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improving land. Therefore, under the competitive system, the productivity of labor can never reach the point of greatest productivity.
The second criticism is of the concept, efficiency. Though wages include the whole product of labor, yet they do not neces- sarily measure efficiency because product is not a measure of efficiency. The product is simply what is produced and we can- not determine its relation to efficiency or even to highest productivity until we consider it in connection with the degree to which capital has been invested in the laborer. How far, by investment of capital in wise feeding and lodging, has the laborer been raised toward the point of maximum energy and power of attention ? How far, by investment of capital in industrial train- ing, has he been raised toward the point of maximum skill ?"^ Even if an industry were monopolized so that workmen could find only one employer for their skill and the employer were, therefore, reasonably sure of their remaining with him, still he would always be choosing the alternative of employing more laborers or investing capital in those already employed. That is, even if laborers were at their highest productivity, they would not necessarily have reached their highest efficiency.^ ^ This
" Of the relative importance of energy, power of attention, or sagacity and skill. Professor Marshall says : "What makes the workers of one town or country more efficient than those of another is chiefly a superiority in general sagacity and energy which is not specialized to any one trade." — Principles of Economics, p. 286.
" Professor Henry L. Moore, starting with Marshall's vague idea of effi- ciency {Principles of Economics, pp. 121, 272, 286, 630, 631), brilliantly works out a statistical demonstration of the differential law of wages which involves the distinction here made between efficiency and productivity ("The Efficiency Theory of Wages," Economic Journal, Vol. XV, p. $71 ; "The Differential Law of Wages," Journal of the Royal Statistical Society, December, 1907). Pro- fessor Moore deals not with mental elements but with wage-rates. He starts, however, with the hypothesis that the "general sagacity and energy among laborers, which is itself a balance of efficiency determined by physical, mental, and moral qualities, follows the Gaussian Law." This hypothesis rests on the results of a study made by Pearson, based on measurements and observations of upward of 1,000 Cambridge graduates and over 5,000 school children, prov- ing that the distribution of mental qualities follows the Gaussian Cur\'e (Karl Pearson, Biometrika, Vol. V, p. 105). The point is that Professor Moore, in his correlation, treats productivity and efficiency as distinct concepts, the former
