Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public PolicyClark, John Bates
General
Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy
Clark, John Bates
Economics
We will let another figure represent the entire product of the same
amount of labor and the same amount of capital that were represented
in the former case. We will assume that there is at the outset a
complete force of laborers, and that no men are added to it or taken
from it; but we will gradually introduce units of capital instead of
units of labor as in the former case. The amount of capital is now
represented by the line _A'E'_ and the product of the first unit of it
by the line _A'C'_. The product of the successive units declines along
the curve _C'D'_. The final unit of capital then brings into existence
the amount of wealth represented by _E'D'_. As every other unit now
produces the same amount, the capital as a whole creates the quantity
represented by _A'B'D'E'_ and every unit of it makes its own separate
contribution to that amount. In this we have simply applied to capital
and its earnings the principle we formerly applied to labor and its
earnings.
[Illustration]
_General Form of the Law of Final Productivity._--This principle is
the law of final productivity, one of those universal principles which
govern economic life in all its stages of evolution. Either one of the
two agents of industry, used in increasing quantities in connection
with a fixed amount of the other agent, is subject to a law of
diminishing returns. The final unit of the increasing agent produces
less than did the earlier units in the series. This does not mean that
at any one time one unit produces less than another, for at any one
time all are equally productive. It means that the tenth unit produces
less than the ninth did _when there were only nine in use_, and that
the ninth unit formerly produced less than the eighth did in that
still earlier stage of the process _in which there were only eight in
use, etc._ If the productive wealth of the United States were only
five hundred dollars per capita instead of more than twice that
amount, interest would be higher than it is, because the productive
power of every dollar's worth of capital would be more than the
productive power of each dollar's worth is now; and, on the other
hand, if we continue to pile up fortunes, great and small, till there
are in the country two thousand dollars for every man, woman, and
child of the population, interest will fall, because the productive
power of a dollar's worth will become less than it now is.
Public-domain text, read in full here on John Shaqi.
Reviews
Reviews
No reviews yet
Be the first to share your thoughts on this work.
Elsewhere in the archive
Join the Discussion
Join the discussion
Sign in to leave a comment or review.
Sign InorCreate an account