[OPE-L:3358] Re: TSS and Tech Change

John Ernst (ernst@usa.pipeline.com)
Fri, 11 Oct 1996 11:08:04 -0700 (PDT)

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In OPE-3356, Jerry says among other things:

>You misunderstood my example -- in the case of c), the electricity
>consumed and price of electricity could not be expected to grow, In fact,
>one would anticipate that the electricity consumed would *decrease*,
>ceteris paribus ...
>Again: let's consider the question of technical change on the micro level
>first. Consider the case of a new process technology which reduces
>circulating capital requirements. For instance, energy-saving computer
>monitors. [here we will only consider this commodity to the extent that it

>can be an element of constant fixed capital and will ignore its dual
>function as a consumer good]. As firms substitute new better monitors for
>older ones, they reduce their circulating capital requirements to produce
>a given level of output. This form of technical change would leave the
>labor requirements per unit of output *in the firm* unchanged. However,
>one could also see this type of technical change as labor-saving since it
>means that the requirements for labour-power would decrease in the
>*electricity-generating branch of production*, ceteris paribus.
>To see how this all plays out, one has to consider the inter-connectedness

>and inter-reledness of different branches of production.
>In practice, there are also other complicating factors as well -- such as
>market structure and rent.

John responds:

Fine. A decrease in electricity per unit output for the firm that uses the

monitors. I assume that it takes the same amount of labor per unit
output of electricity as before and hence cannot agree that in our
example we are seeing labor-saving tech change. If we are, then
any capital-saving tech change becomes, ultimately, labor-saving.
The distinction between the two forms becomes, to say the least,