Law OF Diminishing Returns Essays - Production Economics

Law oF Diminishing Returns The Law of diminishing returns is a key one in economics. It is used to explain many of the ways the economy works and changes. It is a relatively simple idea; spending and investing more and more in a product where one of the factors of production remains the same means the enterprise will eventually run out of steam. The returns will begin to diminish in the long run. If more fertilizer and better machinery are used on an acre of farmland, the yield will increase for a while but then begin to slow and become flat. A farmer can only get so much out of the land, and the more the farmer works, the harder it gets. The economic reason for diminishing returns of capital is as follows: When the capital stock is low, there are many workers for each machine, and the benefits of increasing capital further are great; but when the capital stock is high, workers already have plenty of capital to work with, and little benefit is to be gained from expanding capital further. For example, in a secr etarial pool in which there are many more secretaries than computer terminals, each terminal is constantly being utilized and secretaries must waste time waiting for a free terminal. In this situation, the benefit in terms of increased output of adding extra terminals is high. However, if there are already as many terminals as secretaries, so that terminals are often idle and there is no waiting for a terminal to become available, little additional output can be obtained by adding yet another terminal. Another application for this law is in Athletics, for runners, their investment is the time and energy put into training and the yield is hopefully improved fitness. Early in their running careers or early in the training program a couple of weeks of regular training would be rewarded with a considerable increase in fitness. Having achieved a very fit state though, two weeks of regular training will achieve a barely perceptible increase in fitness. But in today's world, this famous law seems to have been turned on its head. In Japan, for example, huge amounts of investment have resulted in large increases in the economy and large increases in capital goods per worker. But the rate of productivity growth did not decline the way one would have expected on the basis of diminishing returns. Japan got ahead and stayed ahead.

Bellamy and Spencer

Bellamy and Spencer Introduction The following research paper explains how Bellamy and Spencer differ in the novel ‘Looking Backward from 2000-1887’.This essay also examines the Bellamy’s ideal future and also critically examines as to whether or not people can live in Bellamy’s world.’Advertising We will write a custom research paper sample on Bellamy and Spencer specifically for you for only $16.05 $11/page Learn More Looking Backward from 2000-1887’ is a utopian novel that was published by Edward Bellamy in 1888.Edward Bellamy was a Massachusetts renowned writer. In this novel, a thirty year-old American man by the name of Julian Wess wakes up after falling asleep for one hundred and thirteen years. After waking up, Julian Wess discovers that the society has done away with the class divisions.Also, he, he discovers that the same salary is given to workers all over the country and that poverty does not exist in the society. During the time that he was asleep, the United States had developed as a utopia society.Julian Wess is lucky to find Doctor Leete who guides him by showing him around and explaining to him all the recent developments that have taken place in the United States. Doctor Leete explains to him that the retirement age is 45 years and that resources are publicly owned. Edward Bellamy in his book powerfully criticizes capitalist society .The book is famous for its forceful arguments for abolition of the wages. The novel puts much emphasis on society’s freedom of choice with regards to pursuing occupations (Bellamy, 1929, P.3-6). How Bellamy and Spencer differ Both Edward Bellamy and Hilbert Spencer veered differently with regards to addressing the key economic and social issues. The two scholars attempted to address social and economic issues during the late 19th century between the period 1884 and 1899. Edward Bellamy’s idea in his major Utopian work’ Looking Backward,2000-1987â €™ were mainly nationalism i.e. a form of socialism where all the industries are owned by a nation and the economic inequality remains virtually unknown. Decisions concerning allocation of crucial economic resources are determined by the state. All important means of production such as power and land are publicly owned. Since the state owns all the resources, there is no personal income that is derived from ownership of the resources. Bellamy emphasized the adoption of militarization of labor and he believed that, workers should be organized into several industrial armies until they reach the retirement age.Advertising Looking for research paper on social sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More According to him, poverty can be eradicated if everyone does his or her industry duty accordingly. Bellamy held the view that workers should not be allowed to manage themselves because they may decide to choose slack pol icies which may cause the production capacity to fall. He was on the view that an economy which is based on mutual cooperation is beneficial as it is centrally planned and lacks any trace of competition (Rodgers, 2008, P.66-68). On the other hand, Hebert Spencer held a different view on how the society should be managed. Herbert Spencer was a sociologist and British Philosopher .Herbert Spencer emphasized on the application of the Darwinian evolutionary theory in the society. Darwinian evolutionary theory was coined by Charles Darwin in the mid 19th century. Charles Darwin held the view that species usually evolve as a result of natural selection and only the fittest species survive. According to this theory, survival for the fittest is a natural rule that must be followed by all the species failure