Page 12 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 1, 2016, pp. 4-37

wages and interest. The dynamics, as a science, explores the deviations of real rates
from static norms and intervals. This measure is done for bringing the latter back to
their compliance with static norms. It studies the velocity of incremental wages and
real wages‘ rates that follow. Also, it studies the velocity of declining norms of
interest rates and the real interest rates, to follow‖ [Clark James.,2000] .
However, the theoretical approach, which had been initiated by John B. Clark
in the chapter of his book dedicated to the dynamics, is no doubt interesting from the
perspectives of the analysis of the smart management factor, which reflects cohesion
of management personnel with their innovative instruments of economic
governance. In that chapter, John B. Clark had provided meaningful justification of
the input made by science and technology activities and innovation technologies, as
implemented in real economy.
In whole, the strengths of the concept of the applied analysis and assessment
of the effectiveness of regulatory policies lie in the practical value of the three step
system of interdependent economic laws of the Universal Economic Law and the
applied laws of social economy, in statics, as well as of similar laws governing the
dynamic macroeconomics.
The niche, defined for the assessment of the input by the science and technology
potential to the development of the real economy, has been placed within the concept
(as developed by John B. Clark.) Hereafter, under this notion, we mean the impact of
science and technology improvements of production processes in real sector national
economy.
Having highlighted the above, the level of the technological development,
skills and knowledge may co-exist with labor, capital, and land, in the capacity of
the autonomous factors of economic development.
According to John B. Clark‘s concept, the entrepreneurs have what has
evolved from their coordination functioning and management of resource potential
of the process of production.
John B. Clark is correct, primarily, in his initiating the smart factor which is
measured and defined by the size of the incremental profit.
The weaknesses of the concept. John B. Clark viewed the incremental profit as
the ‗gift‘ created under the influence of the social progress or, in our conventional
understanding, – under the influence of the ‗science and technology‘ progress.
His concept is based on the income principle of the monetary dimension (as
suggested by Adam Smith) with no account to the labor component. It is therefore
impossible to juxtaposition production costs with their final outcomes and to
calculate the incremental profit.

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