Production - Economics and Ecology: United for a Sustainable World - page 75

• This means that capital (the machine) is becoming the less valuable
incremental input, and human labor is the more valuable input.
• Therefore, labor should be paid more and capital less.
• Although profits rise temporarily after automation, businesses per-
ceive the opposite—that capital is the more valuable resource.
• They, therefore, continue to automate and further replace human
labor with capital, and seek to pay workers even less.
• This leads to a saturation of the economy with the less productive
input (capital) and to unemployment and underpayment of the more
productive input (human labor).
This scenario leads to—and depicts—the essence of the modern tragedy
global-corporate-capitalism has become. It is not a basic failing of economic
theory, but rather of business practices employed in violation of that theory.
We temporarily leave the scenario at this point, but note that the unfortunate
ironies, which it puts on display, set the stage for the final two chapters of
this section: Chapter 7 on distribution and Chapter 8 on the macroeconomy.
We will then revisit the Capitalist Scenario in deriving our final conclusions
about the current state of economic theory and practice. First, however, we
must take a side trip through the knotty thicket of externalities and eco-
nomic theory.
Endnotes
1. John Gowdy (ed.). Limited Wants, Unlimited Means . Island Press, Washington, DC.
1988.
2. Brother David Steindl-Rast. Gratefulness and the Heart of Prayer: An Approach to
Life in Fullness . Paulist Press, Ransey, NJ. 1984.
3. Henry David Thoreau. http://quotationsbook.com/quote/42321/ (accessed
on November 23, 2010).
4. Our discussion of the Shoshonean People is based on: William D. Clark. Death
Valley, the Story behind the Scenery . KC Publications, Las Vegas, NV. 1981.
5. Victor LeBeau. Price competition in 1955. Journal of Retailing Spring (1955):5-10,
24-44.
6. Comparative advantage. http://en.wikipedia.org/wiki/Comparative_advan-
tage (accessed on November 25, 2010).