Full text: Small and Big Business

f — 
the range of diminishing returns of capital-intensification 
is actually entered in the ordinary course of events; such 
techniques are perhaps not developed at all, a; diminishing 
retur/i3 to capital-intensification exist only theoretically 
beyond the point at which actually developed methods end. 
This point is, however, shifted further on in the course 
of technical progress. This avoidance of range of increasing 
capital-output ratiofmay result from the above stated in 
fluence of high, profit margins. 
Ubat can be the relevance of this analysis to the question 
of scale? In Chapter XU, I used it m ^ cplain why the highest 
also groups of corporations show signs of disdaishing profit 
rate, for which I could find no technical reasons (dis 
economies of scale I assumed to be unimportant). But if the 
capital coefficient does not rise with increasing scale, fee 
whole argument falls to the ground. There is an even more 
direct objection against its Why, on© might ask, do the big 
concerns apply such methods of production, if they yield 
them a smeller profit rate than less capital-using methods 
would? In fact, the analysis of Chapter III is much more 
suitable for explaining why the large firms do not increase 
the capital coefficient! 
I thought^ none time that Chapter III is altogether out of 
place in Ms book. But this is not true. In fact the analysis 
is relevant for the whole relation of capital Intensity, 
technical progress, economies of scale and the distribution 
of income.

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