14 
Therefore the arguments of Chapter III retain their place 
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in this hook, although the applications made of them are not 
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relevant,(This is particularly true of my,unfortunate -g: , 
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argument that the--ees ; t* e#-tfee capital does not matter in less 
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j thaa-fuli^enployment Lwhich becomes redundant 4f~--there~4rS~-B© 
increase in capital-output ratio. Indeed that the profit rate 
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should decline in the highest size classes (taking it as a 
fact, although the evidence may not he wholly conclusive) 
could he explained hy reasons more convincing than a supposed 
tendency for capiti-output ratio to rise. The first of these 
reasons is the safety preference of the large concerns. Since , 
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they are less indebted than smaller firms!their net fearning 
on the average can he expected to he lower. The safety pre 
ference can also bring about similar effects in other ways. 
If the integration of sources of raw materials and power is 
motivated only hy the wish to reduce risks, and yields less 
than the average profit rate of the firm, then we might inter 
pret this as a case of"buying safety" which is fully 
analog to the reduction in debt. Thus the high apparent 
capital-output ratios of Table IX (see above) may indeed con 
tribute to the explanation of falling profit rate (unless the 
raw material investment as happens often in backward countries, 
are profitable), but the interpretation of this is quite 
different from the argument of Chapter III. 
A second reason why the biggest concerns may have lower profit 
rate is that they may be less efficient and, especially, less 
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