Economic essays

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Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

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Title:: Elasticity of supply as a determinant of distribution / Paul H. Douglas

Collection:: Economics Books

ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 113 important of these are: (1) the complications introduced by con- sidering more than two factors of production, (2) the complica- tions introduced by considering more than one commodity, (3) the influence which is exercised by the relative amounts of labor, capital and land rent embodied in the commodities and services which are consumed by the recipients of interest, wages, and rent, (4) the influence of the relative elasticity of demand for these commodities and services. Each of these forces will now be briefly considered and their influence evaluated. 1. The complications introduced by considering more than two factors of production. We have hitherto been considering in a very simplified manner only two factors which we have at times labelled labor and capital. But there is, of course, land and natural resources which is a third factor. Most modern theorists following Francis A. Walker also set up a fourth factor, namely management. It is difficult to recognize this, however, as a distinct economic category or to regard its payment, profits, as any unified return. The management of an enterprise would seem to fall under the category of labor and the wages of management to be indeed but a species of wages. The work of management undoubtedly calls for talents of a high order. Such talents may be so rare that there is competitive bidding for them, which makes the returns received partake of the nature of rent, in the sense that a surplus is paid over the cost of furnishing the service. Management also bears the risk but this more and more can be settled on actuarial basis. It is, moreover, doubtful whether taking business as a whole, the payments for risk bearing are greater than the losses incurred. There remain residual profits and these have been more resorted to by economists as a catch- all to accommodate returns which cannot be attributed to land, capital, labor, than as a reward for a separate type of service. They result from dynamic changes in production which are not immediately distributed to the factors and from changes in the demand schedules of commodities, which for a space give creat rewards to some. They arise from the failure of the fac- tors to move with the speed and intelligence which ordi- narily ascribed to them by economists. Residual profits, there- fore, accrue because of friction and time lags rather than as * On this point, see Knight, Risk, Uncertainty and Profit; Hardy, Risk and Risk-bearing.

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