Chapter 54 Chapter 11 General Introduction to Distribution

A summary of the first eight chapters of the first section, in which a continuous line is sought across the line in the fourteenth chapter of the fifth chapter, and in determining the various factors of production and production unity in the cause of the normal value of the instruments of production (material and human). The arguments of the first ten chapters can now be summarized.It is far from fully solving the problems before us.Because it involves changes in foreign trade, credit and employment, and their various collective effects and common action effects.But what has been said above does touch upon the extensive action of those most fundamental and constant factors governing distribution and exchange.In the conclusion at the end of Part V we had found a continuous line which made the general theory of the equilibrium of supply and demand successively applicable to various periods, from such short periods that the cost of production had no direct influence on value, to Such a long period that the supply of the various means of production can be adapted to their indirect demand, that is to say, the demand derived from the direct demand for the commodities they produce.In this chapter we have dealt with another continuous line which intersects the line connecting the different periods.It connects the various means of production (material and human); in spite of their important external differences, it unites them in their fundamentals.

In the first place, wages, and other remuneration for labour, have much in common with interest on capital.Because the factors that determine the supply price of physical capital and personal capital are consistent.The motives that make a man invest in his son's education are the same motives that make him accumulate physical capital for his son.There is a continual transition from the work and waiting of a father, bequeathing to his son a very rich industrial or commercial enterprise, to the work and waiting of a man to support his son, Acquire him gradually a complete medical education, and finally, secure him a profitable profession.In addition, there is the same continuous transition from him to a man's work and waiting, so that his son can be educated for a long time; If he is forced to work to support himself, the wages of this kind of child labor are relatively high, because this kind of work does not help his future development.

Indeed, under the existing social system, only parents are willing to pay a high price for developing the human capital of youth abilities.And the reason why many first-class talents go uncultivated and disappear into obscurity is that the person who develops them has no special interest in the matter.This fact is actually crucial because its effects are cumulative.But this does not make a fundamental difference between the material factors of production and the human factors of production, because it is similar to the fact that many good fields are poorly cultivated because the good farmers have not cultivated them.

Secondly, because human beings grow very slowly and pass away very slowly, parents usually have to look back a hundred years when choosing a career for their children. Therefore, changes in demand must give full play to their effects, and human factors are more important than other material production equipment. A longer time is required; and in the case of labour, an especially long time must be required for the full operation of the economic forces which bring supply and demand into harmony.On the whole, therefore, the money cost of any kind of labor to the employer is, in the long run, approximately the same as the actual cost of producing it.

Before the second quarter. One end is the efficiency of human production factors, and the other end is the efficiency of material production factors. After the two are weighted, they are compared with their monetary costs.A factor tends to be used when its efficiency relative to its money cost is greater than another factor.The main function of business is to facilitate the free operation of the great principle of substitution.Generally, and sometimes contrary to, the public interest, entrepreneurs are constantly comparing the services rendered by machinery and labour, skilled and unskilled labour, and additional overseers and managers; Strategize, regroup, and choose those combinations that are most beneficial to them.

Thus, in one or more branches of production, the efficiency of almost every class of labor (relative to its cost) is constantly compared with several other classes of labor, and each class of labor is compared with other classes of labor.This competition is essentially "vertical" competition; for it is a struggle for places of employment between groups of workers belonging to different classes, engaged in the same branch of production, and whom it confines.At the same time, however, "horizontal" competition is also going on from time to time, and the methods used are simpler; firstly, because adults can freely switch from one occupation to another in their own business; Any other trade at that level.Since vertical and horizontal competition go hand in hand, although it is true that most of the labor at any level can be supplemented by children at the same level, the rewards for labor at all levels are based on the effective and efficient services they provide. reasonably adjusted.

It can be seen that the role of the principle of substitution is mainly indirect.If there are two barrels full of liquid and connected by a pipe, the liquid in the higher level barrel near the pipe, though viscous, will also flow into the other barrel.In this way, even if no liquid flows from one end of the barrel to the other end of the barrel, the general level of the two barrels can also converge.If there are several barrels connected by pipes, the liquid in each barrel will tend to the same level, although some barrels are not directly connected to other barrels.Likewise, the principle of substitution has always tended, by indirect means, to bring the distribution of income into conformity with the efficiency of trades or trades, which are not in direct contact with one another, and which at first sight appear to be unable to compete with one another.

The third section continues. From unskilled workers to skilled workers, then to supervisors, then to directors, then to general managers of large enterprises (partially paid with bonuses), then to shareholders, and then to financial owners of large private enterprises, all of them are continuous. In a joint-stock company, from the directors to the ordinary shareholders who bear the final major risk of the enterprise, we see them retreating step by step, like a trapezoid.Entrepreneurs, however, are somewhat of a different category. For the principle of substitution acts chiefly through their conscious action in comparing this factor of production with that of that; for them it has no other medium than the indirect influence of their mutual competition.Therefore, it works blindly and causes huge waste.It forces the failure of many who would have made a great contribution if they started well, and combined with the tendency of increasing returns, it makes the strong stronger and the firms of the weak fall into the already partial monopoly the hands of those who

But, on the other hand, there is also a constant increase of those forces capable of breaking up old monopolies, and of giving to persons with little capital of their own the opportunity to start new enterprises and rise to managers of various large corporations; The operating capacity required by capital is brought into play. Generally speaking, the cost of enterprise management work is cheap, and indeed it may not be as cheap as it will be in the future, when people's collective wisdom, sense of responsibility and public spirit will be more developed, and society will work harder to develop the talents of people from humble backgrounds. The secrecy of business is diminished; every wasteful means of speculation and competition is curbed.

