The basic facts of economics : $b A common-sense primer for advanced studentsPost, Louis F. (Louis Freeland)
General
The basic facts of economics : $b A common-sense primer for advanced students
Post, Louis F. (Louis Freeland)
Economics
Before passing to the next subdivision of Distribution, it may not be
a diversion to direct attention to the most remarkable distortion of
technical Economic terms that has yet harassed Economic thought with
confusion. This is the attempt of some Economists to identify Rent with
Wages, by ascribing extraordinary compensation for extraordinary human
service to “rent of ability.” As a subclassification of Wages there
could hardly be any objection to this assignment except its tendency
to mix Rent for Land with Wages for Labor in the minds of students. As
a fundamental classification, however, its absurdity is manifest. Can
anybody “rent” his ability, however great it may be, without putting
it at work? Could the ablest physician, for instance, get a fee unless
he offered to work with his ability? Could the most brilliant author
command royalties unless he wrote books? Of course not. It is only as
one works or promises to work that he is compensated for any degree
of ability. Although Landownership may command compensation in Rent
for such special opportunities as the Land offers to Labor, regardless
of whether it is utilized or not, Man cannot rent his ability without
obligating himself to use his ability; and the man who obligates
himself, though he may call his compensation “rent” if that pleases
either his vanity or his love for confused thinking, gets for his
ability no rent whatever. What he gets is Wages for making his ability
serviceable as a Labor unit. Nor is such compensation any the less
Wages or any the more Rent, if it be (as with lawyers) a retainer for
pledging future service which in the end has not been required of him.
Compensation for work, or for a contract to work, is Wages whether the
contract be in consequence of the worker’s ability or regardless of it.
All compensation for service units, from lowest grades of ability to
highest, is in Economic terminology and analysis, not Rent for Land but
Wages for Labor. The bricklayer, contrasting his Wages with the Wages
of an apprentice, might call his larger income “rent of ability,”
if that flattered him; but his doing so, though it might enhance
Economic confusion, would not alter the Economic relationship of Wages
for Labor and Rent for Land. If Economic thinking is to be done with
definite terminology instead of word-juggling, all compensation for
human service must be expressed by a technical term different from the
technical term for premiums for varying grades of Natural Resources.
The accepted technical terms are Wages for Human service and Rent for
Natural Resource advantages. Though “rent of ability” be picturesque in
dramatics, it is farcical in Economics.
Public-domain text, read in full here on John Shaqi.
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