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I need an economics theory

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MaineWriter:
that says people need to get paid for the work they do. Something that can be summed up in a few words, like "supply and demand" but I know that one doesn't have to do with wages. Anyone?

Surf:

--- Quote from: lnicoll on March 31, 2006, 06:39:47 pm ---that says people need to get paid for the work they do. Something that can be summed up in a few words, like "supply and demand" but I know that one doesn't have to do with wages. Anyone?

--- End quote ---

Taylor developed his theory of "scientific management" as he worked his way up from a labourer to a works manager in a US steelworks.

From his observations, Taylor made three key assumptions about human behaviour at work:

(1) Man is a rational economic animal concerned with maximising his economic gain;

(2) People respond as individuals, not as groups

(3) People can be treated in a standardised fashion, like machines

Taylor had a simple view about what motivated people at work - money. He felt that workers should get a fair day's pay for a fair day's work, and that pay should be linked to the amount produced (e.g. piece-rates). Workers who did not deliver a fair day's work would be paid less (or nothing). Workers who did more than a fair day's work (e.g. exceeded the target) would be paid more.

The implications of Taylor's theory for managing behaviour at work were:

- The main form of motivation is high wages, linked to output

- A manager's job is to tell employees what to do

- A worker's job is to do what they are told and get paid accordingly

Weaknesses in Taylor's Approach

The most obvious weakness in Taylor's approach is that it ignores the many differences between people. There is no guarantee that a "best way" will suit everyone.

Secondly, whilst money is an important motivation at work for many people, it isn't for everyone. Taylor overlooked the fact that people work for reasons other than financial reward.

Surf:
Turning to economic eearnings, what does "necessary and sufficient to employ a factor" mean?  For the Classical Ricardian school, the economic earnings of a factor are merely the payments necessary to maintain the factor "intact".   Thus, for laborers, economic earnings are wages required to keep the laborer alive and well, i.e. "subsistence" wages. (for capital, the story is more complicated; see our discussion of Classical capital theory).

Although some Neoclassicals have agreed to this Classical definition, most have taken on the Austrian definition of economic earnings in terms of opportunity costs. If a producer wishes to secure the employment of a particular factor, it has to pay that factor at least what it might receive in alternative employments. This is the opportunity cost of the factor. So, if a factor is paid $7 an hour by a particular producer and could find alternative employment only for $5 an hour, then the factor's opportunity cost (and thus its economic earnings) are $5 and its surplus earnings are $2.

MaineWriter:
Surf! I want a few words, like supply and demand! LOL You are giving me way too much info here!

ifyoucantfixit:


Maybe too trite...In order to earn..you must toil.
                                                    janice

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