Key Concepts

Law of Population

As demand for labor goes up (as a result of the Law of Accumulation) and wages increase, the population, or available supply of labor, will also go up, reducing the profits business owners can accumulate and reinvest in their business. However, once the population, or pool of available workers is large enough, the supply begins to outweigh the demand, and wages will go down again. When wages go down, business owners are back into the Law of Accumulation cycle...which will eventually lead to demand for more workers again...in a continuing cycle.