to which they will die. In other words, those species including human beings that outwit others usually outlast and outplay them in order to survive. According to Darwinian evolutionary theory, the strongest in the society reign supreme whereas, the weak dies off. Charles Darwin argued that, for the society to evolve, the strong should continue to reign while on the other hand, the weak should die off. Herbert Spencer played an important role in developing the social Darwin’s theory. In fact, he was the one who coined the phrase ‘survival for the fittest’. He argued that, the freedom of individuals is greater than that of the community. According to him, government has an impact as far as progress of individual’s freedom is concerned. Spencer held the view that a clear distinction should be made between the meaning of the term ‘progress’ and ‘human happiness’. He further argued that ambiguity occurs with reference to these two definitions as progress is implied to mean human happiness for the reason that it enhances human happiness (Rodgers, 2008, P.66-68). Herbert Spencer was also on the view that the economic s ystem should be a leissez faire one i.e. one where the decision concerning the allocation of resources is made by the individuals based on price mechanism. According to Spencer, individuals should have the right to acquire and dispose off natural resources as they wish without any restrictions whatsoever. Spencer was on the view that individuals should also have freedom of choice and enterprise i.e. they should be free to purchase or hire the economic resources, organize the economic resources for production and lease or sell them in the market of their choice. The owners of resources should be free to use them as they wish.Advertising We will write a custom research paper sample on Bellamy and Spencer specifically for you for only $16.05 $11/page Learn More Consumers on the other hand should be free to spend their earnings as they wish. According to him, firms should aim at maximizing their profits while the owners of land should aim at maximizing their re nt. Employees should aim at shifting to those occupations which are associated with higher rewards and the consumers should be willing to purchase those goods and services which maximizes their satisfaction (Spencer, 2010, P.285). Herbert Spencer also emphasized on the competition model which is characterized by a large number of buyers and sellers with each buyer and seller accounting for an insignificant share of business. According to Spencer, prices of goods and services should be based on the decisions of the producers and consumers. Government intervention should not exist as far as price control is concerned (Rodgers, 2008, P.66-68). A brief conversation between Bellamy and Spencer Bellamy told Spencer that the main reason why women in modern society are more efficient and happy like men is due to the fact that, each person is provided with an occupation which he or she is well adapted to. According to Bellamy ,both men and women should be treated equally (Bellamy,1929,P.3-6) .Spencer on his part argued that, women plays a greater role in the society and they should be more appreciated as compared to their male counterparts(Rodgers, 2008, P.66-68). Bellamy’s ideal future The book ‘Looking Backward: 2000-1887’ was aimed at stirring thoughts of future. Edward Bellamy gave a forecast of what he believed the 20 the century would be. Edward Bellamy was on the view that society will eventually solve its own problems and thus develop to a perfection state. He believed that the new society will deal with all the vices ranging from crime to loafing. Edward Bellamy believed that criminals and loafers compromised law and order in the society. Criminals according to him are not responsible persons in the society as they prefer to lead a live that is characterized by lawlessness and violence. According to him, the former society was based on injustice and lacked moral authority of dealing with criminals and violent classes in the society. Society did not play its rightful role of judging the irresponsible beings. He argued that the future society has the responsibility of finding the criminal class and change them to become responsible beings. He further argued that the role of the government should not be limited to maintaining peace and defending its citizens against aggression by enemies but rather, the government functions should be extended to protecting its citizens against hunger, nakedness and cold. Public enemies do not necessarily mean state enemies but rather those aspects that subjects people to deplorable living conditions.Advertising Looking for research paper on social sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More The government should aim at meeting both physical and mental needs of its citizens. Society should act to punish corrupt individuals. The wealth machinery of the country should not be entrusted to only a few people such as the political class. With this regards, Bellamy held the view that there should be no politicians or political parties (Karier, 1986, P.101). Bellamy believed that it is important for human nature to change. In order for people to lead productive and meaningful lives in future, they should aim at changing their current motives of action. He argued that former society was characterized by government officials who misused their powers for their own reasons. His ideal future society should be constituted in such a way that it is impossible for an official to make any private profit or misuse power. His ideal society should not provide a state official with an opportunity to engage in corrupt activities .The social system should not offer premiums because of dishones ty (Bellamy, 1929, P.34-41). His ideal future is one the one which is egalitarian. Edward Bellamy in his novel ‘Looking Backward, 2000-1887’ prophesized that one day, the society would change into an orderly one that is free from violent strikes, severe economic recession and corruption in government and in business. Bellamy emphasized