Portrait of Frank William Taussig

Frank Taussig argues for the reverse of a common misconception about the relationship between high wages and the use of machinery (1915)

Found in: Some Aspects of the Tariff Question

Frank W. Taussig (1859-1940), in a chapter on comparative advantage, shows the connection between high wages, the use of machinery, and the widespread existence of “freedom and competition in [men’s] affairs”:


The relation between high wages and the use of machinery calls for a word more of explanation. It is usually said that high wages are cause of the adoption of machinery, and that we find here the explanation of the greater use of machinery in the United States. I believe that the relation is the reverse; high wages are the effect, not the cause…. The abundant resources which so long contributed greatly, and indeed still contribute, to making labor productive and wages high, thereby stimulated the introduction of labor-saving methods in industries not so directly affected by the favor of nature. But the fundamental cause of the prevalent use of machinery was in the intelligence and inventiveness of the people; these being promoted again by the breath of freedom and competition in all their affairs.