Wednesday, May 16, 2012

In economics, labor and capital are two of the three most important concepts, land being the third:

                Land:                     Space to work within.

                Labor:                   Human effort.

                Capital:                 Tools to make human effort more fruitful.

How can an understanding of labor and capital be used to better understand self-improvement? How can you better your lot in life by contemplating them? I found the simple truth to be liberating.
In a business, for example a ditch digging company, capital is often leveraged to get more value out of each unit of labor.  Let’s look at an example that makes this concept clear

Let each individual workers’ hour of labor be considered as one unit of labor. Let’s also pretend that our company has one worker without land or capital and is paid $50 dollars an hour for his services. In this scenario, the worker uses his hands to dig the ditches. It goes without saying that not much is being accomplished. To remedy this situation, the business must invest in capital. 

But wait, isn’t capital money? Yes, money is a type of capital; it is a tool just like a shovel. But for some jobs, shovels are more effective than money in the bank, and it makes sense to trade. Positioning capital where it will leverage the laborer most effectively is the key to success.

You are a business in and of yourself, a business with one employee. A good way to improve a company with one employee is to make that person more efficient, more highly skilled, and better equipped. Instead of falling into a consumer mindset, remember that you are also a unit of production. In short, invest in yourself. I hope to explore ways to do that in this blog.