Full text: Small and Big Business

Therefore the main arguments of Chapter III retain their place 
in this book, although the conclusions drawn are not relevant. 
(this is also true Of my - in any case unfortunate - argument 
that econoraisslng capital is not important as long as there 
UAi f 
is am employment). Indeed, that the profit rate should decline 
in the highest size classes (taking it as a fact, although 
tne evidence may not be wholly conclusive) could be explained 
by reasons more convincing than a supposed tendency for 
capital-output ratio to rise. The first of these reasons is 
the safety preferende of the large concerns. Since they are 
less indebted than smaller firms ' their net profit rate 
ghrhiegaverage can be expected to be lower. The safety pre 
ference can also bring about similar effects in other ways. 
If the integration of sources of rav; materials and power is 
motivated only by the wish to reduce risks, and yields less 
than the average profit rate of the firm, then we might inter 
pret this as a case of "buying safety" which is fully analogous 
to the reduction in debt. Thus the high apparent capital- 
output ratios of Table IX (see above) may indeed contribute 
to the explanation of falling profit rate (unless the raw 
material investments as happens often in backward countries, 
are very profitable), but the interpretation of this is quite 
different from the argument of Chapter III. 
9) It is true that large firms issue more bonds than small 
firms which have no access to the capital market, but the 
total in debtedness is larger for the smaller firm.

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