In Craft conditions growth is driven from the supply side. The growth of the labor force sets the pace of capital accumulation, through its influence on real wages. Capital accumulates as savings are assembled by the financial system and made available to new firms, of the same size and character as the old. All this changes with the advent of Mass Production.

In the era MP/CA growth is demand-driven. Investment plans depend on the expected growth of the market; this is essentially a generalization of the “accelerator” principle. So we need an understanding of how and why markets grow, to provide the basis on which business can develop firm expectations of market expansion. Market growth depends on the expansion of incomes, on the one hand, and on the willingness of households or firms to extend their use of a product or of new groups to adopt it, on the other. A concept of normal market growth can be defined but can also be seen to depend somewhat precariously on particular conditions.

These investment plans cannot be developed without a consideration of pricing policies. When demand increases, capacity must rise in pace. Yet the growth of demand is not itself independent of pricing – lower prices will encourage market expansion, higher will discourage it. On the other hand prices provide the profits on which to base the financing of investment – higher prices enable a larger expansion of capacity; lower, a smaller.