❤❤❤ Robert Reich Saving Capitalism Analysis

Monday, October 11, 2021 7:49:02 PM

Robert Reich Saving Capitalism Analysis



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Killing off Humanity: Injectables. See Bechamp or Pasteur? Why everything you thought you knew about disease is wrong. And so the entire foundation of health practice underwent a profound transformation during the late 19 th century. But a vital component of the injuries and deaths inflicted medically occur by vaccination, for which there is zero science of any benefit. As Dr Stefan Lanka has explained about vaccines generally:. The verifiable facts demonstrate the danger and negligence of these scientists and politicians, who claim that vaccines are safe, have little or no side-effects and would protect from a disease. None of these claims is true and scientific; on the contrary, upon precise scientific analysis, one finds that vaccines are useless and the respective literature admits to the lack of any evidence in their favour.

Far from being useless, however, vaccines have an exceptional record of achievement in two realms. So how effective at killing are these injectables? Here is just a sample of what some prominent doctors and scientists have described, usually as part of a warning:. In this video, Professor Dolores Cahill, Dr. I am very frightened of that. There is no possible benign interpretation of this. I believe that they are going to be used to damage your health and possibly kill you. I can see no sensible interpretation other than a serious attempt at mass depopulation.

This will provide the tools to do it and plausible deniability. This catastrophic number of injection related deaths has NOT been reported by the mainstream media, despite the official figures above being publicly available…. Governments worldwide are lying to you the people, to the populations they purportedly serve. And in this video, Dr Sucharit Bhakdi carefully explains why the Covid injection is precipitating a global catastrophe that will decimate the human population. Having cited these examples, however, it should be pointed out that they constitute a tiny fraction of the rather endless sequence of highly qualified doctors, scientists, geopolitical analysts and others who have perceived the nature of what has been planned and is now being implemented, and been warning humanity of its fate unless vigorous resistance is offered.

For just two of these other warnings, consider the following. In this evocative open letter from twelve holocaust survivors of World War II, they warn:. We, the survivors of the atrocities committed against humanity during the Second World War, feel bound to follow our conscience and write this letter. It is obvious to us that another holocaust of greater magnitude is taking place before our eyes. We, however, know. We remember the name Josef Mengele. Some of us have personal memories. The threatened innocents now include children, and even infants. In just four months, the COVID vaccines have killed more people than all available vaccines combined from mid until the end of —a period of And people affected worst are between 18 and 64 years old — the group which was not in the Covid statistics.

We call upon you to stop this ungodly medical experiment on humankind immediately. Never before has immunization of the entire planet been accomplished by delivering a synthetic mRNA into the human body. It is a medical experiment to which the Nuremberg Code must be applied. Open Letter. In a recent article, Professor Michel Chossudovsky noted:. The vaccine is being applied and imposed Worldwide. The target population is 7. Several doses are contemplated. It is the largest vaccination program in World history. The billionaire elites which fund and enforce the Vaccine Project Worldwide are Eugenists committed to Depopulation.

Of course, the problem with official figures is that they always profoundly understate the deaths and injuries as an extensive CDC-funded Harvard research study explained a decade ago. And a recent research study by Dr Jessica Rose highlights this problem in relation to the current gene-altering injectables. Her research demonstrated that more than ten times the official figure — over , people — have died due to the injectables in the USA so far. But remember the warnings from Professor Cahill, Dr. Mikovits, Dr. Yeadon, Dr. Bhakdi and others. The timeframe on deaths is over the next few years so, in short, despite the horrifying reality already, the tragedy has only just begun. Hence, the tragedy will continue to accelerate with resistance confined to that which can be mobilized outside mainstream channels.

Killing off Humanity: Other means. While I will not elaborate them in this article, as mentioned above, it should be acknowledged that the elite is using other means to kill off a large proportion of humanity, with the deployment of 5G and geoengineering just two more examples. So How Can We Resist? Fortunately, there is considerable resistance already. However, we need to expand this and also get it onto a more strategic footing so that it functionally undermines the power of the Global Elite to conduct this coup.

