The classic relationship in economics
that runs from marginal productivity to
the distribution of income implicitly assumes
the existence of an organization, be
it the market or the firm, that allocates
rewards to resources in accord with their
productivity. The problem of economic
organization, the economical means of
metering productivity and rewards, is not
confronted directly in the classical analysis
of production and distribution. Instead,
that analysis tends to assume sufficiently
economic or zero cost means,
as if productivity automatically created
its reward. We conjecture the direction of
causation is the reverse the specific system of rewarding which is relied upon
stimulates a particular productivity response.
If the economic organization
meters poorly, with rewards and productivity
only loosely correlated, then productivity
will be smaller; but if the economic
organization meters well productivity
will be greater. What makes metering
difficult and hence induces means of
economizing on metering costs?