By Steven Daniel Garber
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200 being laid out in means of production, and £300, say £1 per man, in labour-power. On the introduction of machinery the composition of this capital becomes altered. We will suppose it to consist of four-fifths constant and one-fifth variable, which means that only £100 is now laid out in labour-power. Consequently, two-thirds of the workmen are discharged. If now the business extends, and the total capital employed grows to £1500 under unchanged conditions, the number of operatives employed will increase to 300, just as many as before the introduction of the machinery.
Chapter 18 shows how and why the complex dynamics of localised technological change leads to path dependence when applied to the analysis of social interactions. Localised technological change is path dependent because of the role of the interplay between irreversibility and hence past dependence, learning conditions and the local characteristics of knowledge externalities and positive feedbacks within knowledge networks. This definition makes it possible to articulate the radical differences between past dependence and path dependence and consequently between path-dependent innovation and path-dependent adoption.
The first lines of the chapter are clear enough: As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for.