It is criminally insane. So, as I have explained before, our defense strategy must thwart those key measures of their coup that would give them the control they want. This will not be easy because we must mobilize millions to act strategically. Random acts of resistance, such as the mass mobilizations without strategic focus that have been conducted so far, can have no impact. The Telegram group is here. One-page flyers in several languages, outlining essential nonviolent actions that we must undertake, are published with this article. Given the enormous sophistication and complexity of the elite agenda being implemented under cover of the so-called SARS-CoV-2 virus, our resistance must match the sophistication of the coup if it is to succeed.

And, in this case, it will require far more action in the home than on the street. This is because street protests do not constitute resistance in themselves and can only be used as a means of mobilizing strategic resistance, most of which will need to occur as a result of people modifying certain elements of their daily behaviours as they go about their usual routines. If we cannot mobilize sufficient noncooperation with particular elite agents and specific measures being taken by the elite through these agents, then the Global Elite will succeed in killing off a substantial proportion of the human population and enslaving the balance.

So our choice is simple. Resist, strategically, as outlined above or watch Earth being depopulated to a planet of cyborg slaves. Biodata : Robert J. Burrowes has a lifetime commitment to understanding and ending human violence. He has done extensive research since in an effort to understand why human beings are violent and has been a nonviolent activist since As we saw in Unit 1, the Industrial Revolution did not lead to economic growth everywhere. Because it originated in Britain, and spread only slowly to the rest of the world, it also implied a huge increase in income inequality between countries.

Landes suggested, a little mischievously, that there were basically two answers to this question:. One says that we are so rich and they so poor because we are so good and they so bad; that is, we are hardworking, knowledgeable, educated, well governed, efficacious, and productive, and they are the reverse. The other says that we are so rich and they so poor because we are so bad and they so good: we are greedy, ruthless, exploitative, aggressive, while they are weak, innocent, virtuous, abused, and vulnerable. If you think that the Industrial Revolution happened in Europe because of the Protestant Reformation, or the Renaissance, or the scientific revolution, or the development of superior private property rights, or favourable government policies, then you are in the first camp.

If you think that it happened because of colonialism, or slavery, or the demands of constant warfare, then you are in the second. You will notice that these are all non-economic forces that, according to some scholars, had important economic consequences. What happens in the economy depends on what millions of people do, and how their decisions affect the behaviour of others. It would be impossible to understand the economy by describing every detail of how they act and interact. We need to be able to stand back and look at the big picture. To do this, we use models.

To create an effective model we need to distinguish between the essential features of the economy that are relevant to the question we want to answer, which should be included in the model, and unimportant details that can be ignored. Models come in many forms. You have seen three of them already in Figures 1. Models come in many forms—and you have seen three of them already in Figures 1. For example, Figure 1. Figure 1. The fact that the model omits many details—and in this sense is unrealistic—is a feature of the model, not a bug.

Some economists have used physical models to illustrate and explore how the economy works. It consisted of interlinked levers and floating cisterns of water to show how the prices of goods depend on the amount of each good supplied, the incomes of consumers, and how much they value each good. The whole apparatus stops moving when the water levels in the cisterns are the same as the level in the surrounding tank. When it comes to rest, the position of a partition in each cistern corresponds to the price of each good.

For the next 25 years he would use the contraption to teach students how markets work. William C. Brainard and Herbert E. American Journal of Economics and Sociology 64 1 : pp. Fisher went on to become one of the most highly regarded economists of the twentieth century, and his contributions formed the basis of modern theories of borrowing and lending that we will describe in Unit We will use the concept of equilibrium to explain prices in later units, but we will also apply it to the Malthusian model.

Note that equilibrium means that one or more things in the model are constant. It does not need to mean that nothing changes. For example, we might see an equilibrium in which GDP or prices are increasing, but at a constant rate. Although it is unlikely that you will build a hydraulic model for yourself, you will work with many existing models on paper or on a screen, and sometimes create your own models of the economy.

Mathematics is part of the language of economics, and can help us to communicate our statements about models precisely to others. Much of the knowledge of economics, however, cannot be expressed by using mathematics alone. It requires clear descriptions, using standard definitions of terms. We will use mathematics as well as words to describe models, usually in the form of graphs.

