Classic political economists believed that the value attached

Q1.

Classic political economists believed that the value attached to a commodity is directly related the labour that was put up in production of the same commodity. This is later expounded that labour in its own unchanging value is the real and ultimate measure for value in the current world and this value may be showed by, the amount of money paid for the commodity which is pointed out as the nominal value of the same (Milios, Dimoulis, & Economakis, 2018). The real value of the labour however maybe met by difficulty in valuing the actual effort that went into the production process since some of the labour is more skilled and experienced than others. In spite of this, the Economist argue that the difference brought out here is later balanced within the “haggling and bargaining” nature of the market which tends to correct the true value of the labour (Kurz, 2010). Haggling and Bargaining nature of the market as discussed above comes out in terms of many other factors related to the production process, and which are overlooked by Adam Smith in his definition. These factors attributed to production include the land rates or the rent value to the landlords, the depreciation value on all capital good used in the process, The cost of supplies made during production, The cost of raw materials and Economical factors such as the rate of inflation during the period of production. Adam Smith, David Ricardo and Karl Marx related the labour time value in the production process to the final value of the exchange value articulated to the final product because they made their reference to the simplest form of production. These Economists failed to give a deeper evaluation to a large scale production process in which many production factors come into play (Milios, Dimoulis, & Economakis, 2018). These factors are in direct or indirect association to the production process and affect the cost of production subsequently. Socially necessary labour is the current labour effort required to produce a given output whereas socially average time is the given labour time necessary to give a given output. These are fields used to define the labour used in the production process. They involve the magnitude and time value of the labour used.

Q2.

Marx and Schumpeter showed that what really set of the difference and made firms stand out in promotion of capitalism is the firm’s ability to have access to better technology, better suppliers and better firm organisational plans. This ability, as pointed out by Marx and Schumpeter, strikes at the margins of the firm foundation directly and impacts the very lives of these firms (Phillimore, 2001). Marx explained that the idea of competition as an “external coercive law,” which imposes capital logic over the individual and the overall society, (Giulio, 2017). It can be expressed as the basic improvement of the production process to cut cost and increase profits on sales. This description points out that competition within firms in the capitalist Economy, is affected by a number of factors and the same factors are in direct affiliation with the single individuals and the general community. These parties are the main reason for the creation of reproduction classes within the economy and emergence of some resultant economic factors. Marx also suggests that the competition tendency of the firms may accrue to the natural nature of human beings to compete against each other (Phillimore, 2001). From this argument we deduce that the different managements in different firms within the economy are in constant assessment of the other and in formulation of strategies meant to gain an upper hand advantage to the other. Schumpeter on the other hand, argues with the theory model of “Creative Destruction”. He explains this as the tendency of the new businesses to replace the old one in the economic setting. This theory is held by the dynamic nature of the general economy. Dynamism of the economy leads to the continuous change of the rules applied in the business environment. Schumpeter’s capital argument was meant to portray the way the economy is structured, and the characteristics of the structure which resulted to a self-consumption nature of the economy leading to a continuous replacement of older business. The older businesses were forced to exit the economy due to the difficulty to cope with the strengths brought by the new businesses that have entered the economy carrying with-them new methods that are way more efficient.

Q3.

Ernest Mandel argues that the rate of profit in the monopoly sector is limited by and dependent on the production of surplus value in the competitive sector (Mandel, 1967). He explained the dynamics of crisis and uneven development in the concept of surplus profit in Marxist economic model. According to Mandel, inequalities, crises, wars, mass poverty, majority oppression, and perversion through fascism are not external disturbances, accidents, nor temporary interruptions but logical and natural expressions of the free market (Freeman, 1996). In his observation, Mandel suggested that capitalism is relatively unstable and dependent on surplus value in the free market economy. He observed this based on the movement of capital, labour, and the limits to equalization of different profit rates. The surplus value in question is based on the original Marx description of the surplus production in the economy expounding on the topic with some increments where he quantifies the ‘surplus’ as the general maximization of the labour output while maintaining the cost of labour maintenance and that of labour compensation constant. To ensure surplus production, Mandel shows how capitalist are involved in planned methods of prolonged working hours and wage cuts to ensure that the surplus is reached and realised (Mandel, 1967). Monopoly sector ensures there is always surplus production which maintains capital accumulation. Accumulating capital is a strategy carried out by the monopoly institution to enhance substantial growth that makes the institutions immune to failure from competitive forces.

