Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book III: The Natural Imputation of the Return from Production

Chapter XI
The Individual Factors of Imputation (continued). III. – Technique

NV-III-11.1 Technique is the art of making the best use of productive instruments. Every advance in technique improves either the quantity or the quality of products. Even a so-called “labour-saving” machine acts in the long run like an intensified utilisation. By dispensing with another productive instrument at a certain point or for the present, it preserves it for other or later employments.
NV-III-11.2 Improvement in the quality of products raises their value. Multiplication of their quantity certainly diminishes the value of the individual product, but at the same time (in the “up grade” of value, which, for the sake of brevity, we shall alone consider at present) increases the sum of value of all the products taken together. Technical improvements have, therefore, this result, that the known quantities, in the equations of return by which the contributions of the production goods are to be calculated, are put higher, while the unknown quantities remain the same. Thus, according to circumstances, the contributions of all the factors, or simply of individual factors in the production in question, will be raised; it frequently happens, however, that the circumstances are such that the contributions of certain factors must be calculated at less.
NV-III-11.3 What happens, for example, when some expedient to reduce cost is introduced into a kind of production incapable of further extension – say, the production of wine in a limited area already cultivated to the utmost extent? The return of wine remains the same, and its value remains the same, but to the vineyard must be imputed a larger share of the return than formerly, because it has to share it with a smaller number of productive factors. The elements of production thus saved can and will find another employment; they increase the supply available for other purposes while the demand for such purposes remains the same. The final result is consequently a reduction of their productive contribution. The same is true of all means of production which have been driven from their former employments by reason of technical improvements. The familiar effect of labour-saving machinery is that it makes wages fall; and this arises from the fact that, in the first instance, it reduces the contribution of labour. Even in the communistic state this part of the effect would emerge. The more labour could be replaced by machinery, the more labour power would there be left to dispose of; and the less remunerative the employments to which it would be devoted. If formerly it had been a mistake to devote it to such employments, it would now be a mistake not to do so. The rôle of labour in production would have altered; it would take another position; and other effects would have to be imputed to it, if the imputation is to be based on natural principles, – that is, principles which promote the most advantageous employment possible.
NV-III-11.4 In all cases where production is limited by certain specific elements, the chief advantage obtained by improvement of technique is ascribed to these elements. Means of production which have a more extensive employment are but little affected by changes in individual branches of production; only those technical improvements which affect all, or a greater part of their employments, are of much importance to them, since it is only in these cases that the equations of return are noticeably altered in their favour. The improvement in means of transport, which brought with it the increased utilisation of an enormous number of industries, is an example of a comprehensive technical improvement which actually had the power to raise the returns of almost all means of production.
NV-III-11.5 Every change in technical art naturally calls for a certain change in the plan of production, a certain rearrangement in the disposal and destination of our productive resources. Other results seem now the more attractive; other products are now the marginal products. The rapid development of industry in the course of the present century has attracted many labourers from agricultural to industrial pursuits. This transference, which was a very serious matter to the landowners since, among other things, it compelled them to pay the labourers they had left at the higher rate given by the manufacturers, was entirely beneficial for production generally. It removed the labourers from occupations which brought them little, but were, however, in the absence of anything more remunerative, permissible up till that time, into others in which they could assess their powers at a higher contribution. If in the communistic state a similar phenomenon should ever come in the train of technical development, it also would require to be met by a similar transference of capital and labour, the measure for which would be obtained by observation of the marginal productive contributions.

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