ABSTRACT
This chapter discusses the basic law of the enterprise: the law of higher output. The enterprise must increase its productivity; for increased productivity is the only basis for expansion. The typical change in an industrial economy is expansion: the development of new resources, new products and new markets from within the economy. Historically, economic change has largely been the result of outside forces acting on the economy: war, conquest, geographic discoveries, religious movements, etc. The great and dramatic changes in preindustrial economies have all been the result of dislocation. Change is indeed the very purpose of economic activity and economic institutions in an industrial system. Historically, lower prices and higher real wages have always been at least as important as the means to make the benefits of increased productivity available to the economy, as capital repayment through the profit mechanism.