Q4.

Guy Standing described the precariat as a neologism identification of an emerging social class consisting of people suffering directly from precarity. This social class of people are characterised with the lack of security in their material ownership and psychological well-being on the other hand, the “reserve army of labour” refers to a group of people in the society that are unemployed or their position of employment is lowly rated to the skills they carry (Grover & Piggott, 2005). A precariat is an individual or group of people in the job market whom employment mode or type is in anyway structured to be insecure (Standing, 2013). They include temporal employments and freelancers. It may also refer to the mismatch in occupational places compared to the skills possessed where the current occupation is in lower rating compared to the skills possessed. Insecurity in employment is the nature of an occupation to be seen as non-permanent and the occupants of this position are rendered to be jobless sooner or later in the future. These groups of people are in consistent worry of their employment being terminated or coming to the end date. This instils in them the tendency to prospect on the next employment opportunities and how they can access them leading to anxiety and stressful burdens on them. Insecure employment and underemployment status have greatly affected the general wellbeing of the people involved. This is both mentally and health wise. It is seen that with underemployment status the people involved happen to showcase a lot of dissatisfaction (Standing, 2013). Lack of contentment arises when one is working in a field not related to their profession or lowly rated to the set of skills at their disposal. Underemployment results such as low-income rates are a major cause of increased stress levels within the working groups (Standing, 2013). This is also evident with the class of people under the precariat jobs section. These two groups represent a mentally deprived group associated with day to day worry of termination and future expectations that are mostly unpredictable. The major reason for the introduction of insecure and under employment policies in the current corporates is to have flexibility in the labour market. Flexibility in the labour market ensures that there is always labour mobility for the corporate institutions readily available when required. It makes the market of labour work in service of the corporates preventing any struggle in labour acquiring and labour price setting.

Q6.

Labour shedding in one part of the economy means there are increased numbers of unemployed personnel in the economy. It is a situation experienced when a sector is undergoing internal difficulties that renders it unable to compensate the labour as before. When this happens the sector tends to cut off some of the employees leaving alone a number that can be effectively compensated by the sector. Labour shedding results to labour dumping in the labour market. When labour dumping occurs, there is a general increase in the number of unemployed people in the economy reducing the labour cost. Cost of labour at this point is affected negatively due to the increased number of people readily available for employment (Boeri and Keese, 1992). An increased supply of labour in the economy results to less choosy nature of the unemployed group to the jobs available. This means that people tend to refrain from being specific on the skills they possess with regard to job securing which results to people working in fields they are not necessarily skilled in for even lower wages. Therefore, when the is labour shedding in one part of the economy, the other parts gain the advantage of low cost of labour that adds up to increased profit levels in these economy parts. Mechanization in work places is a great way for lowering production cost with other production benefits (Kongolo, 2010). Adopting mechanized systems in businesses changes the general system of the business in question which results to lowering the number of employees needed in the business. The mechanized systems become the replacement for the employees working in the stations mechanized hence the firms cut off the employees replaced and with that firms cuts on the wages in the event of production mechanization. When the levels of unemployment rise in the economy it results to increased labour supply which does not match the demand of labour in place. A higher labour supply with regard to the labour demand results to lower prices on the labour value available and this is an advantage to the labour-intensive firms. These firms are able to access adequate labour at cheaper prices.

Q7.

