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

74 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK phi Le of for the purposes of exchange to reduce them to common units of value. Due to the tendency of labor and capital to seek the most profitable lines of employment and the consequent tendency of wages of similar laborers to approach equality and of the interest rate to approach uniformity, the margin of production for both labor and capital runs through all industries and must therefore be measured in terms of value. It is idle to deny that this introduces grave complications into the theory of marginal productivity. Thus the value of a worker to an employer is measured by the money addition which he makes to the income of the concern rather than in terms of the benefit which he creates for society. Thus the process of reasoning by which the manufacturer of a quack patent medicine decides whether he shall engage another chemist is precisely the same as that by which a dairyman decides whether he shall employ another milkmaid. Each worker will tend to yield less profit to his employer than his predecessor although in one case the profits will come from conveying worth- less articles to adults and in the other from producing milk for children. Similarly those who are employed in giving an employer a competitive advantage over his fellows without increasing the national product as such all come under the principle of marginal productivity as do those who may actually decrease the total product in which they share. Yet even this dilemna may be mitigated if we measure the output of industry in the form of a composite of physical goods and of services as has been attempted in the various indexes of production compiled by Day, Stewart and others. Granted that there are parasitical elements within each volume of output, it will be enough if we assume that the proportion of parasitism remains the same, and consider the change in the product as a whole which accompanies changes in the quantity of the factors. And if it be objected that it is impossible to construct such an index of production because the values of commodities change from year to year, it can be pointed out that the problem has been virtually solved by Professor Irving Fisher's “ideal” index number whereby the weighted geometric mean of the ratios of value in the base year and in succeeding years may be secured.’ 1 See Thorstein Veblen’s paper, “Industrial and Pecuniary Employments,” reprinted in The Place of Science in Modern Civilization. 2 Fisher. The Making of Index Numbers.

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