Economic essays

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Monograph

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

Structure type:: Chapter

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

Collection:: Economics Books

114 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK a reward for a positive contribution by a fourth factor of production. But natural resources, at least, are a third factor and the ques- tion naturally arises how they may be fitted into the analysis? A method which naturally suggests itself is to compare labor with a combination of land and capital. Since the elasticity of the supply of natural resources, if not precisely zero, is cer- tainly very close to it, the combination of land with capital will (if the supply curve of the latter is positive) make the com- posite elasticity of the two less than that for capital alone. In securing the composite elasticity for these two factors, the elasticity of each factor should, of course, be weighted by the percentage of the national income originally enjoyed by each. The comparison of how labor fared as compared with the com- posite fortunes of the owners of land and capital would afford a basis for judging the effect of given changes upon service income as compared with property income, and hence would be valuable in itself. The relative effects produced upon rent as compared with (1) wages and (2) interest, could then be studied in turn and their results isolated. Since labor and capital (and hence wages and interest) have previously been compared for the purpose of isolat- ing the effects, labor and natural resources could also be merged together and compared with capital. It would be possible then to disentangle the approximate effects produced on each of the factors and to frame a general conclusion for each according to its relative coefficient of elasticity and the relative share which it originally received of the total product. 2. Real difficulties are encountered when we move to a con- sideration of several commodities. Hitherto we have been dealing with only one and consequently have taken into account only one general productivity surface, composed as it was of (a) the rate of increase of the total product with equal proportional changes in the factors, (b) the rate of slope of the product as the propor- tion of X to a constant quantity Y was altered, and (c) the rate of slope of the product as the ratio of Y to a constant quantity of X was altered. But as we deal with several commodities, we encounter diverg- ing slopes of marginal productivity as measured in terms of physical units, and the question naturally arises how these

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