Small and Big Business
Introduction
Several decades after the first publication of this little
book I do not find myself in full agreement with everything
it contains. Since I have no time to re-write it completely
I better leave it as it stands and try to explain in the
following what amendments I should have liked to make.
My chief amendment concerns an error in interpreting the
statistics of U.S. corporations which show that fixed capital
in relation to turnover increases with the size of the firm
(Chapter III, Table IX, p. 24). This does not demonstrate, as
I wrongly concluded, that the larger firms have a higher
1)
capital coefficient in the accepted sense of the term. It
is due to a different fact, namely the greater vertical
integration of the larger firms. In fact, as far as the higher
size classes are concerned, Table IX shows that the apparent
rise in capital-output ratio is strong in paper (where the
large concerns own forests), metals (where they own mines)
and chemicals (where vertical integration also plays a large
role) while the other industries show no increase.
1) Or capital-output ratio, as I called it. The present use
of the terms "capital coefficient" and "capital-intensity"
for capital per unit of output and capital per man had not
been firmly established then.