Elementary economics manual; by unknow

Author:unknow
Language: eng
Format: epub
Tags: Economics
Publisher: Madison, Wis. [Cantwell printing co.]
Published: 1915-03-25T05:00:00+00:00

(d) High standards of living among laborers limit the supply of labor and tend to raise the marginal productivity of labor in the next generation and thus raise wages.

Criticism of Marginal Productivity Theory.

(a) This theory assumes the existence of unrestricted com-

petition in the labor market.

(b) It assumes that the employer is regularly able to esti-

mate the value of the marginal product and to discharge laborers who do not earn their wage.

(c) It assumes that the standard of life limits the supply

and that, in general, all increase due to the efficiency of labor goes to the laborer.

(d) The theory explains, correctly, that wages tend to ap-

proximate the product of the marginal laborer.

VII. GENEEAL CONSIDERATIONS.

Wages in a particular industry may temporarily fluctuate between two extremes: The upper level beyond which wages cannot go is fixed by the value of the entire product and includes the returns which normally would go to the landlord, the capitalist, and the entrepeneur. The lower level may in some few cases be fixed below the subsistence minimum, but in the long run wages cannot remain below the amount of necessities and comforts which the laborers regard as essential and the reduction of which would mean a decrease in population. Between these two limits wages are fixed by bargaining. The story of the bargaining and of the forces helping or hindering the two parties in the bargain constitutes what is known as the Labor Problem.

VIII. WAGES may be regarded as high or low from three

different points of view. First, from the standpoint of the employer, wages may appear to be high or low when compared with the efficiency, amount of output and value of the product resulting from the laborer's effort. Second, from the standpoint of the laborer, wages may be high or low when compared with his fatigue, sacrifice,

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