ABSTRACT
By the late 1960s Hicks had clearly become fascinated by the Ricardo machinery effect, i.e. the employment consequences of the introduction of a different, more ‘mechanized’ method of production. Hicks came to the defence of what he regarded as the central message of Ricardo’s analysis of the machinery question: there are important cases in which the introduction of a new type of machinery might reduce both real output and employment in the short run, the harmful effect might persist for quite a time, but the increased investment caused by higher profits due to the increased efficiency of the new production process should eventually lead to a path of output and employment which is above that one which could have been achieved with the old production process. 1