that people should struggle for a better society which is founded on radical egalitarianism. He was optimistic that a massive transformation will take place in future following the emergence of industrial forces in United States. He argued that democracy cannot exist in a society where there is massive economic and political inequality. He further argued that a healthy society is one where production is aimed for use and not for profit and work is redefined in such a manner that it each person performs those tasks which he or she is capable of accomplishing (Lipow, 1982, P.24). Bellamy advocated for subordination of women. Edward Bellamyà ¢â‚¬â„¢s ideal; future was a perfect world where people coexists in an orderly and harmonious manner. According to him, women should be totally liberated and they should be accorded equal treatment with men. Bellamy noted that women have been severely undermined over the last decades of his own time. Women’s movements were not highly regarded in the society due to lack of thoroughgoing commitment with regards to economic equality. Bellamy hoped that gender equality will prevail in the society. In order for gender equality to be enhanced in the society, Bellamy noted that the society should move shift from being economic dependence to economic independence (Bedford, 1966, P.14). Edward Bellamy held the view that in future, productivity should be high. He hoped that the future of leisure will look bright. According to him, increased production in the future would be enhanced by the widespread use of automation. He was on the opinion that leisure should be abundant in future. Fo r leisure to be abundant in future, Bellamy held the view that the number work week should be reduced (Atkinson, 2004, P.303). Edward Bellamy hoped to live in a society which is comprised of an industrial army. Bellamy’s hoped that the society should be based on a bureaucratic model. He was on the view that, power should be concentrated at the top. According to him, the officers who serve in the industrial army should also be the state’s officials. The military should be able to impose discipline over the tanks and this will ensure that tasks are accomplished in an efficient manner without conflicts and disorders. With regards to the industrial army, impersonal and unselfish goals would be discovered by the masses for which they would strive willingly (Bellamy, 1929, P.126). According to Bellamy, an ideal world is the one in which the educational system provides everyone to attain his or her educational goals. Bellamy was on the view that everyone should receive educat ion to the highest degree. He argued that by educating only a few people, a wide gap is created between the educated and the uneducated. Education according to him is vital as it enables people to communicate with one another. Education also plays an important role in eliminating brutishness (Patai, 1988, P.69). Edward Bellamy hoped to live in a world where there is no private commerce. According to him, individuals will not have the right to own property and dispose off natural resources as they wish. This implies that people will not have the right to income generated from the resources i.e. interest, rent and profit. Bellamy believed that the use of money as a medium of exchange should be abolished. According to him, commerce can be carried on without money. Trading whether domestic or international does not require the use of money. He argued that, when foreign trade was carried out by private enterprises, money was important as it helped in adjusting the complexities of transac tion but the future commerce will be carried out by nations as units. Bellamy argued that books of accounts will serve effectively to regulate the dealings of merchants across the globe. He further argued that custom duties are unnecessary .This is because a nation only imports those commodities which are requisites .The bureau of foreign exchange in each country plays an important role of managing it trading(Bellamy,1929,P.34-41). Bellamy wished to live in a society where the government runs everything .According to him, the state should not only own all the resources but also regulate and control strategic resources. The government should intervene in the economy in order to create a framework of rules and regulations. According to him, the creation and enforcement of rules and regulations is only possible by having a society that is hierarchically organized. The government is vested with the role of promoting the general welfare of its citizens. According to Bellamy, the governme nt should ensure that there is equitable distribution of wealth (Bellamy, 1929, P.34-41). Bellamy wished that in future, labor interest should not be present as it is a major challenge. According to him, the government should assume the responsibilities of capital in order to solve labor related issues. The government by virtue of being a sole employer will ensure that all its citizens are provided with tasks which they perform enthusiastically and efficiently. The future government should take into consideration the industry’s needs before distributing its employees. According to him, the principle of universal military service should be adopted in addressing the labor issues. He was on the view that, every individual will be obliged to contribute his or her military services to protect the state once the society changes into a sole capitalist. Each citizen will thus contribute a substantial proportion of his or her intellectual services towards the maintenance of the countr y. This is achievable only when the sate becomes the sole employer of its citizens .Indeed, there can be no labor organization in a situation where the employing power is divided among many individuals and corporations (Bellamy, 1929, P.34-41). Bellamy’s ideal future is one where service is not compulsory upon all the individuals but rather a natural and reasonable aspect. According to him, the society should move from a situation where service is compulsory as this is a weak way of stating its absolute