Production Relations, Labor Productivity, and Choice of Technique: British and U.S. Cotton Spinning

The role of capital-labor relations in the transformation of inputs into output is central to the Marxian theory of capitalist development but is neglected by neoclassical theory. By comparing the development of cotton spinning in Britain and the U.S. in the last half of the nineteenth century, this paper analyzes the ways in which capital-labor relations affected the level and structure of wages, labor productivity, and choice of technique. This case study demonstrates the descriptive and predictive limitations of the neoclassical theory of choice of technique while at the same time pointing the way towards the development of a more incisive, and historically relevant, theory.