Introduction

Earlier in this book, we explained that the economy's production capabilities are determined by the supply of the three basic inputs – land, capital, and labor – and the technological relationship that governs their combination. As we have seen, the need for both land and capital has stimulated arrangemental innovation (i.e. underwritten an improvement in the state of institutional technology) that promoted either income redistribution or increases in total income. The need for labor can also inspire the innovation of institutional arrangements. Slavery, indentured servitude, the importation of Oriental labor, European recruitment drives for industrial workers, and the governmental employment centers established during World War II are some examples of arrangemental attempts to increase the supply of labor and make that labor more mobile and efficient. Each of these attempts has generated an array of institutional arrangements. Slavery, for example, inspired the development of formal markets to facilitate the flow of slaves between regions; later, firms emerged whose only function was to make available to potential European immigrants the information and funds necessary to come to the United States.

In addition to those innovations that supplement the existing labor supply, there have been many arrangements devised to educate and train the labor force to meet technological advances in production. Some, such as secretarial and speed reading schools and schools that train computer operators and programmers, are tailored to fit specific but general needs of production and have traditionally been carried out by an arrangemental technology at the individual level.