Acta Oeconomica 9. (1972)
1972 / 3-4. szám - Révész Gábor: Capital-Labour Substitution
Acta Oeconomica Vol. 9 (3—4), pp. 287—304 (1972) G. Révész CAPITAL-LABOUR SUBSTITUTION* The article presents the limits in Hungary to substituting machinery for labour under the conditions of the economic regulators operating at present. In the author’s view, the need for saving labour by mechanization ought to be higher in Hungary than in the developed capitalist countries. The regulators now in force hinder this process. The unrealistically low tax on wages and the exaggerated burden on capital work to this effect; the price level of consumer goods is much lower than that of machinery. Also the generally applied wagelevel regulation has an unfavourable effect, together with the fact that only a relatively small part of the additional yield of investments is available to enterprises for repaying credits. Also the looseness of work discipline (intensity), to be partly traced back to the labour shortage emerging under the effect of the regulators has a retarding effect. In conclusion, some trends (possibilities) for the improvement of the regulators are outlined. The relative valuation of capital and labour in the actual economic activity is a question of great importance. These relative values determine the extent to which the mutual substitution possibilities may be utilized in production. Looking at the question from the aspect of productive forces, the substitution of capital for labour in a broad sense is in effect a central issue in the historical development of labour productivity and thus in economic growth as well. This substitution process reflects the continuous perfection of the working, tool-making and using man. We are not going to follow and describe the historical process of substituting capital for labour in this article. Our aim is rather to show what influence the economic regulators prevailing in Hungary have on the interest of enterprises in mechanization and in the application of high-level technology. Our analysis does not aim at specifying those external impulses and internal, frequently contradictory, opinions as a result of which positive or negative decisions are taken regarding mechanization. Our concern here is to characterize the potential scope af activity limited by the economic regulators with a view to enterprise decisions. By economic regulators we understand the system of prices, rules and behaviour norms (including profit and wage regulations) belonging to the financial system. * For the convenience of the Western readers, labour and capital are used here, instead of the usual Marxian concepts of live and embodied labour.