Quotation of the Day…

by Don Boudreaux on November 22, 2011

in Complexity & Emergence, Growth, Innovation, Myths and Fallacies, Prices, Work

… is from Part 1, Chapter III of Frank Taussig’s 1915 book Some Aspects of the Tariff Question:

The relation between high wages and the use of machinery calls for a word more of explanation.  It is usually said that high wages are cause of the adoption of machinery, and that we find here the explanation of the greater use of machinery in the United States.  I believe that the relation is the reverse; high wages are the effect, not the cause….  The abundant resources which so long contributed greatly, and indeed still contribute, to making labor productive and wages high, thereby stimulated the introduction of labor-saving methods in industries not so directly affected by the favor of nature.  But the fundamental cause of the prevalent use of machinery was in the intelligence and inventiveness of the people; these being promoted again by the breath of freedom and competition in all their affairs.  What are the ultimate causes of industrial progress and industrial effectiveness is not easily stated; complex historical, political, perhaps ethnographic forces must be reckoned with.  But these causes work out their results in modern times largely by prompting men to improve their implements and to use unhesitatingly new and better implements.  Thence flows a high rate of return for their labor; it is not the high rate of return that leads them to use the better tools.


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