If you want, you will also be able to look at some of the equations behind the graphs. Just look for the references to our Leibniz features in the margins. Introducing the Leibnizes. A model starts with some assumptions or hypotheses about how people behave, and often gives us predictions about what we will observe in the economy. Gathering data on the economy, and comparing it with what a model predicts, helps us to decide whether the assumptions we made when we built the model—what to include, and what to leave out—were justified.

Governments, central banks, corporations, trade unions, and anyone else who makes policies or forecasts use some type of simplified model. Bad models can result in disastrous policies, as we will see later. To have confidence in a model, we need to see whether it is consistent with evidence. We will see that our economic models of the vicious circle of Malthusian subsistence living standards and the permanent technological revolution pass this test—even though they leave many questions unanswered.

For a country or city of your choice, look up a map of the railway or public transport network. Much like economic models, maps are simplified representations of reality. They include relevant information, while abstracting from irrelevant details. In this unit, we are going to build an economic model to help explain the circumstances under which new technologies are chosen, both in the past and in contemporary economies. We use four key ideas of economic modelling:. Part of the process of learning to do economics involves learning a new language.

The terms below will recur frequently in the units that follow, and it is important to learn how to use them precisely and with confidence. For example, later in the course we simplify an analysis of what people would choose to buy by looking at the effect of changing a price—ignoring other influences on our behaviour like brand loyalty, or what others would think of our choices. We ask: what would happen if the price changed, but everything else that might influence the decision was the same. These ceteris paribus assumptions, when used well, can clarify the picture without distorting the key facts. So we assume:. Suppose you build a model of the market for umbrellas, in which the predicted number of umbrellas sold by a shop depends on their colour and price, ceteris paribus.

Which of the following questions do you think this model might be able to answer? In each case, suggest improvements to the model that might help you to answer the question. All economic models have something equivalent to gravity, and a description of the kinds of movements that are possible. The equivalent of gravity is the assumption that, by taking one course of action over another, people are attempting to do as well as they can according to some standard.

This is where economic incentives affect the choices we make. Like many economic models, the one we use to explain the permanent technological revolution is based on the idea that people or firms respond to economic incentives. As we will see in Unit 4, people are motivated not only by the desire for material gain but also by love, hate, sense of duty, and desire for approval.

But material comfort is an important motive, and economic incentives appeal to this motive. When owners or managers of firms decide how many workers to hire, or when shoppers decide what and how much to buy, prices are going to be an important factor determining their decision. If prices are a lot lower in the discount supermarket than in the corner shop, and it is not too far away, then this will be a good argument for shopping in the supermarket rather than in the shop. A third characteristic of many economic models is that we are often interested in ratios of things, rather than their absolute level.

Economics focuses attention on alternatives and choices. If you are deciding where to shop, it is not the corner shop prices alone that matter, but rather the prices relative to those in the supermarket and relative to the costs of reaching the supermarket. Relative prices are simply the price of one option relative to another. We often express relative price as the ratio of two prices. We will see that they matter a lot in explaining not just what shoppers or consumers, as we usually call them decide to buy, but why firms make the choices that they do.

Imagine that you have figured out a new way of reproducing sound in high quality. Your competitors cannot copy you, either because they cannot figure out how to do it or because you have a patent on the process making it illegal for them to copy you. So they continue offering their services at a price that is much higher than your costs. If you match their price, or undercut them by just a bit, you will be able to sell as much as you can produce, so you can charge the same price but make profits that greatly exceed those of your competitors.

In this case, we say that you are making an innovation rent. Innovation rents are a form of economic rent—and economic rents occur throughout the economy. They are one of the reasons why capitalism can be such a dynamic system. We will use the idea of innovation rents to explain some of the factors contributing to the Industrial Revolution. But economic rent is a general concept that will help explain many other features of the economy. When taking some action call it action A results in a greater benefit to yourself than the next best action, we say that you have received an economic rent.

