Economic Nature of the Construction Industry Assignment

Economic Nature of the Construction Industry - Assignment Example Later on, Karl Marx introduced his ideas of exploitation of labor by capital and concluded that the huge constructions that the economy witnessed were all the result of labor that were unjustly and unethically denied the fruits of their efforts which were usurped by capitalists. With progress of time, came the Great Depression and the development of a radically new approach to macroeconomics by John Maynard Keynes. Faced with gloomy prospects of an ever deepening economic depression where the roaring economy of United States that was confident that good times will last forever suddenly faced a scary scenario where jobs vanished and with it the much vaunted purchasing power of populace, Keynes had to think of an way out of that desperate situation. He realized that increasing aggregate demand was the only way out and chose construction industry as the most convenient vehicle of autonomous investment to undertaken by the US government. He prescribed large doses of investment by the gov ernment in construction industry that would, through multiplier effect, generate substantial aggregate demand and consequent rise in general price level that would be sufficient to motivate producers to undertake induced investment. Once this process gets started the upward moving price-wage spiral would pull the entire economy out of the depths of depression. Construction industry is seldom characterized by cutting edge innovations. Any new technique implemented by a builder is quickly replicated by competitors and generally all firms in the industry have access to similar technology. Thus it is an industry that experiences intense competition among equally formidable rivals. It is also an industry where production cycle is possibly the longest and with huge potential for employment requiring substantial levels of continuous investment to keep the industry healthy, construction industry becomes one of the benchmarks for judging the overall