Study Guide to Man, Economy, and State with Power and Market

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Chapter 9: Production: Particular Factor Prices and Productive Incomes 111 wages per capita. Thus the rise in real wages over time need not be due to the merits of the workers. For example, an increase in investment in the auto industry will cause the physical product of auto workers to rise (since they work with more and better tools). This will raise wage rates in that industry, which in turn will draw workers from other occupations into it. The reduced supply of workers in, say, the food service industry will raise the equilibrium real wage in it. Hence the cafeteria workers will earn a higher real wage, not because of harder work or training, but because of capitalists investing in auto plants. F. A Note on Overt and Total Wage Rates From the employer’s point of view, the total wages he or she pays cannot exceed the worker’s DMVP. Thus an increase in pension contributions, health care premiums, or other perks will decrease an employee’s take-home pay, ceteris paribus. G. The “Problem” of Unemployment In contrast to the charges of Keynes, economics does not “assume” full employment. Economics deduces that individuals can always “get a job” if they are willing to work for a sufficiently low (possibly negative) wage rate. Thus it is not jobs that are the goal, but high-paying jobs, and in order to achieve this goal we need capital accumulation (to raise the DMVP of labor), not government “pump priming.”
112 Study Guide to Man, Economy, and State with Power and Market 3. Entrepreneurship and Income A. Costs to the Firm Prices determine costs, not vice versa. (Recall that the “costs of production” are largely the prices of factors.) The plethora of cost curves in mainstream texts assume fixed factor prices, and cannot explain the emergence of prices because they proceed from the viewpoint of an individual, “price taking” firm. Average costs per unit may vary with the level of output because of indivisibilities in factor inputs. B. Business Income A business owner’s gross income consists of: (a) interest on capital invested, (b) (implicit) wages for his managerial tasks, (c) rents of ownership-decision, and (outside the ERE) (d) entrepreneurial profit or loss. C. Personal Consumer Service Certain entrepreneurs (such as doctors and lawyers) sell their labor directly to the final consumer. These people are self-employed and earn a wage only in the implicit sense. D. Market Calculation and Implicit Earnings Implicit earnings can only be computed if there are explicit prices on an actual market with which to compare one’s gross income from a given activity.
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CONTENTS INTRODUCTION . . . . . . .
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In June of 2004, I became convinced
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Introduction ix appropriate, I have
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Chapter Summary In a money economy,
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Chapter 4: Prices and Consumption 4
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Chapter Summary Economists often ta
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Chapter 1: Defense Services on the
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Chapter 1: Defense Services on the
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Chapter Outline 1. Types of Interve
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Chapter 2: Fundamentals of Interven
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Chapter Summary Society is composed
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Chapter 4: Binary Intervention: Tax
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Chapter Summary There has been litt
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Apriorism, 1, 9 Ability-to-pay prin
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Index 251 Equilibrium, 47, 104 macr
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Index 253 Medium of exchange, 27, 3
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Index 255 See also Economy, Evenly
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