Production and Cost

This section is concerned with production and its associated cost concepts. Value and cost are intimately related: ENL's estimate of a final output's value is the degree to which it increases human health through consumption, whereas its estimate of a final output's cost is the degree to which it decreases human health through production.

Without this converse relationship, value and cost would be incommensurable, and a coherent economic framework would be impossible.

A condensed history of the concept of cost is provided to give some perspective on this crucial concept.

Contents of this section:

Allocation and Production Allocation refers to the decisions that determine which inputs will be used to produce which outputs. Allocation thus precedes production in time. Read on…
Allocation Efficiency Allocation is the critical social process of assigning inputs to the production of outputs, thereby initiating the whole chain of economic activities. If inputs are misallocated, health maximization will be impossible, no matter how efficiently the subsequent tasks are performed. Read on…
Brief History of Cost Compared to value, cost has had a much quieter ideological history, at least on the surface. Read on…
Crowding in Production In the sphere of production, the phenomenon of crowding can occur just as it can in relation to consumption (for example, in housing). This is evident particularly in relation to the various modes of transportation that take people to and from work. Read on…
Deaths from Production ENL’s method for quantifying the health effects of deaths that are attributed to consumption are also applicable to the sphere of production. Read on…
Defining Production Production is the conversion of selected inputs into an output, which can be either a material object like a cup, desk, or barrel of oil, or an end-user service like medical care or bartending. Read on…
Defining Well-Being With the core ENL concepts established, it is possible to offer a formal definition of well-being in place of the conventional meaning of satisfactory conditions for human existence. Read on…
ENL's Approach to Value and Cost The fact that health can both increase and decrease means that value and cost in ENL can be either positive or negative. Read on…
Input Cost and Forgone Health What is sacrificed in the allocation of inputs to a specific output is the possibility of using these same inputs in other production to gain alternative benefits. This is the sacrifice that standard economics calls opportunity cost. Read on…
Labor Cost Labor is the human input to production. It includes all activities, such as transportation to and from the work site, that are immediately necessary for workers to engage in a production process. Read on…
Maldistribution of Labor Unlike standard economics, which applies the concept of distribution exclusively to final outputs, ENL applies it to final outputs, labor, and wastes. Read on…
Maldistribution of Wastes Wastes are the material residues of economic activities, and therefore include pollution, discarded production materials, and discarded outputs. Because these residues can be harmful to human health, their distribution among countries, regions, neighborhoods and individuals is an important topic. Read on…
Natural Cost ENL holds that value and cost pertain to humankind alone. It follows that natural cost does not refer to environmental damage itself, but instead to the human health effects associated with such damage. It is thus an indirect rather than a direct effect of production. Read on…
Opportunity Cost: the Great Deception Opportunity cost is singled out for more extensive treatment here because of its far-reaching human and ecological significance, and because it appears to have an intoxicating effect on thinkers, both inside and outside the economics profession. Read on…
Production Efficiency > The most striking thing about modern industry is that it requires so much and accomplishes so little. Modern industry seems to be inefficient to a degree that surpasses one's ordinary powers of imagination. Its inefficiency therefore remains unnoticed. Read on…
Ranking Production Facilities The concept of potential gains can be used to rank production facilities, since it is unlikely to be the case that all facilities capable of producing an output at a specific quantity will do so with the same results for value and cost. Read on…
Value, Cost and the Output Life Cycle The figure below shows the output life cycle diagram including the value and cost concepts discussed in this section and the section on consumption and value. Read on…
Worker Participation Rate A striking feature of progressive thought is the divergence of views regarding the desirable level of employment — what is here called the worker participation rate. Read on…

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