Production (economics)

“ Every one of those Economic details can be considered intelligently, readily and accurately, through the medium of the three Basic Facts, into one or another of which must fall, not only that barrel of potatoes and all the details of its production, but also the entire stock of the store, and of all other stores, and every Economic agency back of them to the very beginning of each productive process through which they have passed. ”

“ And as of the details of that needle’s production, so of all Economic details, from least to greatest, from simplest to most complex, throughout the labyrinthine intricacies of the Productive Process in Economics. To study separately all the Economic constituents of even the simplest civilized habitation and their respective relations to it, Economically, one would need training in many different kinds of specialties, from forestry to decoration. ”

“ It is only as variations in the desirability of particular kinds and locations of Land play a part in Production that Wages as a whole are distinguished from total product. In those circumstances, however, the Wages category embraces the entire Product less Rent for superior Land. ”

“ In saying that the value of a commodity is determined by the quantity of labor worked up or crystalized in it, we mean the quantity of labor necessary for its production in a given state of society, under certain social average conditions of production, with a given social average intensity, and average skill of labor employed. ”

“ We may, therefore, consider the capital of a producer as measured by the means which he has of possessing himself of the different essentials of production: namely, labour, and the various articles which labour requires as materials, or of which it avails itself as aids. ”

“ In manufactures, accordingly, the causes tending to increase the productiveness of industry, preponderate greatly over the one cause which tends to diminish it: and the increase of production, called forth by the progress of society, takes place, not at an increasing, but at a continually diminishing proportional cost. ”

“ To any advance in the arts of industry or the comforts of life, a rate of production exceeding the rate of consumption, with consequent accumulation of resources, or in other words, the formation of capital, is indispensable. ”

“ But there is still a third kind of commodities to be considered: those which have, not one, but several costs of production: which can always be increased in quantity by labour and capital, but not by the same amount of labour and capital; of which so much may be produced at a given cost, but a further quantity not without a greater cost. ”

“ We may confine our attention to the system of distribution which is the most complex, and which virtually includes all others—that in which the produce of manufactures is shared between two classes, labourers and capitalists, and the produce of agriculture among three, labourers, capitalists, and landlords.
The characteristic features of what is commonly meant by industrial progress, resolve themselves mainly into three, increase of capital, increase of population, and improvements in production ”

“ Production does not merely mean the making of things, but includes the increase of value gained by transporting or exchanging things. There is a produce of wealth in a purely commercial community, as there is in a purely agricultural or manufacturing community; and in the one case as in the others, some part of this produce will go to capital, some part to labour and some part, if land has any value, to the owners of land. ”

“ The materials of manufacture being all drawn from the land, and many of them from agriculture, which supplies in particular the entire material of clothing; the general law of production from the land, the law of diminishing return, must in the last resort be applicable to manufacturing as well as to agricultural history. As population increases, and the power of the land to yield increased produce is strained harder and harder, any additional supply of material, as well as of food, must be obtained by a more than proportionally increasing expenditure of labour. ”

“ The three requisites of production, as has been so often repeated, are labour, capital, and land: understanding by capital, the means and appliances which are the accumulated results of previous labour, and by land, the materials and instruments supplied by nature, whether contained in the interior of the earth, or constituting its surface. ”

“ We have surveyed the field of economical facts, and have examined how they stand related to one another as causes and effects; what circumstances determine the amount of production, of employment for labour, of capital and population; what laws regulate rent, profits, and wages; under what conditions and in what proportions commodities are interchanged between individuals and between countries. We have thus obtained a collective view of the economical phenomena of society, considered as existing simultaneously. ”

“ If we suppose the occupations of the society extended, that some provide canoes and tackle necessary for fishing, others the seed and rude machinery first used in agriculture, still the same principle would hold true, that the exchangeable value of the commodities produced would be in proportion to the labour bestowed on their production ”

“ If, for instance, the general efficiency of all labour were increased, so that all things without exception could be produced in the same quantity as before with a smaller amount of labour, no trace of this general diminution of cost of production would show itself in the values of commodities. ”

“ The exchangeable value of all commodities, whether they be manufactured, or the produce of the mines, or the produce of land, is always regulated, not by the less quantity of labour that will suffice for their production under circumstances highly favourable, and exclusively enjoyed by those who have peculiar facilities of production ”

“ Production is not a fixed but an increasing thing. When not kept back by bad institutions, or a low state of the arts of life, the produce of industry has usually tended to increase; stimulated not only by the desire of the producers to augment their means of consumption, but by the increasing number of the consumers.
We have seen that the essential requisites of production are three—labor, capital, and natural agents; the term capital including all external and physical requisites which are products of labor, the term natural agents all those which are not. ”

“ In making labour the foundation of the value of commodities, and the comparative quantity of labour which is necessary to their production, the rule which determines the respective quantities of goods which shall be given in exchange for each other, we must not be supposed to deny the accidental and temporary deviations of the actual or market price of commodities from this, their primary and natural price. ”

