In this article we will discuss about the Economic Effects of Machinery. After reading this article you will learn about: 1. Advantages of Machinery 2. Disadvantages of Machinery.

Advantages of Machinery:

Machinery benefits the workers, the producers and the economy in the following ways.

1. Exploitation of Natural Resources:

Machines help in the exploitation of natural resources for the benefit of the people. Natural wealth of rivers, forests, minerals, land, mountains, seas, etc., can be properly exploited and used for productive purposes with machines.

2. Development of Infrastructure:

Machinery helps in the development of infrastructure like roads, railways, power, refineries, communications, etc.

3. Increases in Production:


The use of machines helps in increasing the production of capital goods, durable consumer goods, and agricultural products. Perishable consumer goods like milk, vegetables, fruits, eggs etc. are no longer perishable and are available all the year round with the spread of cold storage facilities.

This prevents their wastages and prices from rising when their supplies are short. By increasing production, machines raise the incomes of the people and the country.

4. Variety of Goods:

Machines provide a variety of consumer goods like TV, car, refrigerator, washing machine, household gadgets, etc. which make life comfortable and increase the standard of living of the people. The manufacture of innumerable consumer goods from the smallest pin to the largest aero plane has been made possible by machines. Machines have, in turn, been manufactured by other machines, called capital goods.

5. For the Producer:

The use of machines helps the producer in many ways which tends to increase his production and income. It leads to large scale production, division of labour and specialisation. These, in turn increase production, reduce costs and raise profits.


Machines save time and labour. They work faster than man! For example, a person operating a computer or a tractor finishes his work faster than many persons engaged in doing the same work by hands. Thus machines increase the productivity of labour and hence production.

6. For the Worker:

Machines help the worker in performing his duties in a better way than by hands. The efficiency of the worker increases because he can work accurately and faster, and produce quality products in larger quantities. Jobs which are dirty dull and involve lifting of heavy loads are done by machines.

For example, the cleaning of the city and the sewerage system by machines, preparing of accounts by a computer, and lifting of heavy loads by a crane have brought relief to workers. They take more interest in their work and their efficiency increases.

More Employment:


In the beginning, machinery replaces labour and there is unemployment. But in the long-run, it creates employment. ‘The use of machines increases productivity of labour thereby increasing production, reducing costs and making the goods cheaper.

As a result, their demand increases. In order to meet this demand, more workers are employed to increase their production. Income will rise which will further increase the demand for goods, thereby necessitating the employment of more workers. This process will continue in a multiplier way.

Secondly, as machines are made by machines, workers are needed to manufacture new machines.

Thirdly, after some use, machines need maintenance, repairs and replacement. For manufacturing their spare parts, and for repairs and maintenance, machines also need men.

Fourthly, machines require for their operations, repairs and maintenance, educated and skilled manpower. This leads to the setting up of institutions on formal and technical education which creates demand for the teaching staff.

Lastly, educated and skilled workers invent new machines and innovates new processes, thereby opening more employment opportunities. Thus machines create more employment.

7. For the Economy:

By increasing the productivity of all factors of production like land, labour, capital, etc., machines raise the overall production in the economy. It leads to the development of the industrial agricultural, tertiary and export sectors of the economy. Consequently, employment, national income and growth rate of the economy increase.

Disadvantages of Machinery:

Machinery is not an unmixed blessing. It has its harmful effects which are discussed below:

1. For the Worker:

Working on the same machine makes the work of a worker monotonous. There is no joy and satisfaction for him because he performs the same work over the years. This tends to reduce his efficiency. If the worker wants to migrate to some other place, it is difficult for him to find the same job in which lie specialises. Thus machinery reduces the mobility of labour.

2. Evils of Factory System:


The use of machinery leads to the development of the factory system and the evils associated with it. There is exploitation of men, women and children. Trade unions emerge which lead to class conflicts. The factory system gives rise to urbanisation with its bad effects like congestion pollution slums, dislocation of family life, diseases, etc.

3. For the Economy:

Machinery adversely affects the economy in a number of ways:

(a) Class conflicts lead to strikes and lockouts. They reduce production of goods and their prices rise,

(b) Inequalities of income and wealth increase because profits rise rapidly than the rise in wages,


(c) Often goods are produced in anticipation of demand, thereby leading to over production of goods. This leads to recession in the economy, and

(d) As machines replace men, there is unemployment in the country. But this is only in the short period.


Most of the adverse economic effects of machinery given above are not to be found except the evils of the factory system and urbanisation in modern times.