Productivity levels in firms or organizations can be positively influenced by application of appropriate organizational structures in the institutions. The types of organizational structures adopted in a business can be vital to influencing the motivation amongst the colleagues. A well stipulated and simple-to-understand system should be put in place, which clearly shows the flow of activities within the institutions. Organizational structures adopted, defines the ability of the colleagues to be involved in effective and productive teamwork activities within the organization. It also supports effective supervision and other leadership roles supporting a well-defined workflow throughout the working period. Proper leadership is accrued to the set of skills possessed by the personnel put in the higher positions in the firms and organisations. For higher productivity the leadership in these areas should possess a morale oriented and captivating skills with which to encourage and motivate the entire workforce for maximization of their output (Soltanisehat, Alizadeh, & Mehregan, 2019). The motivating factor in leadership should also support teamwork within the workforce for a unified goal internally. Socially, leaders should be great team workers and support team working within their group too. Team working is a great tool to ensure the goals of the organisation are met. Synchronization of the entire team makes the focus remain clear to every employee, preventing deviation while promoting hardworking and determination. Organizational skills are also very critical to the success of the organization. Some of the necessary organizational skills include proper work delegation, time management skills, proper and effective communication skills and critical thinking with analytical organisation and formulation of ideas. Organisations can promote social attributes of the working team through involvement in team building functions such as retreats to help colleagues gain a good understanding of each other. These functions also serve the necessary function of helping the employees discover and reveal unknown skills and talents that may be beneficial to the entire organisation. Maintaining a healthy social interaction between employees promotes the ease to work together. Working together within colleagues maintains a smooth and productive workflow which is a great aspect to enable the organisation realise its vision and meet the goals set.

Q8.

Public goods are products or services that are available for use by all people in living and dependent to the products. These products possess the characteristics of non-rivalry and non-excludable. The non-rivalry nature of the public goods means that the goods are available in the exact working quantity in that the constant use by an individual does not reduce the product’s available quantity for the next user. The products are availed in their exact working quantity which is not subject to change upon usage by one or several individuals. Non-excludability on the other hand is the feature of the public good that prevents bias usage within individuals. All the users to this product are all equally entitled to the product usage. Therefore, no one is expected to be hindered to have access to this product. According to (Bramoullé & Kranton, 2007), the users of these products cannot be exempted to use them even when they are not able to compensate the same and the use by one person does not affect the use by another. Landmarks and facilitating infrastructure are products availed to the society by the government authorities. These products serve specific purposes in facilitating particular service within the whole population within their range of usage. The service offered by these products is highly expensive in that it makes it impossible for each individual to acquire the service themselves. With these characteristics, the products are clearly meant to be used by the entire population to become cost effective. The ownership and maintenance responsibility of these products is accrued to the government. The landmarks innovations and their facilitating infrastructure are a meant for public service in sustaining their specific service delivery to the population. They are very expensive for individual provision and maintenance, with that, the government pools the tax based capital as individual investment of every tax payer in acquiring these products. Due to the nature of every tax payer contribution, the products are publically owned making them usable by everyone without restriction from anyone. Any damage done on these products by individuals is a crime and can be charged in court making these products public goods.

References

Giulio, P., Competition: a Marxist view, Cambridge Journal of Economics, Volume 41, Issue 6, November 2017, Pages 1559–1585, https://doi.org/10.1093/cje/bex006Freeman, A. (1996). Ernest Mandel’s Contribution to Economic Dynamics. https://mpra.ub.uni-muenchen.de/64974/1/MPRA_paper_64974.pdf

Mandel, E. (1967). The labor theory of value and Monopoly Capitalism. International Socialist Review, 28(4), 29-42.

Kurz, H. D. (2010). Technical progress, capital accumulation and income distribution in classical economics: Adam Smith, David Ricardo and Karl Marx. The European journal of the history of economic thought, 17(5), 1183-1222.

Milios, J., Dimoulis, D., & Economakis, G. (2018). Karl Marx and the classics: An essay on value, crises and the capitalist mode of production. Routledge.

Phillimore, J. (2001). Schumpeter, Schumacher and the greening of technology. Technology Analysis & Strategic Management, 13(1), 23-37.

Standing, G. (2013). Defining the precariat: A class in the making. Eurozine. https://eprints.soas.ac.uk/18276/1/Defining%20the%20precariat%20Eurozine%20Apr%202013.pdfBoeri, T., & Keese, M. (1992). From labour shortage to labour shedding: labour markets in Central and Eastern Europe. Communist Economies and Economic Transformation, 4(3), 373-394.

Kongolo, M. (2010). Job creation versus job shedding and the role of SMEs in economic development. African journal of business management, 4(11), 2288-2295.

Bramoullé, Y., & Kranton, R. (2007). Public goods in networks. Journal of Economic theory, 135(1), 478-494.