Full text: Small and Big Business

the decline in the capital-coefficient with size seems 
There are certain general factors which act in the opposite 
direction: An increase in scale (and consequently, markets) 
involves additional investment in transport and communica 
tion, power, etc., in short, an infra-structure increasing 
disproportionately more than the firm's capacity. The burden 
of this investment is, however, ordinarily not borne by the 
firms, but for the greater part by governments, although 
to some extent large concerns do provide such infra-structure 
investment (for example power stations etc.) themselves. 
This tentative picture of the problem can now be related to 
the historical development of the capital coefficient as it 
appears to most economists nowadays: The impression is that 
the capital-output ratio for society as a whole has remained 
roughly the same over the decades. From the comparison of 
scale one might have expected it to decline since large firms 
have tended to replace small ones with the advance of 
technology. In so far as it did not this might be partly due 
to the above mentioned factor (increasing infra-structure etc.). 
There is, however, another explanation: The comparison of firms 
in a cross section and the development over time is not the 
same thing. Over time, the real wage increases, and with it 
the value of a given output in terms of labour input decreases. 
4) Simon Kuznets, Capital in the American Economy. Princeton 
1961. Table 6, p. 80.

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