The term is easily confused with everyday uses of the word, such as the rent for temporary use of a car, apartment, or piece of land. Remember, an economic rent is something you would like to get, not something you have to pay. Or, if you are enjoying A but then someone excludes you from doing it, your reservation option is your Plan B. This decision rule motivates our explanation of why a firm may innovate by switching from one technology to another. We start in the next section by comparing technologies. We now apply these modelling ideas to explain technological progress. In this section we consider:. Suppose we ask an engineer to report on the technologies that are available to produce metres of cloth, where the inputs are labour number of workers, each working for a standard eight-hour day and energy tonnes of coal.

The answer is represented in the diagram and table in Figure 2. The five points in the table represent five different technologies. For example, technology E uses 10 workers and 1 tonne of coal to produce metres of cloth. Follow the steps in Figure 2. The table describes five different technologies that we refer to in the rest of this section. They use different quantities of labour and coal as inputs for producing metres of cloth. The A-technology is the most energy-intensive, using 1 worker and 6 tonnes of coal.

The B-technology uses 4 workers and 2 tonnes of coal: it is a more labour-intensive technology than A. Finally, the E-technology uses 10 workers and 1 tonne of coal. This is the most labour-intensive of the five technologies. We describe the E-technology as relatively labour-intensive and the A-technology as relatively energy-intensive. If an economy were using technology E and shifted to using technology A or B we would say that they had adopted a labour-saving technology, because the amount of labour used to produce metres of cloth with these two technologies is less than with technology E.

This is what happened during the Industrial Revolution. Which technology will the firm choose? The first step is to rule out technologies that are obviously inferior. We begin in Figure 2. The C-technology is inferior to A: to produce metres of cloth, it uses more workers three rather than one and more coal 7 tonnes rather than 6 tonnes. We say the C-technology is dominated by the A-technology: assuming all inputs must be paid for, no firm will use technology C when A is available. The steps in Figure 2. The five technologies for producing metres of cloth are represented by the points A to E. We can use this figure to show which technologies dominate others.

Clearly, technology A dominates the C-technology: the same amount of cloth can be produced using A with fewer inputs of labour and energy. This means that, whenever A is available, you would never use C. Technology B dominates the D-technology: the same amount of cloth can be produced using B with fewer inputs of labour and energy. Note that B would dominate any other technology that is in the shaded area above and to the right of point B.

Technology A dominates C; technology B dominates D. The E-technology does not dominate any of the other available technologies. We know this because none of the other four technologies are in the area above and to the right of E. Using only the engineering information about inputs, we have narrowed down the choices: the C- and D-technologies would never be chosen. But how does the firm choose between A, B and E?

This requires an assumption about what the firm is trying to do. We assume its goal is to make as much profit as possible, which means producing cloth at the least possible cost. Making a decision about technology also requires economic information about relative prices—the cost of hiring a worker relative to that of purchasing a tonne of coal. Intuitively, the labour-intensive E-technology would be chosen if labour was very cheap relative to the cost of coal; the energy-intensive A-technology would be preferable in a situation where coal is relatively cheap. An economic model helps us be more precise than this.

The firm can calculate the cost of any combination of inputs that it might use by multiplying the number of workers by the wage and the tonnes of coal by the price of coal. We use the symbol w for the wage, L for the number of workers, p for the price of coal and R for the tonnes of coal:. In the table in Figure 2. This corresponds to combination P 1 in the diagram. When drawing the line, we simplify by assuming that fractions of workers and of coal can be purchased.

This is point Q 2. We could draw isocost lines through any other set of points in the diagram. If prices of inputs are fixed, the isocost lines are parallel. The slope of the isocost lines is negative they slope downward. Isocost lines join all the combinations of workers and coal that cost the same amount. We can use them to help us compare the costs of the three technologies A, B, and E that remain in play that is, are not dominated. The table in Figure 2. Clearly the B-technology allows the firm to produce cloth at lower cost. In the diagram, we have drawn the isocost line through the point representing technology B. We can see from Figure 2. The other available technologies will not be chosen at these input prices.

