(855) 4-ESSAYS

Type a new keyword(s) and press Enter to search

Standard of Living in the History of Economic Thought

            In the book, "History of Economic Thought," Harry Landreth and David Colander argue the most important factors when considering a country's wealth. They argue to Smith, that increasing productivity of labor, specifically through specialization and division of labor, following by innovation, and capital accumulation, are the most important factors. The more we produce, the wealthier the nation is; ensuring a rise in the standard of living. If we increase the productivity, there is more output, the unit cost of production decreases, and prices decrease. Therefore, due to dropping prices, citizens are able and wiling to purchase more products. This assumes that their income remains the same, making the material standard of living increase. Some skeptics might argue that with high productivity, producers do not need many workers, increasing unemployment. Nevertheless, due to lower prices, demand for those goods would inevitably rise, potentially leading to a rise in quantity demanded, forcing producers to produce more. In short, productivity shares a positive relationship with quality of life, and those factors that reinforce high productivity, will guarantee a good life standard, at least in the material aspect. .
             Specialization does increase the productivity if human resource is fully used. As mentioned in, "New Ideas from Dead Economists," by Todd Buchholz, Smith figures out this idea by observing a pin factory. The factory use to produce only 20 pins, to 48,000 pins a day due to division of labor. Workers are allowed to focus on only one specific task, for example, only manufacturing, or only retailing. In his work, Buchholz also offers 3 reasons. First, the mistakes are reduced because of the worker's handiness. Second, time is saved since the worker does not have to change tasks. Lastly, incentives for a new method or machine is generated during the process. By dividing process into single tasks, producers can produce a large amount of goods, increasing the productivity, and contribute to a higher standard of living.

Essays Related to Standard of Living in the History of Economic Thought

Got a writing question? Ask our professional writer!
Submit My Question