inevitableness. The entire social order should not be based on compulsory service for survival because, if a man has no means to provide for his or her existence, then he or she may decide to exclude him or herself from the world by committing suicide (Bellamy, 1929, P.34-41). Bellamy also held the view that the number of volunteers in any kind of trade should be exactly the same number that is required in that trade .In other words, the supply of volunteers should always meet the demand. Businesses have the role of ensuring that the supply of volunteers in any trade equals the demand. Volunteering rate should be closely monitored and if the number of volunteers exceeds the number required, then the trade should be understood to offer greater attraction as compared to others. However, if the volunteers for a given trade fall below the demand, then the trade should be inferred as tough. The administration has the role of ensuring that the attractions of various trades equalizes. This is important as it will ensure that labor conditions are addressed. Bellamy held the view that people should engage in those trades which they have a natural interest in. This is achieved by varying the number of labor hours according to the nature of trade’s arduousness. According to him, a person should not engage himself or herself in those tasks which are harder to be accomplished (Bellamy, 1929, P.34-41). Bellamy was on the view that, one does not necessarily have to stick to a trade or occupation which he or she initially entered. Thus, one may change his or her occupation later in life despite the fact that changing occupation frequently is not encouraged. Every person has the right of volunteering in an industry which he or she deems fit (Bellamy, 1929, P.34-41). Bellamy also held the view that the term of service should not be lengthy or for life. According to him, the term of service should begin late in life and also end earlier .Leete explains to Wess that workshops in former society were filled with young children and old people. Bellamy believes that the term of industrial service should be 24 years and it should begin after one completes his or her education at 21.The term for industrial service should end after one attains forty-five years. According to him, terminating at 45 provides one with an opportunity of remaining liable to special calls in emergency cases (Bellamy, 1929, P.34-41). We are yet to live in Bellamy’s wor ld as most of things that he envisioned are unrealistic and cannot be applicable in modern society. The future is not dependent on what we believe i.e. utopias does not exist. Utopia is in fact dynamic and therefore, a social system should be willing and ready to change in order to survive. The paths that individuals choose to follow plays an important role in determining whether they will live well lives in future or not. However, the increased use of technology has made it possible to assign machines with the role of making decisions. In the modern world, machines are used in virtually all areas. Electronic computers have enhanced accomplishment of complex tasks. In today’s world, people are able to live long and healthy as a result of innovations .The advents in science and technology have made it possible for an individual’s achievements to be based on his or her pursuits and not the amount of wealth and property that he or she acquires. Living in Bellamy’s world The world that Bellamy envisions is the one that will respect the rights of every individual regardless of his or her skin color,age,tribe e.t.c.The world will ensure that love prevails all over the place as people will love for others sake. True love is characterized by lack of envy or selfishness. Everybody would wish to, live in Bellamy’s world where public goods like education are adequately provided to all. His world would play an important role in shifting resources in pursuit of a grand scheme such as rapid industrialization .Also, it would ensure greater equality in income distribution and monopoly would not be encouraged. Everyone would be happy to live in Bellamy’s world that is characterized with beauty and general goodness. This world is however not achievable in modern times due to such reasons as Bellamy’s world would not result to a higher growth rate .there would be no self interest in pursuit of personal goods. In the absence of profit mot ive in production, there is no incentive for hard work and innovations. This will eventually give rise to inefficiencies in terms of low output per worker. Higher rate of economic growth cannot be achieved. This is because of lack of incentives available for hard work and quality of work. Usually, high level of skills and motivated by extra pay or profits. Living in Bellamy’s world will compromise the concept of consumer sovereignty. People will not have power to determine not only what is produced and what quality but also, how resources are allocated. In general, people are more sovereign in a free market economy where commodities are produced in line with their preferences. Also, the lack of competition in Bellamy’s world implies that, efficient allocation of resources between competing users will be undermined. Reference List Atkinson, R. (2004).The past and future of Americas economy: long waves of innovation that power cycles of growth.Cheltenham: Edward Elgar Pu blishing. Bedford, H. (1966).Socialism and the workers in Massachusetts, 1886-1912.Boston: Univ of Massachusetts Press. Bellamy, E. (1929).Looking backward, 2000-1887.New York: Forgotten Books. Patai, D. (1988).Looking backward, 1988-1888: essays on Edward Bellamy.Boston: Univ of Massachusetts Press. Karier, C. (1986).The individual, society, and education: a history of American educational ideas.Chicago: University of Illinois Press. Lipow, A. (1982).Authoritarian socialism in America: Edward Bellamy the nationalist movement. New York: University of California Press. Rodgers, D. (2008).Debugging the link between social theory and social insects.Louisiana: LSU Press. Spencer, H. (2010).The Study of Sociology.London: READ BOOKS.