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

ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 73 would be only a small share of what it is now; while still others have reasoned that since without labor, the product would be nil, labor should receive all. Others have said that capital should receive the difference between what would be produced without its services and what is produced and hence should obtain vir- tually all of the product. If this interpretation of marginal productivity were followed, there would of course be claims (including that of land) upon the national product, of nearly four times the product itself. The truth of the matter is of course that all the factors coOperate in turning out the total product but that their return per unit depends upon the amount of change in the total product which the last of their constituent units occasions when all other factors are held constant. There is a further feature of the marginal theory which needs exploration. Does the sum of the returns of the two factors (i.e., the respective marginal productivities of each multiplied by their number of units) equal the total product minus rent? This has been much disputed. Hobson * and Adriance ® declare that it does not and urge that the output specifically attributed to the last worker was really the result of the coOperation of the total number of workers and the capital equipment. To try to sepa- rate the contributions of individuals would be impossible and would lead to double counting. This criticism can be and has been mathematically disproved by the late P. H. Wicksteed * and by C. W. Cobb of Amherst College * by the application of Euler’s law and on the assumption that the total output will increase in the same proportion as equal proportionate increases in the supply of the factors. Where the increase in the total product is not linear however the sum of the amounts attributable under marginal productivity may not be equal to the whole.’ The theory of marginal productivity as formulated by Pro- fessor Clark measured productivity in terms of physical units. Yet since many commodities are produced, it is clearly necessary * J. A. Hobson, Economics of Distribution, p. 147. Hobson, however, has never understood the principle of infinitesimal differences which lies at the base of the theory. *W. M. Adriance, “Specific Productivity,” Quarterly Journal of Eco- nomics, Vol. XXIX, p. 158. * Wicksteed, A Coordination of the Theories of Production and Dis- tribution, pp. 1-56. * See J. M. Clark, The Economics of Overhead Cost, p. 473. rd But oe Wicksteed, The Common Sense of Political E¢onomy, pp. 358 ff.

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