ABSTRACT
In any area of production, labor productivity can be raised by scrapping equipment that is obsolete (or at least not up to the latest standards of technology) and replacing it with more modern, or the most modern, models. The ultimate aim and effect of such investment for modernizing the means of production are none other than increasing the productivity of labor. And conversely: productivity, except for some special cases, cannot be increased without the appropriate investment. On the basis of this relationship between investment and greater productivity, it seems justified to assume that a higher rate of investment will automatically lead to a greater increase in labor productivity. This conclusion appears obvious, but it is fallacious nevertheless. More precisely, it may be true for the isolated case, but it is generally misleading for the economy as a whole, especially in the long run.
