The Economics of Speed: Machine Speed as the Key Factor in Productivity by Bernard C. Beaudreau

Author:Bernard C. Beaudreau
Language: eng
Format: epub, pdf
ISBN: 9783030267131
Publisher: Springer International Publishing

4.2.1.6 Profitability

In this section, we analyze the profitability of speed-ups, focusing on not only the logistics, but also what we refer to as the market outcome. The father of modern political economy, Adam Smith, in his “An Inquiry into the Nature and Causes of the Wealth of Nations,” stated uncategorically that the extent of specialization is determined by the extent of the market,” by which it should be understood that the decision to speed-up production is determined by the size of the market—or put simply, what the market will bear. If the market cannot absorb the additional output, then it is clear that the firm will decide against it. In Smith’s case, the speed-up consisted of moving either from artisanal techniques to steam engine-powered ones or from hydraulic-powered techniques to steam-engine powered ones. The latter was the case of Matthew Boulton’s Soho manufactory that was powered by a waterwheel on Hockley Brook, which oftentimes dried up in the summer months, making the steam engine a welcomed alternative.

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