficiency; even if he were exceptionally efficient, he would be only a marginal stockman if his net product were equal to his wages.The farmer may have calculated that a stockman with normal efficiency would only increase the production of sixteen sheep; and would be willing to employ him at more than a quarter of his ordinary wages;He should be representative, that is, have normal efficiency. If he is representative, and his employer is also representative, twenty sheep represent the pure product of a stockman, and thus his earning power.But if the employer is unmanageable, for example, if he allows his stockmen not to feed the sheep adequately, he can produce only sixteen more sheep instead of twenty.The pure product tends to represent normal wages only if both the workers and their conditions of employment are in a normal state. The increased product of the labor of this herdsman is greatly affected by the number of herdsmen employed by the farm; and the number employed is determined by the general conditions of demand and supply, and especially by the number of herdsmen employed by the present day. The number of people, the demand for mutton and wool and the size of the pasture and the efficiency of the stockmen on all other farms, etc.And the marginal product is deeply affected by competition from other uses of the land: the area available for sheep is reduced by the land needed for afforestation, oats, deer, and so on. Here is a selected illustration from the simple sheep industry.But in various industries, the form of the problem may be different, but its essence is the same.Excepting those conditions which are noted in the footnotes, but which are insignificant to our principal object, the wages of each class of laborer tend to be equal to the net product furnished by the additional labor of the marginal laborer of that class. This principle is sometimes presented as the theory of wages.But any such claim is untenable.The principle that a workman's remuneration tends to be equal to the net product of his labour, is moot in itself; for to calculate the net product we must, in addition to his wages, assume that he produces The entire production cost of the item. It is right not to admit that it is a theory of wages, but it is not right to deny the role of this principle in elucidating the role of one of those causes which determine wages. Section VIII Requirements for General Capital. In the following chapters we shall, for special purposes, illustrate by other illustrations the principle which was illustrated in the previous section by means of manual labour.In particular, show how the value of a part of the management of a business is measured, when it is found that more supervision has an equal increase in the effective output of an enterprise than the employment of one more ordinary worker; In some cases, it is calculated by increasing the output of the factory without causing any incidental additional expenses. In deriving from the work of a particular machine to that of a certain sum of value, we may suppose that there is a factory in which an additional hundred pounds worth of machinery could be employed without any other expenditure, the value of the annual net output of the factory ( That is, after deducting the wear and tear of the machine itself), add four pounds.If investors first invest their capital in places with high profits, and if after this process reaches an equilibrium, investors still feel that it is worthwhile and only worth hiring the machine, then we can infer from this fact that the annual interest rate is 4%.But this example only points out part of the reason why value is determined. If such examples are regarded as the theory of interest or as the theory of wages, they will inevitably commit the fault of circular reasoning. Let me further explain the nature of the demand for capital for a certain use, and examine how the total demand for capital is constituted by the demand for capital in many different uses. Let us, for the sake of argument, take a particular trade, such as hat-making, and examine what are the causes which determine the quantity of capital absorbed in it.Suppose the rate of interest is four per cent a year on riskless securities, and suppose the hat-making business absorbs a capital of £1,000,000.This means that the hat-making industry can put to better use the capital of a million pounds, and would rather pay four per cent. on it than throw it away. Certain things are necessary for hat-making; it must not only have food, clothing and shelter, but also circulating capital as raw material and fixed capital as tools or even a little machinery.Though competition prevents the employment of this necessary capital from exceeding the profits of ordinary business, the hat-making industry would rather pay five cents on it if it could not obtain it at a lower rate of rate, than suffer from the want of it. damage caused.Suppose the annual interest is two cents, and there may be other machines that cannot be used in the hat-making industry. When the annual interest is one cent, the number of machines used will increase. When the annual interest is six percent, more machines will be used. It is four per cent, so more machines are used.When the hatmaker has this quantity of machinery, the marginal utility of the machinery—that is, the utility of the only machine worth using—is four per cent. The rise of the rate of interest reduces the use of machinery in the hat-making industry; for the machinery which has an annual surplus of not more than 4 per cent. Four percent of the machines are also used.Moreover, the lower the rate of interest, the more solid and handsome are the buildings for the mills and lodgings of the workers; at the same time a fall in the rate of interest will lead to a greater employment of capital in the hat-making industry, which is manifested in a great stockpile of raw materials and finished goods in the hands of retailers. Although in the same industry, the methods of using capital are quite different.Each proprietor, according to his funds, will invest in every aspect of his business until what he considers to be a favorable margin appears to be reached; If the interest rate falls, and additional capital can be borrowed at this rate, the line stretches irregularly