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

76 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK rate of interest were to be one-half of its present figure, can we assume that the supply of capital would be the same? If the change in the remuneration of labor and capital altered the supplies of these two factors, then would not their marginal productivities also be altered? Furthermore, the marginal pro- ductivities in the original situation may well have been such as to cause either more or less of a given factor to be supplied and this very alteration in the quantity offered would alter the marginal productivities. The truth of the matter is that the theory of marginal pro- ductivity as advanced by Professor Clark explains the processes of distribution under the condition of fixed supplies and of atom- istic competition. It does not fully explain the permanent long- run processes of distribution nor tell us whether the prices of the factors at any one moment are such as to constitute an equili- brium or whether they are not. Fundamentally therefore the contribution of Professor Clark to the theory of distribution was very similar to that of the Austrian school to the theory of value. To both the prices, of goods in the one case and of factors in the other, were fixed by demand schedules; the units of desire expressed and weighted by monetary units constituting the demand curve for commodities and the curves of imputed mar- oinal productivity constituting the demand schedules for labor and capital respectively. But in real life, and for the purposes of a complete theory, we also need to know what determines the supply since this is also an essential factor in price determination. The supply of a com- modity is not a purely plastic affair in which any quantity will be offered irrespective of price. It is on the contrary a function of price just as is demand. But since it is the factors of produc- tion, %.e., labor, land, capital and management which produce commodities, the prices paid for the latter are really analyzable into prices for the factors. The supplies of the factors can in a similar sense be conceived of as functions of price or of return. The fixation of the equilibrium in a simplified economic state and the unit return to each factor will therefore depend not only on (1) the curve of imputed productivity of Factor X when Y is constant and (2) the curve of imputed productivity of Factor Y when X is constant but also (3) the curve of the advance in total productivity when X and Y are increased proportionately (4) pL

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