But even now managerial work is cheap, and its gain to production outweighs its remuneration.For the entrepreneur, like the skilled artisan, renders a service which society wants, which would have been more costly to obtain without him. The similarity between the factors which determine the normal return of ordinary power on the one hand, and the operating power of employing capital on the other, does not apply to changes in their present returns.For the employer acts as a buffer between the buyers of the commodity and the various laborers who produce it.He takes the full price of the commodity and pays it to the worker.His profits follow the changes in the prices of the commodities he sells, and vary more; the wages of his servants vary later and less.At any given time the returns to his capital and power are sometimes large and sometimes negative, while those of his hired hands are never large and never negative.When a wage earner loses his job, he is bound to suffer greatly, but this pain does not arise because he is a wage earner, but because he has no savings in his hands.

That part of a man's income due to his special natural abilities is a gift to him; similar in abstract point of view to other gifts of nature, such as rent, which is an inherent property of land.But in its normal price it should be classed with the profits of the healer of the wasteland, or with that of the pearl-seeker.Among the settlers, some had better land than originally expected, while others had worse land. A pearl seeker's bountiful gains from one dive are outweighed by many fruitless dives.The high income of a lawyer, engineer, or merchant by virtue of his genius must be compared with the failure of many others; and the failure seems to have the same prospects in youth, the same education and equal chances of employment, but , the service he renders to production, relative to the cost of the service, is smaller than that of the successful man.The most able entrepreneurs are generally those who profit the most, while at the same time doing the work extremely cheaply; Nothing is better than waste, just like handing over a precious diamond to a person with low wages and poor skills to process it. Section IV Various factors of production compete for employment, but they are also the only source of mutual employment. In reviewing the arguments presented in the second chapter of this treatise, we should bear in mind that the various factors of production maintain a dual relation to one another.On the one hand, they tend to compete with each other for employment; any factor whose efficiency relative to its cost is greater than another factor tends to substitute for that factor, thereby limiting its demand price.On the other hand, all elements provide places of employment for each other, and no element can be employed unless the other elements provide it with places of employment.The national income that is created jointly by all factors of production and increases with the supply of each factor is also the only source of demand for each factor. The increase of physical capital, therefore, opens up new places of employment for it; and though in making new investments it may reduce the places for employment of manual labor in a few trades, on the whole it greatly increases the employment of manual labor. and other factors of production.Because it will greatly increase the national income, which is the common source of all factor demand; because of the increase in the employment competition of capital, the interest rate will inevitably decrease, so that the part of the national income jointly created by capital and labor will be more favorable to labor than before. allocated under the conditions. This new demand for labour, is partly due to the opening of new enterprises, which previously might not have been able to pay for them.And part of the new demand is due to the need for workers to make expensive new machines.For when one speaks of the substitution of machinery for the laborer, it means the substitution of labor combined with a great deal of waiting for labor combined with a little waiting, and on this ground alone it is impossible to replace labor in general by capital, except in one place In other words, it imports capital from elsewhere. It is still true, however, that the main advantage which an increase of capital confers on labor is not that it gives labor new employment, but that it increases the common product of land, labor, and capital (or land, labor, and waiting). , and reduces the share that any given amount of capital (or waiting) can claim as its own remuneration in the product. Section V. The increase in the number of workers at any trade, or its increased efficiency, benefits other workers, but while the latter benefit, the former are persecuted.It changes its own and other workers' marginal products, thereby affecting wages.Be careful when calculating the normal marginal product. In discussing the effect of a change in the supply of work by any group of workers on the employment of other kinds of workers, it is not necessary to ask whether this increase in the quantity of work is due to the increase in the number of workers in that group, or to their increased efficiency.Because this question is not directly related to other questions.In either case the increase to the national revenue is equal, and in either case competition will oblige them in the same degree to retire to uses where their marginal utility is less; A share of what can be earned in a certain kind of work as a reward for a certain amount of work. However, this question is extremely important for workers within this group.For if the change were a tenth increase in their average efficiency, the total income received by each of ten of them would be equal to the total income received by each of eleven persons whose number had increased by a tenth but with the same efficiency. income. The wages of each group of workers, as a function of the number and efficiency of his group, are a special case of the general rule that circumstances (or chance) play at least as much as his energies and abilities in determining the net product to which his wages approach. Same effect. The net product to which the wages of any group of workers approach must be calculated on the assumption that production has reached a point at which the sale of the output yields only a normal profit, and no more.At the same time it must be calculated in respect of a worker of normal efficiency, whose increased product can only reward an employer of normal ability, fortune, and funds with normal profits, not more profits (as in the normal wages of a normally efficient worker, some amount must be added to or subtracted from that net product).The time chosen must also be the normal time of business, when there is a more favorable supply of labor of all kinds.For example, if the construction industry is particularly bad, or particularly prosperous, or if its growth is hindered by a shortage of bricklayers or carpenters, while other builders are in excess, the time is not right to estimate the brick. The normal wages of a carpenter or carpenter and the pure product.