We can now represent the isocost lines for any wage w and coal price p as equations. To do this, we write c for the cost of production. We begin with the cost of production equation:. The slope is the relative price of labour. Any change in the relative price of these two inputs will change the slope of the isocost lines. Looking at the positions of the three technologies in Figure 2. This is what happened in England in the eighteenth century. Looking at the table in Figure 2. Cheaper coal makes each method of production cheaper, but the energy-intensive technology is now cheapest. The A-technology is on the isocost line FG. Technologies B and E are above this line, with higher costs.

The slope of the isocost line can be found by calculating the relative price of labour. The easiest way is to find one of the end points F or G. This is point F. You can see from Figure 2. They will not be chosen if the A-technology is available. The next step is to calculate the gains to the first firm to adopt the least-cost technology A when the relative price of labour to coal rises. Like all its competitors, the firm is initially using the B-technology and minimizing its costs: this is shown in Figure 2. From the table, we see that with these relative prices, A is now the least-cost technology.

Switching to technology A will be cheaper. Whether the new or old technology is used, the same prices have to be paid for labour and coal, and the same price is received for selling metres of cloth. The decision rule if the economic rent is positive, do it! In our example, the A-technology was available, but not in use until a first-adopter firm responded to the incentive created by the increase in the relative price of labour. The first adopter is called an entrepreneur. When we describe a person or firm as entrepreneurial, it refers to a willingness to try out new technologies and to start new businesses. The economist Joseph Schumpeter see below made the adoption of technological improvements by entrepreneurs a key part of his explanation for the dynamism of capitalism.

This is why innovation rents are often called Schumpeterian rents. Innovation rents will not last forever. Other firms, noticing that entrepreneurs are making economic rents, will eventually adopt the new technology. They will also reduce their costs and their profits will increase. In this case, with higher profits per metres of cloth, the lower-cost firms will thrive. They will increase their output of cloth. As more firms introduce the new technology, the supply of cloth to the market increases and the price will start to fall. This process will continue until everyone is using the new technology, at which stage prices will have declined to the point where no one is earning innovation rents.

The firms that stuck to the old B-technology will be unable to cover their costs at the new lower price for cloth, and they will go bankrupt. Joseph Schumpeter called this creative destruction. Look at the three isocost lines in Figure 2. Lynne Kiesling, a historian of economic thought, discusses Joseph Schumpeter. Joseph Schumpeter — developed one of the most important concepts of modern economics: creative destruction. Schumpeter brought to economics the idea of the entrepreneur as the central actor in the capitalist economic system.

The entrepreneur is the agent of change who introduces new products, new methods of production, and opens up new markets. Imitators follow, and the innovation is diffused through the economy. A new entrepreneur and innovation launch the next upswing. For Schumpeter, creative destruction was the essential fact about capitalism: old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market by selling goods at a price that covers the cost of production.

The failure of unprofitable firms releases labour and capital goods for use in new combinations. This decentralized process generates a continued improvement in productivity, which leads to growth, so Schumpeter argued it is virtuous. The slowness of this process creates upswings and downswings in the economy. Schumpeter was born in Austro-Hungary, but migrated to the US after the Nazis won the election in that led to the formation of the Third Reich in As a young professor in Austria he had fought and won a duel with the university librarian to ensure that students had access to books.

He added that only the decline of the cavalry had stopped him from succeeding in all three. Before the Industrial Revolution, weaving, spinning, and making clothes for the household were time-consuming tasks for most women. What did inventions such as the spinning jenny do? The first spinning jennies had eight spindles. One machine operated by just one adult therefore replaced eight spinsters working on eight spinning wheels.

By the late nineteenth century, a single spinning mule operated by a very small number of people could replace more than 1, spinsters. These machines did not rely on human energy, but were powered first by water wheels, and later by coal-powered steam engines. The model in the previous section provides a hypothesis potential explanation for why someone would bother to invent such a technology, and why someone would want to use it.