outward.The demand for capital, therefore, is the total demand of capital of all entrepreneurs in every trade; it obeys the same laws as the sale of commodities.Just as at any given price a quantity of commodities always finds a buyer, so if the price rises, the quantity that can be sold decreases, and so does the employment of capital. This is the case with all kinds of loans for production, but it is also the case with loans by those who spend more than they produce, or by governments who pledge future resources to obtain present expenses.It is true that their conduct is often very little governed by cool plans, and often determines the amount they will borrow, with little regard to what they will have to pay for it in the future; Impact. Section IX short summary. To try to make a comprehensive (even if difficult) summary of all the above: the various factors of production, such as land, machinery, skilled and unskilled labor, etc., are often used in production where they are most advantageous.Employers and other entrepreneurs will use any factor if they think they can get better results by using a little more of that factor; they estimate the net output value ( that is, the net gain in money value of the total output less incidental costs); they will divert a small amount of expenditure if it is profitable to divert it from one side to another. Thus, the use of the various factors of production is determined by the general conditions of demand and supply.That is to say, it is determined, on the one hand, by the urgency of the various uses of the element and funds owned by the users, and, on the other hand, by the existing stock of the element.According to the principle of substitution, its value is equalized in all uses due to the tendency of the element to serve uses of lesser value to those of greater value. If unskilled labor, or any factor of any kind, is used less, it is simply because, at a certain point, people hesitate to decide whether it is worthwhile to use it, and finally decide that it is not.That is to say, we must pay attention to the marginal use of various elements and their marginal efficiency.We do this only because any transfer can only occur marginally, through which the altered supply and demand emerge. If we ignore the differences between the various grades of labor, and regard all labor as the same labor, or at least as labor expressed in terms of some kind of labor with standard efficiency, we can find that the directly employed labor and the direct use the margin of indifference between capitals; in short, in the words of Tu Neng: "The efficiency of capital must be the measure of its remuneration, because if capital's labor is cheaper than human labor, the entrepreneur must lay off some Workers, if capital is more expensive than labour, he employs more workers". However, there is a difference in nature between the pursuit of employment by capital in general and that of machinery in a particular industry.While the latter can render a certain kind of labor completely unemployed, the former cannot generally replace it, since it necessarily increases the number of employed producers of capital. In fact, substituting capital for labor is nothing more than substituting labor with a lot of waiting for other forms of labor with a little waiting. Section 10 Redefinition of national income or national income. When we speak of national income, or distributable net national income (as divided into shares of land, labor, and capital), we must be clear about what we include and what we exclude.It does not matter to our argument whether we use these terms broadly or narrowly.But it is important that our usage be consistent throughout any one argument. Whatever is included in one aspect of the demand and supply of land, labor, and capital must also be included in the other. When a country's labor and capital act on its natural resources, it produces a certain amount of pure commodities every year, some of which are material and some are non-material, and various services are also included.The qualifying word "pure" refers to compensation for the consumption of raw materials and semi-manufactured products, as well as the wear and tear and depreciation of machinery and equipment in production.All these consumptions must be subtracted from the total product before we can arrive at real or net revenue.Net income provided by foreign investment must also be included (see Part II, Chapter IV, Section VI).This is the true annual net income, or national income, of a country.Of course, we can calculate this benefit by year or by a certain period of time.The terms national income and national income are used interchangeably.The term national income makes more sense only when we regard national income as the sum total of new sources of enjoyment available for distribution.But here it is best to follow the convention that what is not ordinarily counted as part of personal income is also not to be counted as part of national income or income.Thus, except where the contrary is mentioned, a person's own services for himself, and free services to family and friends, as well as benefits derived from personal qualifications and public property (such as duty-free ports) are all It cannot be counted as part of the national income, but must be discussed separately. A part of the product is used not only to replace expended materials and worn-out machinery, but also to increase the stock of raw materials, machinery, etc.This part of national income or income does not go directly into the field of personal consumption.But in the broad sense in which the term is commonly used, it does enter the consumer sphere, for example, when a printing press manufacturer sells a printing press to a printing house.In a broad sense, therefore, it is true that all production is for consumption, and that national income, total net production, and total consumption are terms that are used interchangeably.In the ordinary industrial state, production and consumption go hand in hand, unless there is corresponding production that creates conditions for consumption, then there is no consumption.All production is accompanied by the consumption it is to satisfy.的确，在某些特定生产部门中，可能有产销脱节现象；商业信用的破产可能使绝大多数仓库一时存货充斥，无法出售。但这些都是例外情况，而不在我们现时的考察范围之内（参阅以下第八章第十节；附录七，第三节）。