This book, published in 1957, gives simple, clear, and well reasoned explanations of the sources of economic value. Comments and quotes regarding areas of particular interest to me are as follow:
DEFINITIONS
* Higher wages come from increased output per hour of work. w19
* … wage is a price, too. It is the price of doing work … w99
TOOLS TO HARNESS ENERGY w28
* The growth in energy output (man+animal+mineral & water power) per man-hour of work for the last century … rose from about 5 man hours to about 33 man hours in 1950. w34.
* One horsepower is roughly equal to the energy of ten able-bodied men working strenuously — i.e., each man working an equivalent of lifting 55 pounds one foot a second, continuously. Or to illustrate its power another way, only one 75-watt light bulb in use represents as much energy as that of one man turning the crank on the generator. w33
* This remarkable harnessing of energy, along with the idea of wage payments among specialists under relative freedom of exchange, accounts in great measure for the rise in wages in the United States over the decades (1850-1950). w34.
* Tools make the difference. Of our total output, perhaps as much as 95 per cent is because of the use of tools. And this is at a cost of only about 15 per cent of total output, as pay to those who have saved to create these tools. That, and not Marx’s concept, is the miracle that creates a surplus of value. w27
DOING WHAT YOU CAN DO BEST w35
* … endless human variation … creates the chance for endless cooperation, to the mutual advantage of participants. This opportunity can exist only as differences are understood and tolerated — allowed to blossom into the cooperation with which we are here concerned. w36
* The process, rather than to demand more mental or physical effort in the form of work, only increases the extent of concentration of one’s effort on what he can do best. He spends less time on what he cannot do well, obtaining it insteady by means of trade. w39.
THE MIRACLE OF EXCHANGE
* The miracle of exchange. This process of exchanging the fruits of one’s efforts performs what may seem like a miracle. Each is allowed to use more fully his peculiar abilities in production. The appearance of a miracle is due to the fact that the whole seems greater than the sum of its parts. w37
* This is how the seeming miracle works. It is really rooted in exchange rather than in production. It is a process that allows rearrangement of what is produced from the producer, who wants it little or not at all, to someone who wants it much more as a consumer. So there arises a cooperating circle of such exchanges. w38
* The capacity to increase one’s specialized production beyond one’s own needs includes all the aids to specialized production discussed in previous chapters — savings, the harnessing of power, and the like. these become aids to the use of a person’s rare ability, putting increased leverage on the unusual ability of a person like an inventor or a machine technician. w40
* So by trading rather than working harder, both sides of the exchange greatly increase the satisfaction of their wants. w43
MONEY AS LUBRICANT
* Money serves as a lubricant in exchange. … Serving in a sense like a lubricant in a motor, money facilitates the movement of other things in exchange without itself being consumed or even wanted for consumption. w44.
* For anything to serve as money, it must enjoy a multiple acceptance; otherwise it cannot perform the task of money. and the wider its acceptance, the better it will serve as a lubricant for trade. w45.
* Money serves as an IOU for a barter. It allows a time shift between the bartering of two products thus serving as a store of value which can be traded for a wide variety of products and services.
* By using money, the two persons don’t need to find each other directly. … It is a device that reduces all alternative offerings of employment to one common denominator of expression — the money wages of the various job offerings. comparison is then much easier than if the pay offer were in one case a certain number of bushels of wheat, in another some shoes, and the like.
LEISURE AS WAGES
* So it is not really inactivity we want, in our yearning for more leisure. It is, instead, our desire to be active at something other than our regular activity. … to do something else for a change. … A point is finally reached where more work and more things become less appealing than more leisure. … since leisure is — in a sense — a form of wage. w88
* What most persons do with their leisure costs them money. Yet they probably are paying for the privilege of doing something that someone else gets paid for doing regularly for his living.
PRICING
* The function of price is to discourage production of unwanted items and to encourage production of what is wanted. w96
* … trading will be greatest at the equality point, a free price. Either above or below that point trading is lessened, either because things are not wanted at a higher price or because they will not be produced and made available at a lower price. w99
* The trouble is, however, that jobs are lost three times as fast as wages are raised. this being true, the highest income is to be found at full employment. Per studies by Douglas and Pigou the elasticity of demand for labor is -3.0, or a little more. w108
OTHER SUBJECTS
F.A. Harper also does a fine job of explaining the economic effect of such subjects as unions, minimum wage laws, money, government services, etc.
References:
Why Wages Rise, F.A. Harper
See similar quotes in post on The Wealth of Nations
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