In this model, producers of cloth chose between technologies using just two inputs—energy and labour. This is a simplification, but it shows the importance of the relative costs of inputs for the choice of technology. When the cost of labour increased relative to the cost of energy, there were innovation rents to be earned from a switch to the energy-intensive technology. This is just a hypothesis. Is it actually what happened? Looking at how relative prices differed among countries, and how they changed over time, can help us understand why technologies such as the spinning jenny were invented in Britain rather than elsewhere, and in the eighteenth century rather than at an earlier time.

Page of Robert C. Cambridge: Cambridge University Press. You can see that labour was more expensive relative to the cost of energy in England and the Netherlands than in France Paris and Strasbourg , and much more so than in China. Wages relative to the cost of energy were high in England, both because English wages were higher than wages elsewhere, and because coal was cheaper in coal-rich Britain than in the other countries in Figure 2. Page in Robert C. It shows the wages of building labourers divided by the cost of using capital goods. This cost is calculated from the prices of metal, wood, and brick, the cost of borrowing, and takes account of the rate at which the capital goods wear out, or depreciate.

As you can see, wages relative to the cost of capital goods were similar in England and France in the mid-seventeenth century but from then on, in England but not in France, workers became steadily more expensive relative to capital goods. In other words, the incentive to replace workers with machines was increasing in England during this time, but this was not true in France. In France, the incentive to save labour by innovating had been stronger during the late sixteenth century than it was years later, at the time the Industrial Revolution began to transform Britain.

From the model in the previous section we learned that the technology chosen depends on relative input prices. Combining the predictions of the model with the historical data, we have one explanation for the timing and location of the Industrial Revolution :. No doubt it helped, too, that Britain was such an inventive country. There were many skilled workmen, engineers and machine makers who could build the machines that inventors designed. In the s, the relative prices are shown by isocost line HJ. The B-technology was used. At those relative prices, there was no incentive to develop a technology like A, which is outside the isocost line HJ.

In the s, the isocost lines such as FG were much steeper, because the relative price of labour to coal was higher. The relative cost was sufficiently high to make the A-technology lower cost than the B-technology. We know that when the relative price of labour is high, technology A is lower cost because the B-technology lies outside the isocost line FG. Economic historian Bob Allen addresses the question of why Britain industrialized when others did not. Watch our video in which Bob Allen, an economic historian, explains his theory of why the Industrial Revolution occurred when and where it did. The relative prices of labour, energy and capital can help to explain why the labour-saving technologies of the Industrial Revolution were first adopted in England, and why at that time technology advanced more rapidly there than on the continent of Europe, and even more rapidly compared with Asia.

What explains the eventual adoption of these new technologies in countries like France and Germany, and ultimately China and India? One answer is further technological progress, where a new technology is developed that dominates the existing one in use. Technological progress would mean that it would take smaller quantities of inputs to produce metres of cloth. We can use the model to illustrate this. In Figure 2. The analysis in Figure 2. Where the relative price of labour is high, the energy-intensive technology, A, is chosen.

Where the relative price of labour is low, the labour-intensive technology, B, is chosen. This technology uses only half as much energy per worker to produce metres of cloth. The new technology dominates the A-technology. A second factor that promoted the diffusion across the world of the new technologies was wage growth and falling energy costs due, for example, to cheaper transportation, allowing countries to import energy cheaply from abroad. This made isocost lines steeper in poor countries, again providing an incentive to switch to a labour-saving technology.

Either way, the new technologies spread, and the divergence in technologies and living standards was eventually replaced by convergence—at least among those countries where the capitalist revolution had taken off. Nevertheless, in some countries we still observe the use of technologies that were replaced in Britain during the Industrial Revolution. The model predicts that the relative price of labour must be very low in such situations, making the isocost line very flat. The B-technology could be preferred in Figure 2.

Look again at Figure 2. The historical evidence supports our model that uses relative prices and innovation rents to provide a simple account of the timing and the geographical spread of the permanent technological revolution. This is part of the explanation of the upward kink in the hockey stick. Explaining the long flat part of the stick is another story, requiring a different model. Malthus provided a model of the economy that predicts a pattern of economic development consistent with the flat part of the GDP per capita hockey stick from Figure 1.

