Economics For Everyone Jim Stanford Wants Chapter 6 Summary
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Chapter 6: Working With Tools
In Chapter 6 of Economics for Everyone, Jim Stanford suggests the idea that profit reflects the productivity of capital is a false belief, yet it is one that generally underlies economic policy making in capitalist, free-market economies. Stanford attempts to illustrate this by detailing the role of tools in supporting productivity, by comparing tools to technology, or the technique of production (i.e. process) and then by making the link to capital and profits. Stanford begins by identifying the importance of tools in our work as it increases efficiency and provides better quantity and quality of goods and services. He outlines that while tools are a precursor to enhanced efficiency and productivity, they in and of themselves, are not productive, nor do they enhance the standard of living. Their value exists in how tools support the work conducted by workers; in making the workers more productive in creating the goods and services that are consumed by individuals. According to economists, those goods and services consumed are Final…show more content… Stanford defines physical capital as “any tangible product used to produce something else” and includes such things as warehouses, computers, corporate buildings/headquarters, pipelines, electrical towers, machinery, equipment etc. He argues that the accumulation of physical capital coupled with the development of new technologies (processes) have contributed immensely to the economic progress over the last two hundred years. However, similarly to tools, capital is not inherently productive. Yet, under capitalism, profit, which typically should result from enhanced productivity, is paid to people who own the capital (i.e. property rights), and not necessarily to those who use the capital effectively and efficiently for enhanced