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
_To what Extent the Movement of Labor and that of Capital are
Interdependent._--The early statements of the law of rent did not
usually define the intensive margin of cultivation in connection with
labor and capital separately, but spoke of these two agents as
employed together upon land in quantities increasing up to a limit
beyond which both labor and capital would best be employed elsewhere.
The supposition that labor and capital go thus together from one grade
of land to another is only approximately accurate. If we consider one
man and five hundred dollars' worth of productive wealth as a dual
unit of labor and capital, and add such units, one after another, to
the forces at work on a tract of good land, we shall reach a point at
which it will not be profitable to increase the amount of one of the
agents, while it will still be profitable to increase the amount of
the other. It will perhaps not pay to use any more capital, but it may
still pay to add to the number of workers. On land that is tilled
more and more intensively, labor and capital are not tied together in
fixed proportions in such a way that, when there is more of one of
them used, there is _proportionately_ more of the other. Moreover,
when a unit of one of them abandons a piece of land and goes
elsewhere, there is no probability that exactly one unit of the other
will do the same. There is, indeed, no such thing as a dual unit of
labor and capital that can be thought of as moving to and fro among
different employments till it finds the point at which, as a dual
unit, it can create its largest product. These two agents so locate
themselves that a final unit of each one, separately considered,
produces as much where it is as it can produce anywhere else.
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