“ There are four fundamental facts connected with the subject, viz., the points of production, places of consumption, methods of operation and means of communication. Production is upon the farm, consumption in the cities and towns, methods, to be determined by experience, and the mode and means of conveyance, a government function.
Regarding the first of these divisions, certain facts are apparent. The balance of trade, eight to one is against the farmer at the point of production; he receives very much more than he sends. ”

“ If every commodity on an average remained unsold for a length of time equal to that required for its production, it is obvious that, at any one time, no more than half the productive capital of the country would be really performing the functions of capital. ”

“ Conditions of an increased production of wealth.WE have in the two previous chapters discussed some of the causes which determine the productiveness of land, labour, and capital; we have shown, for instance, how the productiveness of land may be increased by good systems of farming, and how the efficiency of labour and capital may be promoted by machinery and by a proper combination of labour. ”

“ The labourer may obtain greater comforts; wages in kind real wages may rise. Or the progress of population may force down cultivation to inferior soils, and more costly processes; thus raising the cost of production, the value, and the price, of the chief articles of the labourer's consumption. On either of these suppositions, the rate of profit will fall. ”

“ The internal actions constituting social functions, exemplify the general principle no less clearly. Supply and demand are continually being adjusted throughout all industrial processes; and this equilibration is interpretable in the same way as preceding ones. The production and distribution of a commodity, is the expression of a certain aggregate of forces causing special kinds and amounts of motion. The price of this commodity, is the measure of a certain other aggregate of forces expended by the labourer who purchases it, in other kinds and amounts of motion. ”

“ Seeing that production is limited by consumption, what rule must be followed in distributing the results of production to be consumed in order to develop consumption to the highest possible point, and thereby in turn to create the greatest possible demand for production. ”

“ For greater clearness, let us omit, for the present, the consideration of tools, materials, &c, and conceive production as the result solely of labour. In a certain country, let us suppose, the wages of each labourer are one quarter of wheat per year, and 100 men can produce, in one year, 120 quarters. Here the price paid for labour is to the produce of that labour as 100 to 120, and profits are 20 per cent. Suppose now that, in another country, wages are just double what they are in the country before supposed ”

“ A previous application of labour to produce the capital required for consumption during the work, is no less essential than the application of labour to the work itself. Of capital, again, one, and by far the largest, portion, conduces to production only by sustaining in existence the labour which produces: the remainder, namely the instruments and materials, contribute to it directly, in the same manner with natural agents, and the materials supplied by nature.
We now advance to the second great question in political economy; on what the degree of productiveness of these agents depends. ”

“ But I say again that too much importance is attached to money; facility of production is the great and interesting point. How does that operate on the interests of mankind? You ask what is to become of the money before produced in a country which should grow its own corn with 10 per cent. profit, if it had its facility of producing corn doubled, and profit, were to rise to 100 per cent.; you ask further whether she would not continue to produce money as well as other commodities as the profits of producing it would be also 100 per cent. ”

“ We may say, then, without a greater stretch of language than under the necessary explanation is permissible, that the requisites of production are Labour, Capital, and Land. The increase of production, therefore, depends on the properties of these elements. ”

“ Seeing distinctly that labor was the basis of all production (not merely in agriculture) , he shows (Books I and II) that the wealth of a country depends on the skill with which its labor is applied, and upon the proportion of productive to unproductive laborers. The gains from division of labor are explained, and money appears as a necessary instrument after society has reached such a division. He is then led to discuss prices (market price) and value; and, since from the price a distribution takes place among the factors of production, he is brought to wages, profit, and rent. ”

“ The second step, the process of production, is complete so soon as the means of production have been converted into commodities whose value exceeds that of their component parts, and, therefore, contains the capital originally advanced, plus a surplus-value. ”

“ Those who think differently, must, on the other hand, suppose that the luxuries required by B would be produced, not instead of, but in addition to, the food previously supplied to A's labourers, and that the aggregate produce of the country would be increased in amount. But when it is asked, how this double production would be effected—how the farmer, whose capital and labour were already fully employed, would be enabled to supply the new wants of B, without producing less of other things ”

“ The first important induction to be made is that where cost of production [pg 269] is low, wages and profits are high. The high productiveness of extractive industries in the United States is the reason why wages and profits are higher here than in older countries. ”

“ It will be seen that the quantity of capital which will, or even which can, be accumulated in any country, and the amount of gross produce which will, or even which can, be raised, bear a proportion to the state of the arts of production there existing; and that every improvement, even if for the time it diminish the circulating capital and the gross produce, ultimately makes room for a larger amount of both than could possibly have existed otherwise. ”

“ I say that with every facility or difficulty of production, of the quantity of necessaries, that is to be divided between profits and wages, different proportions will be given to each, and that money will accurately show those proportions. You appear to me [Pg 124] to think that profits do not depend on the division of the produce, and that money wages may as often rise with facility of production as fall. ”