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:: The relation between statics and dynamics / John Maurice Clark

Collection:: Economics Books

64 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK supply side of the balance, though the more important forces appear to be psychological. Along with this goes a transforma- tion of the static idea of a margin of employment. It becomes clear that the rewards of labor and capital bear no close rela- tion to their marginal productivities at any given moment; and if there is a long-run marginal productivity which has a close relation to the rewards of labor and capital, it requires careful redefining. 11. Overhead Costs In all this a large part is played by the existence of overhead costs, or costs not specifically traceable to particular units of output, and costs which frequently do not vary with the varia- tions of output, or not in anything like the same degree. At its most difficult levels, the problem of overhead costs is identical with the problem of surplus capacity. It gives rise to the danger of cutthroat competition, to the practice of discrimination with its uses and abuses, to the wastes of irregular production and to the chief financial incentive to their removal, and to some of the most definite of those ties of common interest which nowadays bind producers together into a genuine business community. A concern which expands its orders is bestowing intensified gains upon those with whom it deals, for their expenses will not increase as fast as their output—within limits. And a concern which reduces its purchases is imposing an uncompensated bur- den on the rest of the business community, because their costs cannot be made to shrink as fast as their output. The concern which reduces its purchases does so in order to retrench, but the entire business community cannot retrench to anything like the same extent, and it is a doubtful question to what extent it can really retrench at all at a time of general depression. But even aside from this question of shifted burdens, it is clear that over- head costs introduce doubt and ambiguity into the most essential economic service of costs: the service they render when we com- pare values and costs to decide whether a given thing is economically worth doing. Thus the economist is deprived of one of his ready-made yardsticks of economic soundness, and must repair the loss somehow, not trusting the results of private enterprise and private accountancy to be necessarily correct from the standpoint of community economy.

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