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reasons that it will rise again or that it would if such
methods were ever 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 increase in output capacity* This is because the intro
duction of machines, apparatus etc. immediately brings into
sight dimensional 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 increases the technically possible utilization and
therefore output scale (broad strip mill, continuous versus
batch processes).
This phth of capital intensification can be regarded as a
historical path - perhaps we might say a historically necessary
path - because the development has really proceeded 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, albeit 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 increased. At the same time the old
fashioned methods keep alive only by changing their output
(special dimensions and qualities made in small batches, for
example); this will prevent the output-capital relation from
declining for the more old fashdoned firms (who could not
exist if it would decline).