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University Degree: Economic Systems
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Examine the difference between the Lewis and Todaro models of economic development. Discuss the view that neither model adequately explains the process of development in contemporary less developed countries.
So in reality there is a surplus of labour. To make this point more mathematically you can say that the marginal product of labour is equal to zero, or if it is equal to anything then it is negligible. Wage is equal to Average product in this case so in the farm scenario above each family member gets 15 products. And so therefore wage is higher than marginal product of labour. If nothing happens to this economy then this will repeat year after year. Something has to happen for this economy to become a modern industrial economy.
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Aim is to derive optimal wage rate such that elasticity of effort w.r.t. wage is = 1. A 1% increase in wage results in 1% increase in effort. This wage may be above mkt clearing wage thus involuntary unemployment may be generated. The level of unemployment is dependant on AD. Wages will not deviate from the optimal Solow wage regardless of economic activity. The derived wage minimises the cost per unit of efficiency. Shirking (Shapiro & Stiglitz 1984) condition recognises that workers may work or shirk (not work) It may not be possible or be too costly for a firm to constantly monitor employees and may be demoralising for employees at work.
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Henry Ford was the first person using the assembly line-the ultimate embodiment of division of labour theory. Ford set up plants in the USA and Britain at the start of the twentieth century to manufacture the Model 'T' Ford. The poster of his company is 'you can have any colour you like, so long as it is black'. This summarizes quite well what Fordist assembly line technology is all about-a standardized product but manufactured at a low price to make it available to the masses. Fordism refers to the system of mass production and consumption characteristic of highly developed economies during the 1940s-1960s.
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These innovations made possible the moving, or continuous, assembly line in which each assembler performed a single, repetitive task, which is known as mass production. In the 1970s fordism started to break down due to economic and political and social reasons. The problems of fordism were that new bonds of culture and diffusion of lifestyles and culture became complex and therefore firms found it hard to meet consumer demands. As Sabel (1982) claims that the chief factor is the changing nature of consumer tastes.
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Discuss the extent to which the principles of "Scientific management" (F.W.Taylor) are still relevant to modern organizations.
Haven't things changed, especially in the tertiary, which had been kept out of scientific management for so many years? And finally, wouldn't it be more specific to talk about neo-fordism rather than Toyotism? We shall see that scientific management is still relevant to modern organizations in a first part, and then shall see that this isn't completely true anymore. In modern organizations, hierarchy is still present. It will probably always be like this, somebody needs to be in charge or else there would be too many conflicts. Hierarchy is one of the three most important points of scientific management, along with the specialisation of the worker's task and the timing of this task so as to impose a cadence.
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Fordism is a very rigid process, compared to the flexibility of post-Fordism. Post-Fordism is just small batch production, and also includes the global market. The role of labour in the 2 systems is very different. Fordism allows the worker to concentrate on just one simple task, where as post-Fordism workers are expected to carry out multiple tasks. Fordism allows workers to specialise. Under Fordism, workers found their responsibilities diminishing. Assembly line work is unpleasant in a mass production environment. It is physically demanding, requires high levels of concentration, and can be excruciatingly boring.
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Assess the contention that 'post-Fordist' changes in the organisation of work have improved the quality of employees' work experience. Provide examples to illustrate your answer.
Machines are used to produce standardized parts for products which are mass-produced. Products tend to be relatively cheap. Labour costs are held down because there is little need to employ skilled labour, and because of the large number of products produced, overheads and capital costs, such as the cost of machinery are relatively low." (Haralambos and Holborn 2000; pg.713) Fordism also experiences an autocratic style of management, a strict division of labour and little empowerment/decision making for employees. Although work was secure for the majority, workers felt 'alienated.' With this revolutionary style of production, Fordism heavily influenced the improvement of developed countries economies during the mid twentieth century, particularly in the 1940's to the mid 1960's.
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To what extent does the post-fordist workplace mark a fundamental change in the modern forms of work and employment?
These systems comprised of the mass production of highly standardised goods from partially mechanised assembly lines manned by low to semi skilled workers. In return for the repetitive work incurred on the assembly line, Ford introduced a $5 day wage to certain groups, which ensured that the workers had the capacity and disposable income to purchase the variety of mass, standardised goods that were now being produced. Thus resulting in a process whereby Ford's production methods were producing a system of both mass production and mass consumption.
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In fact, the concept of post-Fordism has already gone beyond the manufacturing field that is previously dominated by Fordism, to an even comprehensive field, which includes the tertiary employment sector: the many types of services production, such as education, retailing or hospitals. In this sense, the post-Fordism is likely to shape the dynamics of the capitalist economic system to a broader scope than the Fordist style of organisation and work could do. However, many commentators (e.g. Kumar), argue that economies based on mass production are still common, while flexible firms, industries and economic systems are relatively few; manufacturing as a
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As Wallace states " Ford incorporated aspects of Taylorism such as the disaggregation of planning from the execution of work, task fragmentation and the timing of specific operations and enhance them through the introduction of the flow-line principle in the form of the moving assembly line and new forms of labour control." Over the first half of the twentieth century, output expanded through a focus on manufacturing processes (Fordism) and the use of methods of shop floor control (Taylorism). The first section continues describing how the evolution of the assembly line and mass production diminished the need for time consuming set ups and the skilled workers required to perform them.
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What impact has the movement from ‘Fordism’ to ‘Post-Fordism’ had on the world of work?
As fordism relied on large scale production it also relied on the assumption that demand would be sufficient to support it. These mass production techniques were quickly adopted by other firms in the US and Northern Europe and became the social and productive basis in America in the post-world war II era, often called the golden age. In terms of the work experience, people benefited from jobs. However, Fordism went hand in hand with the division of labour as it involved breaking the manufacturing process down into stages.
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In analysing the market for property space the important feature about demand is that it is derived and the important feature about supply is that it is inelastic. Critically discuss this statement
Input (office space) Output (Services) Marginal physical product (MPP) Marginal Revenue (MR) Marginal Revenue Product (MRP) Rent per 100m2 (R) Marginal Effect on Profit (MRP – R) Per 100m2 Units P.A. Units P.A. £’000s per unit £’000s P.A. £’000s P.A. £’000s P.A. 0 0 - - - - - 1 40 40 10 400 80 320 2 88 48 10 480 80 400 3 152 64 10 640 80 560 4 208 56 10 560 80 480 5 240 32 10 320 80 240 6 256 16 10 160 80 80 7 264 8 10 80 80 0 8 268
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Market Economy A market economy is a system where economic decisions are made through the free market mechanism. The forces of market demand and supply without any government intervention determine how resources are allocated. Free market economies are also able to give full power to prices to determine the allocation and distribution of goods and services. This is known as the working of the price mechanism. Within this type of economy, what is produced is decided upon whether or not the product will be good profitably. This means that when the demand for a product increases then the price increases, which then raises the profitability of the product selling in the market.
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