His model introduces concepts that are used widely in economics. One of the most important concepts is the idea of diminishing average product of a factor of production. To understand what this means, imagine an agricultural economy that produces just one good, grain. Suppose that grain production is very simple—it involves only farm labour, working on the land. In other words, ignore the fact that grain production also requires spades, combine harvesters, grain elevators, silos, and other types of buildings and equipment.

Labour and land and the other inputs that we are ignoring are called factors of production , meaning inputs into the production process. In the model of technological change above, the factors of production are energy and labour. We will use a further simplifying ceteris paribus assumption: that the amount of land is fixed and all of the same quality. Imagine that the land is divided into farms, each worked by a single farmer. Each farmer works the same total hours during a year. Together, these farmers produce a total of , kg of grain. This describes the relationship between the amount of output produced and the amounts of inputs used to produce it.

To understand what will happen when the population grows and there are more farmers on the same limited space of farmland, we need something that economists call the production function for farming. This indicates the amount of output produced by any given number of farmers working on a given amount of land. In this case, we are holding constant all of the other inputs, including land, so we only consider how output varies with the amount of labour. In the previous sections, you have already seen very simple production functions that specified the amounts of labour and energy necessary to produce metres of cloth.

For example, in Figure 2. In the third column we have calculated the average product of labour. We call this a production function because a function is a relationship between two quantities inputs and outputs in this case , expressed mathematically as:. X in this case is the amount of labour devoted to farming. Y is the output in grain that results from this input. The function f X describes the relationship between X and Y , represented by the curve in the figure. The production function shows how the number of farmers working the land translates into grain produced at the end of the growing season. Point A on the production function shows the output of grain produced by farmers.

Point B on the production function shows the amount of grain produced by 1, farmers. The slope of the ray from the origin to point B on the production function shows the average product of labour at point B. The slope is , meaning an average product of kg per farmer when 1, farmers work the land. The slope of the ray to point A is steeper than to point B. When only farmers work the land there is a higher average product of labour. The slope is , the average product of kg per farmer that we calculated previously.

Our grain production function is hypothetical, but it has two features that are plausible assumptions about how output depends on the number of farmers:. Labour combined with land is productive. No surprises there. The more farmers there are, the more grain is produced; at least up to a certain point 3, farmers, in this case. As more farmers work on a fixed amount of land, the average product of labour falls.

Remember that the average product of labour is the grain output divided by the amount of labour input. From the production function in Figure 2. The average product of labour falls as more labour is expended on production. This worried Malthus. To see why he was worried, imagine that, a generation later, each farmer has had many children, so that instead of a single farmer working each farm, there are now two farmers working. The total labour input into farming was , but is now 1, Instead of a harvest of kg of grain per farmer, the average harvest is now only kg.

You might argue that in the real world, as the population grows, more land can be used for farming. But Malthus pointed out that earlier generations of farmers would have picked the best land, so any new land would be worse. This also reduces the average product of labour. Because the average product of labour diminishes as more labour is devoted to farming, their incomes inevitably fall. On its own, the diminishing average product of labour does not explain the long, flat portion of the hockey stick.

It just means that living standards depend on the size of the population. Malthus was not the first person to have this idea. Elevated as man is above all other animals by his intellectual facilities, it is not to be supposed that the physical laws to which he is subjected should be essentially different from those which are observed to prevail in other parts of the animated nature. Imagine a herd of antelopes on a vast and otherwise empty plain.

Imagine also that there are no predators to complicate their lives or our analysis. When the antelopes are better fed, they live longer and have more offspring. When the herd is small, the antelopes can eat all they want, and the herd gets larger. Eventually the herd will get so large relative to the size of the plain that the antelopes can no longer eat all they want.

As the amount of land per animal declines, their living standards will start to fall. This reduction in living standards will continue as long as the herd continues to increase in size. Since each animal has less food to eat, the antelopes will have fewer offspring and die younger so population growth will slow down. Eventually, living standards will fall to the point where the herd is no longer increasing in size. The antelopes have filled up the plain. At this point, each animal will be eating an amount of food that we will define as the subsistence level.

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