Labor proportions

The nature of technology makes it impossible to obtain something from marginal product. We are among those who favor the argument that marginal product schedule assumes that the fixed stock of capital is divisible in the sense that it can be spread among greater and greater numbers of workers as employment is increased.

We did not agree then with the former CEO Jay H Walder’s point of view, who championed that the production process requires labor and capital in relatively fixed proportions.

Here is our reasoning, for example a small commuter airline with say three planes each  which requires two pilots, is it possible to calculate the marginal product of each pilot given the stock capital of three planes? The marginal product of the first pilot would be zero, since with only one pilot no plane could fly. Here we can use this example to respond on their demand or theory of One Person Train Operator - OPTO - with a second pilot one plane could fly and both pilots together would yield a positive increment in production. The addition of yet a third pilot however would not lead to any further increase in production since the second plane could not fly. The result is that it is impossible to either attribute a unique marginal product to each individual worker or to derive a continuous marginal product schedule.

We are aware of the demand on the contract for OPTO by the management - they contend that in nearly all real world production situations there is no fixed necessary relationship between capital and labor. In the example above one pilot could it would be argued fly the plane if she or he had to. The first pilot would have a nonzero marginal revenue product. The second pilot would also have an identifiable marginal revenue product - the increase in safety and efficiency with which the flight is operated.

We know the management argue and blame more often than not, fixed capital/labor requirements stem from the TWU Local 100 work rules (It is a fact a train needs a crew of two not one) rather than from technology itself.