What Is the Marginal Productivity Theory?

Marginal productivity is the first derivative of the production function, which refers to the amount of production that can be increased for each additional unit of production factor (such as labor, capital, etc.) in various industries. When the marginal productivity is too low or close to zero, it means that the development scale of the industry is close to saturation, and human and material resources should be transferred to other industries. When only one of the factors of production is variable (such as capital), marginal productivity is marginal output.

Marginal productivity

Marginal productivity is closely related to employment. When there is marginal labor productivity equal to or less than zero in the economic sector,

The bourgeois vulgar economic theory of interest and wages. German economist Dunen first proposed that the American economist Clarke developed it and adopted it widely for modern vulgar economists. It is believed that when the amount of labor is constant and the capital (the means of production) increases successively, the output or value produced by each additional unit of capital decreases in order, the so-called "law of diminishing productivity", and finally the output or value produced by a unit of capital is increased. Called "marginal productivity of capital", it determines the level of interest; similarly, when capital is unchanged and the amount of labor increases successively, "marginal productivity of labor" determines the amount of wages of workers. Therefore, it is believed that the more capital, the lower the interest; the more labor, the lower the wage. This theory also described the means of production as creating value, and attributed the poverty of working people caused by the capitalist system to the decline in "marginal productivity of labor", reflecting its limitations. But it also played a role in the development of economics.