Nature of Competition: Human Power Rental
Earlier we define the creation function (of
each) to be: q= f(lh∙hr,
kh∙hr, nh∙hr),
where lh is the labor force “hired” and ready to run, kh the physical capital equivalent, and nh the land equivalent. Following the general
uses of terms in everyday life, we might better name them, human power, mechanical power and
soil power, respectively. If unsure,
please be reminded of the electric power, horse power, engine power and the
like.
Incidentally a piece of land is also traded as a site (per period of
occupancy); while a person often lends the brain power on top of being a running power.
Again, a power never runs across space (L-1) but over time (T-1).
Before getting a job done, in general, a “force” has to move a distance (L),
while a “power” to run for a period of time (T). In the same vein, we nominally
say the purchasing power of money
while really meaning the purchasing force,
instead.
When normal, ordinary or commonsensical, the
power runs for performance per hour (U∙M∙T-1, if in economics),
while the force for utility per meter (U∙M∙L-1).
With
the above said, we begin with the human power. We herein use “the rental market
for human power” instead of “the
labor market” in textbooks. The unit of trade is the person-hour instead of the
laborer. Ouch, no labor, no worker or no person is to be traded with the sunshine
let in. “For simplicity,” in addition, there is no “term contract” on both sides, while the other
powers are fixed at the firm on the demand side.
The
accounting period would be something similar to the hiring cycle, from a day
for bread-earners to a lifetime in Japan circa 1980s when “life-time employment”
was the trend.
Supply of person-hours. There
are two large categories of costs: the one is the working pain including
strains, stresses, boredom, energy expense, withstanding nags, interpersonal conflicts
and the like; the other is concerns about the family affairs and “missing (–) the
leisure time” with friends. Apparently all those cost increase as working on hour
after hour after hour. Or, the marginal cost of person-hour keeps increasing.
Consequently, the supply curve of person-hour slopes upward; no bending
backward until we cross the River.
In
addition, at a higher compensation, some people from other occupations
including retirement and housekeeping may stand in the “job-seeking” line. This
will keep the supply curve somewhat flatter, or less “elastic” as sometimes
said.
Who
says “work and leisure” are in trade-off?
Yah, some wise economists “work” for “fun.” For instance, “teaching economics
is fun.” It would be a double bang, or “Bang Bang” as it were, if they get paid
as well. For most of us, to be candid, leisure is “fun of funs” and never comes
for free; at least, we in the meantime are “killing my invaluable time softly
with my leisure.” Among the rest of us, leisure comes is at the cost of or “keeps
company with” work. The two are friends, not foes.
Demand for person-hours. There
is the famous law of diminishing marginal returns. The demand curve for human power slopes downward. The law applies to the defined job at a particular workshop, to be
precise, of the firm in the given accounting period only.
The
law never holds true across workshops not to mention over periods. No
shop-owner would steadfastly stick to the same workshop across a few
consecutive periods not to mention “in the long run.” If any of us did, he
would certainly hit the wall of
ineffective demand, secular stagnation all the way to the Golden Rule of Robert
Solow. A lining in the cloud as always: The wall may geo-famously exist in
Stockholm.
The cross in the market. Like
in any other market, we can make a clap at the golden cross of the demand and
supply curves. By nature, it is the market average of wages to be found ex post and very specific to the period.
The cross never crosses over periods. Or, if the prices in the following
periods are equibrial, that’s totally random and way beyond scientific inquiries.
Equilibrium
is not for the market as organism. That’s either for a mechanism or an
ex-organism resting in peace.
Comments
Post a Comment