Technical progress and the responses of an illyrian firm

This paper explores the behavioral properties of an Illyrian firm when technical progress occurs. The responses of the firm differ from those of a capitalist firm. If technical progress is Harrod-neutral, then the Illyrian firm keeps capital and output constant but reduces employment. The problem of technological unemployment is thus generated. This problem will be, in fact, a short-run one but not always a long-run one, because, as a result of the technical progress, new cooperatives enter an Illyrian industry and hence an opportunity for employment is created in the industry as a whole.