LABOR: MEANING, KINDS AND IMPORTANCE | ECONOMICS

In simple meaning by ‘Labor’ we mean the work done by hard manual labor
mostly work done by unskilled worker.

But in Economics, the term labor mean manual labor. It includes mental work also.

In other-words we can say that Labor includes both physical and mental work
undertaken for some monetary reward.

In this way, workers working in factories, services of doctors, advocates, officers

and teachers are all included in labor. Any physical or mental work which is not
undertaken for getting income, but simply to attain pleasure or happiness, is not
labor.

For example:
The work of a gardener in the garden is called labor because he gets income for
it. But if the same work is done by him in his home garden, it will not be called
labor, as he is not paid for that work. Further, if a mother brings up her child, a
teacher teaches his son and a doctor treats his wife, these activities are not
considered ‘Labor’ in economics. It is because of the fact that these are not done
to earn income.

Definition of Labor:

1. According to Prof. Marshall – “Any exertion of mind or body undergone partly

or wholly with a view to earning some good other than the pleasure derived
directly from the work.”

2. According to Prof. Jevons – “Labor is any exertion of mind or body undertaken

partly or wholly with a view to some good other than the pleasure derived directly
from the work.”

3. As S. E. Thomas has said – “Labor connotes all human efforts of body or mind
which are undertaken in the expectation of reward.”
4. According to Waugh – “…………………… we define labor as human efforts used
in production.”

Therefore, important facts regarding Labor are:

(i) Only the work of man is included under Labor.

(ii) The physical and mental work undertaken for some monetary reward is
included under Labor.

(iii) Any work done for entertainment or for self-satisfaction is not included under
Labor in economics.

(iv) In Economics Labor has no relation with morality.

(v) Any work done by animal or bird is not Labor in Economics.

Kinds of Labor:

Labor can be classified under the following heads:

1. Physical and Mental Labor.

2. Skilled and Unskilled Labor.

3. Productive and Unproductive Labor.

1. Physical and Mental Labor:

Such work in which physical labor and physical strength is more important in
comparison to mental labor is called physical labor. For example—The work of
Rickshaw Puller, workers working in factory, porter who carries luggage on the
platform.

But mental Labor is that in which brain is applied or mental fatigue is more in
comparison to physical fatigue, For example—The work of an advocate, teacher,
doctor, chartered accountant etc. For better performance of work mental and
physical labor is essential.
2. Skilled and Unskilled Labor:

Skilled Labor is that in which special knowledge, learning, training and efficiency
is required in performing the work. For example—The Labor of engineer, doctor,
teacher and a scientist has been called as skilled Labor.

While the work in which special knowledge, training or learning is not required is
known as unskilled labor. For example—The work of rickshaw puller, porter
carrying luggage on platform is called unskilled. The remuneration of skilled
worker is normally higher than that of unskilled worker.

3. Productive and Unproductive Labor:

Productive Labor is that labor which adds net value to the product. While
unproductive labor is that which does not add net value. In other-words we can
say that “Labor producing material goods are productive and Labor producing
perishable goods including services of servants, teachers, doctors, lawyers etc.
are unproductive.”

But according to Prof. Marshall all labor is productive. He saw-“no distinction in

the work of the baker who provides bread for a family and that of the cook who
prepares rice or boiled potatoes”. Modern economists following Marshall regard
all Labor whether material or non-material or services as productive.

Only that Labor is considered unproductive which is performed by anti-social

persons such as pickpockets, thieves, dacoits etc. But Labor used in constructing
building, a dam etc. is productive because the workers worked on them and
receives wages.

In this connection Prof. Robbins has written “Whether Labor is productive or

unproductive does not depend upon its physical or mental nature of work. Rather
it depends upon its relative scarcity in relation to its demand. All kinds of Labor
which has a demand and receives a wage is regarded as productive.”
UTILITY: MEANING, CHARACTERISTICS AND TYPES |
ECONOMICS

Meaning of Utility:
The simple meaning of ‘utility’ is ‘usefulness’. In economics utility is the capacity of
a commodity to satisfy human wants.

Utility is the quality in goods to satisfy human wants. Thus, it is said that “Wants
satisfying capacity of goods or services is called Utility.”

In this way utility is measured in terms of money and it is relative. There is difference
between utility and usefulness. A useful commodity may not here utility of goods
depend upon the intensity of wants.

A consumer buys or demands a particular commodity he derives some benefit

from its use. He feels that his given want is satisfied by the use or consumption of
the commodity purchased. Utility is the basis of consumer demand. A consumer
thinks about his demand for a commodity on the basis of utility derived from the
commodity.

