There are two main economic theories and principles that predict the overall effects and consequences of the computerization of the workplace. These theories make the distinction between the inputs of labor and capital in the economic marketplace. Labor, the use of human workers as a resource, and capital, the investment of resources, money and materials, are the two important parts in a company's production process. The introduction of new technology into the work environment has effectively reduced the individual company's use of labor, human workers, and increased the firm's investment or input in capital, into buying new machines and creating new technology. The two following theories share differing views on the theory behind and effect of this change:

• The Capital-Labor Complementarity Theory
• The Production Theory

This theory argues that neither capital nor labor is the essential ingredient to the success of a company or production process. In economics, complementarity between two activities is defined as follows: a set of activities with the property that doing more of any subgroup of the activities raises the marginal return to the other activities. Two inputs are complements when the increase in profit from doing one is higher if the other has also been done. This theory argues that labor and capital are both complements: increasing input in one, while maintaining the level of the other, will increase the combined profits and benefit of the two; likewise, decreasing the input of one will decrease the total profits and benefit.

This theory argues that the computerization of the workplace has greatly reduced the individual firm's investment in labor. Since labor and capital are complementary, the large decline in labor input has resulted in a significant decrease in the total benefit of the investment in capital, as the increased inputs in capital have not been able to compensate for the overwhelmingly larger decrease in labor. In other words, by replacing a large number of human workers with a single machine, the company is actually reducing the total benefit that it could be achieving.

The fundamental principle of this theory is the assumption that, "in the workplace, trained professional workers are extremely important and essential because they add a human element unmatched and unparalleled by computer technology." (Ellwood) There are many problems only humans can solve as well as many situations where human workers are most capable of doing the job right. Computers are not truly capable of intelligence and independent problem solving; they are only as capable as their programming. Accordingly, computers are limited in that they may not be able to handle certain situations; humans, on the other hand, are not hindered with such limitations.

Furthermore, the key to economic success is synergy and motivation. If workers start seeing their colleagues being fired, being replaced by machines, the morale of the company will definitely suffer. The worker's belief in their own job security, and thus their motivation and productivity, will be adversely affected. With the alarming rate of job elimination caused by the computerization of the workplace, this effect will be amplified.

Finally, there is a moral issue to deal with. Every worker has rights, it is not ethical to replace a human's work and livelihood with a machine. Is it fair to take away someone's job after they have dedicated his or her life for decades? Is it right to cut off an individual's source of income for simple increase in profits? Do workers deserve to be exploited by management? The morality of a company also has a large effect on the motivation and productivity of its employees.

It is imperative that a balance between the inputs of capital and labor be maintained in sustaining an efficient, effective and moralistic business. If the labor is "present, working and productive the product will be better, creating more capital." New technology does not necessarily need to replace workers; computers can be used by workers to increase productivity, helping them in their work rather than to replacing them in the workplace. Only by maintaining such a balance can a company maximize its benefits and success.

The production theory places a pure emphasis on capital as the key ingredient to the success of a company. This theory is based on the neoclassical theory of production; as economists Diwan and Chakraborts explain: "[this theory] is based on the idea that capital and labor are substitutes." If the chance of reducing costs, thereby increasing profits as well as production exists, any excess of non-necessities of labor can be compromised or eliminated. Since the computerization of the workplace eliminates labor while increasing profits and production, then it creates an efficient allocation of resources.

This theory focuses on the basic fundamental principles of economics. Economics is based on the equilibrium where supply must meet the demand at a given price. In order for a firm to compete in the marketplace, all it must do is be able to produce the given amount of the product and sell it at that given price. Which inputs are involved is not important. Whether or not the firm uses all labor or all capital is not significant in reaching this equilibrium.

However, these inputs are important when determining the firm's profits, determined by total revenue minus total cost. Obviously, the lower the costs or the higher the revenues will result in greater profit for the company. Therefore, in the interests of profit, the company will always pick those inputs, which either cost less or increase revenues.

New technologies, then, are ideal for advocates of the production theory. The introduction of new technology in the workplace has not only greatly decreased costs, but also increased production, thereby increasing revenues. Investing in technology, a capital-intensive input, will result in increased profits. Labor, which is more expensive and less productive, is no longer as essential to the company.

In the competitive market, the company that best reduces costs and maximizes profits will enjoy the most success. If new technology can accomplish that task, then it is in the firm's best interest and survival instinct to utilize that technology to its fullest extent; otherwise, the firm may face extinction in the economic marketplace. If thousands of jobs and wages can be replaced with one single machine, why not use it? Computers are more reliable than humans are--they do not get sick--and are more productive--they can do the work faster and more effectively.

Furthermore, in times after the introduction of new technology, a new sector has always emerged, compensating for lost jobs in the previous sector. For example, although mass production, invented by Henry Ford, resulted in the loss of jobs of small craftsman, new jobs such as factory workers and engineers were created. With the increased usage of computers, the demand has never been greater for computer specialists, programmers and technicians.

The shift of firms towards a more capital-intensive and technology-intensive focus simply reflects a more efficient and effective allocation of resources. The computerization of the workplace and the introduction of new technology are beneficial in promoting economic prosperity and growth for all people.