massive investment spending is able to produce capital
goods and raw materials at low prices. For example, it
has been reported that available technology can drill oil
form mountain areas such as Colorado at a very low cost
per barrel. Many machines and several types of
equipment can be produced at a lower cost of production.
This reduction in prices of capital goods and raw
materials generates a lower cost of production for
business enterprises. Consequently, profitability will
increase, so will investment and employment.
The introduction of new technologies, besides the
increases in production, will reduce demand for labor and
wages (Veblen, 1923: 220, 287). Veblen (1923: 200)
thinks that the business community intends “to buy the
industrial man-power as cheap as may be, and to sell the
means of living ...as dear as may be.” This statement
clearly means that profit is augmented by lowering wages
and squeezing workers. Moreover, lower wages during
the initial expansionary phase of the business cycle are
associated with increased productivity which reduces the
cost of labor per unit of output and increases profits.
massive investment spending is able to produce capitalgoods and raw materials at low prices. For example, ithas been reported that available technology can drill oilform mountain areas such as Colorado at a very low costper barrel. Many machines and several types ofequipment can be produced at a lower cost of production.This reduction in prices of capital goods and rawmaterials generates a lower cost of production forbusiness enterprises. Consequently, profitability willincrease, so will investment and employment.The introduction of new technologies, besides theincreases in production, will reduce demand for labor andwages (Veblen, 1923: 220, 287). Veblen (1923: 200)thinks that the business community intends “to buy theindustrial man-power as cheap as may be, and to sell themeans of living ...as dear as may be.” This statementclearly means that profit is augmented by lowering wagesand squeezing workers. Moreover, lower wages duringthe initial expansionary phase of the business cycle areassociated with increased productivity which reduces thecost of labor per unit of output and increases profits.
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