17
To return for a moment to the discussion of capital-intensity:
It is also connected with the question of the ’’correct"
measure of size of an establishment or firm. I have shown in
11)
another place that the pattern of relation of size and
output per man is quite different according to whether size
is measured by output or employment. (In the first case a
monotonous increasing relation obtains, whereas in the second
case the output per head first increases, then falls with size.)
I also showed that the difference between the two patterns
is due to the stochastic character of the data - the disper
sions of the individual values of output per head round the
average,
What the "correct" measure of size is can not be decided
by statistical arguments. We are free to choose our definitions
on grounds of convenience of language, and simplicity of de
scription. On these grounds I choose the criterion of output
capacity? tiie relations of technical progress, capital-intensity
and scale which were pictured earlier on could not in principle
be changed by a different terminology but they would become
unnecessary complicated because the size of plant in terms
of man power historically first increases, and then in the
age of automation decreases. If one chose men per plant as the
12)
criterion of size, as Mr. Johnstone ' proposed, the automated
11) Maturity and Stagnation in American Capitalism, Chapter IV,
Oxford 1952t
12) J.Johnstone. Statistical Cost Analysis, London 1960