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saving invention, using "work" in the broad sense adopted elsewhere in this book to cover the activities of all workers, and not merely of wage earners. In practice, many labour-saving inventions are not work-saving in this sense since, at any rate in their immediate effects, they considerably enrich the business men responsible for their introduction.

Capital-saving and land-saving inventions may be similarly defined, either in the narrow or in the generalised sense, as inventions which reduce the relative share of capital and of land respectively, either in the industry directly affected or in industry as a whole. In the subsequent discussion the generalised sense will be adopted. It is obvious, as far as the definition is concerned, that the same invention may simultaneously reduce the relative shares of two or more factors of production, so long as it increases the relative share of at least one factor. But it is unlikely that the same invention will be both labour-saving and capital-saving.

§4. As regards the effects of inventions upon the absolute shares of factors of production, it will be noticed that the test is, whether particular inventions are complementary or rival to these factors in the sense used in preceding chapters. In so far as inventions increase production, every invention must be complementary to all factors of production taken together, but it may be rival to particular factors taken separately. Thus an invention will be rival to labour, if it reduces the demand for labour in the community as a whole, not merely in the industry concerned; it will be rival to capital, if it reduces the demand for capital; it will be rival to land, if it reduces the demand for land.

$5. The question of practical interest is, what types of invention are, in reality, the most common and the most important. Land-saving inventions will be discussed in a later chapter. As regards other inventions,

which may, of course, be of a neutral character, reducing cost of production, but not altering the proportionate cost of the various factors employed, the following conclusions seem reasonable, though the subject is speculative and little assistance can be obtained from statistics.

(1) The great majority of inventions are obviously complementary both to capital, to work, and to labour in the narrower sense, and their effect is to increase the absolute shares of all these factors.

(2) Particular inventions may be rival to capital as a whole, or to labour as a whole, but there seems very little evidence that such inventions have been frequent or important.

(3) There is no lack of evidence that particular inventions have been rival to special groups of capitalists or workers, and have diminished the incomes of such groups.1

(4) Labour-saving inventions have been more numerous and important in the past than capital-saving inventions. On this last point something further may be said.

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§6. A suggestive distinction, broadly, though not precisely, equivalent to that between labour-saving and capital-saving inventions, is the distinction between those inventions which complicate, and those which simplify, machinery. Professor Johnson goes so far as to assert that capital-saving devices, though comparatively neglected in economic literature, are probably not less frequent or important than labour-saving devices. Simplification of machinery, cheapening of machines through improvements in the technique of their manufacture, are processes taking place everywhere."

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1 Compare Pigou, Wealth and Welfare, p. 85, and Johnson, Effect of Labour-Saving Devices on Wages (Quarterly Journal of Economics, Nov., 1905).

1 Ibid, p. 101. Professor Johnson defines a labour-saving invention as one which reduces the wages paid per unit of output, and a capitalsaving invention similarly.

The comparative neglect of capital-saving inventions, both by professional economists' and by others, seems to be partly due to the manner of their introduction. For, in the first place, they are less apt than labour-saving inventions to cause large, sudden and easily traceable displacements of labour. In the second place, the disappearance of old machines attracts less attention than the appearance of new and unfamiliar machines. And, in the third place, a capital-saving invention often leaves no visible trace of its introduction. For example, invention in recent years has enabled a larger number of messages to be sent along a single wire, both by telegraph and telephone, in a given time. A capital outlay on additional wires, which would otherwise have been necessary, has thus been saved. Again, the need for capital outlay in duplicating railway lines, in order to deal with an increase in traffic, has been partly avoided by new devices for handling a denser traffic on the existing lines. Another important example of a capitalsaving invention is any device, which results in the more continuous working of machinery by means of multiple shifts. The social disadvantages of nightwork and the increasing appreciation of these disadvantages by many classes of workers, limit the possible extension of the multiple shift system. But the present tendency to shorten the length of the normal shift in many industries,

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1 Sidgwick is one of the few textbook writers, who notes explicitly the possibilities of capital-saving inventions. Hitherto," he says, "inventions have generally had the effect of complicating and prolonging the processes of industry. But this has not always been the case; and so far as I know, there is no definite reason why the inventions of the future should not be chiefly in the direction of simplifying and abbreviating industrial processes; so that at each step of improvement the demand for capital will be restricted instead of being enlarged." (Principles of Political Economy, p. 160). For more recent references to the subject see Cannan, Wealth, pp. 134-6, and Pigou, Wealth and Welfare, p. 87.

Compare, e.g., the Report of the Committee on Night Baking, appointed by the Minister of Labour, 1919.

where expensive machinery is used, opens up new possibilities of increasing, by means of multiple shifts, the proportion of the twenty-four hours, during which the machinery is kept running.'

The future course of invention is a subject on which economists, and even engineers and chemists, will be wise not to prophesy confidently. Wireless telegraphy is a striking example of an unanticipated capital-saving invention, and the gradual substitution of motor omnibuses for trams, and of motor lorries for railways in the transport of many sorts of goods, is now anticipated by many engineers. The future balance between capitalsaving and labour-saving inventions seems incapable of forecast. As regards the absolute shares of the chief factors of production, work, labour in the narrower sense, and capital, it seems unlikely that these will be reduced by future inventions below what they would otherwise have been. As regards relative shares, the question turns on whether work-saving or capital-saving inventions predominate. If the former, the tendency discussed in the last chapter for the relative share of work to decrease will be strengthened; if the latter, this tendency will be weakened and may even be reversed.

1 See Leverhulme, The Six Hour Day and Other Essays. Compare also Cassel, Nature and Necessity of Interest, pp. 102-4, and Marshall, Principles, pp. 695-6.

Professor Cassel in this matter is an unwise economist, when he asserts, (Ibid, p. 113) with regard to capital-saving inventions, that "it is obvious that the scope for such progress is not, and indeed cannot be, very extensive."

The capital-saving involved in substituting motor transport, which does not require either a permanent way or an electric cable, for forms of transport which do require these things, is less than may appear at first sight, since additional expenditure on roads is necessitated.

4 For the case of land see Chapter IX. below.

CHAPTER VIII

THE EFFECTS OF CHANGES IN THE CHARACTER OF CONSUMERS' DEMAND.

§1. Inventions bring about changes in producers' demand for the various factors of production. But we must also take account of changes in consumers' demand for consumable goods and services, and consider how far such changes are likely to affect the absolute and relative shares of the various factors. Three causes of changes in consumers' demand may be usefully distinguished; first, changes in the tastes and habits of consumers, unaccompanied by changes in the relative incomes of individuals and classes or in the total production per head of the community; second, changes in the relative incomes of individuals and classes, unaccompanied by changes in the total production per head; third, changes in the total production per head.

§2. Apart from wars, the effects of which will not be considered here, changes of the first sort are not very important for our present purpose. Changes in fashion are most prominent, of course, in luxury trades which, however, only absorb a small part of the productive resources of any community. In any case, it seems

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Even in France, according to a French estimate, less than 1% of the total production consists of articles of luxury. See Robertson, Industrial Fluctuation, pp. 71-72. Mr. Robertson gives various examples of the effects of changes in fashion, which are more amusing than important, e.g., the effects of the spread of the habit of bicycling among women, and of the Chinese Revolution of 1911, as a result of which many Chinamen gave up wearing pigtails, to the great benefit of the sofa-stuffing trade in this country, owing to the cheap import of large consignments of these discarded emblems of the past.

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