Utility depends upon the intensity of want. When a want is unsatisfied or more
intense, there is a greater urge to demand a particular commodity which satisfies
a given want. In modern time utility has been called as ‘expected satisfaction.’
Expected satisfaction may be less or equal to or more than the real satisfaction.

Definition of Utility:

Various economists have defined utility as follows:

1. According to Prof. Waugh:
“Utility is the power of commodity to satisfy human wants.”

2. According to Fraser:
“On the whole in recent years the wider definition is preferred and utility is
identified, with desireness rather than with satisfyingness.”
Characteristics of Utility:

The following are the important characteristic features of utility:

1. Utility has no Ethical or Moral Significance:

A commodity which satisfies any type of want, whether moral or immoral, socially
desirable or undesirable, has utility, i.e., a knife has utility as a household
appliance to a housewife, but it has also a utility to a killer for stabbing some body.

2. Utility is Psychological:
Utility of a commodity depends on a consumer’s mental attitude and assessment
regarding its power to satisfy his particular want. Thus, utility of a commodity may
differ from person to person. Psychologically, every consumer has his likes and
dislikes and everyone determines his own level of satisfaction.

For instance:
A consumer who is fond of apples may find a high utility in apples in comparison
to the consumer who has no liking for apples. Similarly a strictly vegetarian person
has no utility for mutton or chicken.

3. Utility is always Individual and Relative:

Utility of a commodity varies in different situations in relation to time and place.
Even the same consumer may derive a higher or lower utility for the same
commodity at different times and different places. For example—a person may
find more utility in woolen clothes during the winter than in summer or at Kashmir
than at Mumbai.

4. Utility is not Necessarily Equated with Usefulness:

Utility simply means the ability to satisfy a want. A commodity may have utility but
it may not be useful to the consumer. For instance—A cigarette has utility to the
smoker but it is injurious to his health. However, demand for a commodity depends
on its utility rather than its usefulness. Thus many commodities like opium liquor,
cigarettes etc. have demand because of utility, even though, they are harmful
to human beings.
5. Utility cannot be Measured Objectively:
Utility being a subjective phenomenon or feeling of a consumer cannot be
expressed in numerical terms. So utility cannot be measured cardinally or
numerically. It cannot be measured directly in a precise manner. Professor
Marshall has however, unrealistically assumed cardinal measurement of utility in
his analysis of demand.

6. Utility Depends on the Intensity of Want:

Utility is the function of intensity of want. A want which is unsatisfied and greatly
intense will imply a high utility for the commodity concerned to a person. But when
a wan is satisfied in the process of consumption it tends to experience a lesser
utility of the commodity than before. Such an experience is very common and it
is described as a tendency of diminishing utility experienced with an increase in
consumption of a commodity. In other words, the more of a thing we have, the
less we want it.

7. Utility is Different from Pleasure:

A commodity may have utility but its consumption may not give any pleasure to
the consumer, e.g., medicine or an injection. An injection or medicinal tablet
gives no pleasure, but it is necessary for the patient.

8. Utility is also Distinct from Satisfaction:

Utility and satisfaction, both are though inter-related but they have not been
considered as the same in a strict sense.

Different Types of Utility:

In economics, production refers to the creation of utilities in several ways.

Thus, there are following types of utility:

1. Form Utility:
This utility is created by changing the form or shape of the materials. For
example—A cabinet turned out from steel furniture made of wood and so on.
Basically, from utility is created by the manufacturing of goods.
2. Place Utility:
This utility is created by transporting goods from one place to another. Thus, in
marketing goods from the factory to the market place, place utility is created.
Similarly, when food-grains are shifted from farms to the city market by the grain
merchants, place utility is created.

Transport services are basically involved in the creation of place utility. In retail
trade or distribution services too, place utility is created. Similarly, fisheries and
mining also imply the creation of place utility. Place utility of a commodity is
always more in an area of scarcity than in an area of scarcity than in an area of
abundance e.g., Kashmir apples are more popular and fetch higher prices in
Pune than in Srinagar on account of such place utility

3. Time Utility:
Storing, hoarding and preserving certain goods over a period of time may lead
to the creation of time utility for such goods e.g., by hoarding or storing food-
grains at the time of a bumper harvest and releasing their stocks for sale at the
time of scarcity, traders derive the advantage of time utility and thereby fetch
higher prices for food-grains. Utility of a commodity is always more at the time of
scarcity. Trading essentially involves the creation of time utility.

4. Service Utility:
This utility is created in rendering personal services to the customers by various
professionals, such as lawyers, doctors, teachers, bankers, actors etc.