Non-human resources used in production are major determinants of labor productivity. For example, even unskilled workers in the United States work with much more capital and consequently produce far more than their counterparts in, say, India. Thus, American trash collectors each process more garbage than Indian trash collectors because Americans use more trucks, crushers, and other equipment. Relatively abundant capital per worker in industrialized countries is a major reason workers in advanced nations enjoy higher wages on average than do workers in less developed economies.

 

   The flip side is that capital productivity rises as the number of workers per machine grows. Large amounts of capital per worker in the United States mean that labor per unit of capital is low relative to developing countries such as India. Thus, while output per worker is high in the United States relative to India, output per unit of capital is probably higher in India. In the United States, shovels often lay idle on construction projects; in India, a hand shovel might be used three shifts every day. The upshot is that labor productivity and wages tend to be higher the greater the capital-to-labor ratio, while interest payments and the productivity of capital tend to be higher the lower the capital-to-labor ratio.

 

   This broad notion holds for virtually all resource ratios: (a) capital is more productive and highly paid the greater the amounts of labor, entrepreneurial talent, or land working with capital; (b) entrepreneurs will be more productive and highly remunerated the fewer the entrepreneurs attempting to use other given resources; and (c) land will be more productive and draw higher rents the more capital and labor are used to work the land. For example, relative to vast desolate ranches on which a few cowhands try to keep track of a few scattered cattle, small flower farms covered with greenhouses and automatic watering equipment produce much more value per acre.

 

   The general principles of marginal productivity govern the markets for labor, land, capital, and entrepreneurial talent, but each market has unique characteristics.