John Bates Clark

John Bates Clark was an American economist who lived from 1847-1938. He
played an important role in the development of marginal productivity, and had a
great influence on the development of economic thought in the United States.
Clark was educated at Amherst College and at the University of Heidelberg in
Germany. He taught at Carlton College in Northfield, Minnesota from 1875 to
1881. He then moved on to teach at Smith College, Amherst, Johns Hopkins and
Columbia from which he retired in 1923.
In formulating the Neoclassical theory of the firm, John Bates Clark
took over the classical categories of land, labor, and capital and simplified
them in two ways, this simplification was the theory of marginal productivity.
First, he assumed that all labor is homogenous, which meant that one labor hour
is a perfect substitute for any other labor hour, but when marginal productivity
was decreasing, the industry found it more profitable to replace labor with
machinery. Clark believed that to make a sound economy wages had to be equal to
the marginal productivity of labor. This was also beneficial to both the
industry and the labor.
Secondly, Clark ignored the distinction between land and capital,
grouping together both kinds of non-human inputs under the general term
"capital," which he then assumed that the broadened "capital" is homogenous.
John took this Neoclassical approach one step further than others in
applying it to the business firm and the maximization of profits. One of the
results was a theory of the distribution which demonstrated that market outcomes
were just.
Clark also believed that technological change would lead to an increase
in the standard of living which he felt was one of the chief goals of any
economic system. He felt that with this technological change, labor would be
more productive and lead to higher profits for industry. When the labor would
see that industry was making higher profits, they would demand its share of the
profits for their hard work. The labor\'s higher wages and the industries\'
higher profits would increase incomes and better the social living for everyone.
Among Clark\'s works are The Philosophy of Wealth (1886), The
Distribution of Wealth (1899), and Essentials of Economic Theory (1907). His
son, John Maurice Clark, also became a noted economist, and even co-wrote some
work with his father, but his work is remembered as being quite different from,
and in some ways even contradictory to, his father\'s.
Critics believe that John Bates Clark\'s ideas were somewhat incomplete
because they showed the ideal economy and not the real world of imperfect
markets and factors of production. Clark\'s ideas have aided in the explanation
of human economic behavior, and many economists today share his views on
marginal analysis and the increased standard of living.

Category: Business