OLD THEORIES OF WAGES

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OLD THEORIES OF WAGES  Subsistence Theory’ Several theories have been put forward to explain the general level of wages prevalent in a country. Take first the Subsistence Theory. This theory originated with the Hippocratic School of the French economists and was developed by Adam Smith and the later economists of the classical school. TIle German economist Assailable called it the Iron […]

Why a Separate Theory of Wages?

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Why a Separate Theory of Wages? It is demand and supply relationship or scarcity in relation to demand, which explains all values whether values of commodities or values of services of the factors of production. Why should we then have a separate theory of wages? The ordinary theory of prices, i.e., demand and supply theory, is not fully applicable […]

Is Labour A Commodity?

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Is Labour A Commodity?  We have said that wage is the price of labour as if labour is a commodity. There is no doubt that labour has peculiarities of its own which differentiate it from other commodities (see next page) and labour protests against its being described as a commodity, yet it is true that from the aspect with which the economist is concerned, labour is […]

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Extra Work Without Extra Payment If an employee is required to do extra work without any compensation. his real wages arc less by that extent. Peon, arc paid fur doing their duty during working hours, but quite often they are required to work late. For such extra work they are paid nothing. This means that their real earnings are reduced to […]

Nominal Wages vs. Real Wages

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Nominal Wages vs. Real Wages  According to the classical wage theory, labour supply was considered a function of real wages, But according to Keynes, the workers acted irrationally and generally bargained for money wages and they sharply reacted against any cut in money wages. That is, a rise in prices does not offend labour so much as a cut in the […]

IMPACT OF TECHNOLOGICAL PROGRESS ON RELATIVE FACTOR SHARES

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IMPACT OF TECHNOLOGICAL PROGRESS ON RELATIVE FACTOR SHARES Recent technical advance in agriculture. industry, trade and transport has raised the question or its effect on the relative remuneration of the factors or proc.luction, in particular of labour and capital. Technological progress implies the introduction of innovations i.e. new processes, new proc.lucts or more Economical methoc.ls of production.  The analysis of relative factor shares requires […]

Relation between Production, Value and Distribution Theories

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Relation between Production, Value and Distribution Theories Relation between Production, Value and Distribution Theories Relation Between value and Distribution Theories Value means the price of a product and distribution which makes it possible to build a theory ofdis!ribution based on the concept of marginal productivity.It was Prof. I licks who introduced the concept of elasticity uf substitution betweati’actors and pointed out its importance for detcrmiRing the […]

Product Exhaustion Problem or Adding Up Problem

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Product Exhaustion Problem or Adding Up Problem The marginal productivity theory of distribution states that each factor of production is paid remuneration equal to its marginal product. It has been urged out that if that were so, the total product would be just exhausted without leaving any surplus or deficit. This problem is called the adding-up problem. The following figures numbering 31.7 […]

Remedies

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Remedies There are two broad remedies : (a) Via Administered Prices. Prices may be fixed or manipulated in favour of the proper sections of society. (b) Via resources Redistribution. Labour resources can be redistributed by increasing vertical mobility, by providing greater equality in educational and training opportunities. greater economic opportunities by reducing inequalities of capital ownership and breaking down barriers to entry into […]