Full text: Small and Big Business

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i that it will or would rise again if such methods would eve,$ 
J&e used. This increasing application of more units of capital 
per unit of labour is, however, constrained to a path of 
increasing scale of output capacity; A reasonable capital- 
intensification is in general not possible without an in 
crease in output capacity: This is because the introduction 
of machines, apparatus etc. immediately brings into sight 
diiuettu *\X economies which make the smaller scale inefficient, 
(It may nevertheless have to be chosen by firms without 
sufficient funds.) Further, the use of continuous processes 
Y increases technically possible utilization and therefore 
output scale (broad strip mill, continuous versus batch 
This path of capital intensification can be regarded as a 
historical path - perhaps we might say a historically 
necessary path - because the development has really pro 
ceeded like that. In so far as the techniques of the past 
are preserved in existing equipment, the path, however, is 
also mirrored to a degree in a cross-section of present 
plant, with some modifications: In the course of 
evolution, price-cost relations are brought down so that 
the capital-output ratio for the advanced methods is in 
creased, At the same time the old fashioned methods keep 
alive only by changing their output (special dimensions and 
quality made in small batches, for example); this will pre 
vent the output-capital relation from declining for the more

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