Small and Big Business

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Small and Big Business: Introduction [2nd revision]

Author:: Steindl, Josef

Scope:: Typoskript, 21 Blätter, mit Hilfe von Tipp-Ex korrigierte Version

Year of publication:: 1978

Source material date:: [04.1978]

Language:: English

Note:: Das Typoskript stellt die 2. revidierte bzw. korrigierte Fassung der 1972 neu verfassten Einleitung zu "Small and Big Business" (1945) dar. Vermutlich zwecks der spanischen Ausgabe des Buches verfasst.

Topic:: Firm and market structure

JEL Classification:: D24 [Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity] D43 [Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection] L11 [Production, Pricing, and Market Structure, Size Distribution of Firms]

Shelfmark:: S/M.3.11

DOI:: https://doi.org/10.48671/nls.js.AC14446394

9 fairly uniform wage and interest rates and all methods developed will be aimed at fitting the prevailing market conditions of the region, so that they will by no means differ much; only in different countries on a different level of economic and technical development will there be very different combinations of production ingredients in use. To be realistic this picture has only to be modified in one respect: The opportunity cost of capital - the ruling profit rate - differs in one and the same country for risk capital of different sizes. Thus there is good reason for the simultaneous existence and application of different methods of production, in so far as these different methods are used by firms of different size. Among the methods existing at one and the same time there is often one which is more efficient on all counts. That it does not immediately rule out all others is explained by its scale: Not everybody can afford to use it, since the risk capital of a firm limits its investment. If a situation continuously prevails in which there are unused possibilities of applying such efficient (in terms of labour and capital) methods, then this will explain why rarely anybody is tempted to use methods which will increase the capital- output ratio. In other words, when increasing returns to capital are available in quite a number of fields, nobody will force capital-intensification in fields where it brings diminishing returns. Another explanation is that the profit margin in big business is so large that an increase in the

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