Full text: Small and Big Business

composition of capital. 
Many economists for a long time apparently hold views 
about the capital-coefficient which have no sufficient 
basis in facts. She reason may be the enormous role of 
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tradition aadr-the lack of information in economic 
She economists prejudice stems from the following ideas: 
(1) a belief in capital accumulation as the only vehicle 
of economic progress (strong virtues of SoAT\-\v^ 
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(2) the idea that economics is a matter of substitution 
fin tn 4 ~b' 3 - the product is re 
garded as fixed. Shis could be justified only if we are 
everywhere far in excess of the "optimum scale of pro 
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(3) the idea that we must in practice -be in the range 
of diminishing return^. 
In analogy to Ricardo^)icture of a fixed amount of land 
to which successive doses of input of labour and capital 
are applied, we have to picture a given amount of labour 
to which successive doses of capital are applied. 
Shis picture, however,would not be adequate to represent 
the conditions of an individual plant under modern industrial 
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conditions, because feteeee may very well involve a reduction 
of the labour employed per plant. We plot therefore capital 
per man as a function of output per man. She gradient of a 
straight line joining the coordinate centre to a point of 
this function - the capital coefficient - will decline over 
a certain range; later on we can assume for general reasons

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