If the structure of production is modified by regulation or by politically empowered unions (i. e., "featherbedding"), so that the allocation of factors no longer accurately reflects their marginal contributions to the final product, then that structure will fail to produce consumers' goods with optimum efficiency. More specifically, workers will no longer be allocated to the most productive tasks, as determined by the law of returns, the value scales of consumers, and time preferences as reflected in the interest rate—and consequently DMVP and wages will be adversely affected. Such conditions may also lead to a demoralization of the work force, further eroding productivity.

In summary, increases in productivity and wages require adequate and efficient investment in the cooperating factors of production, especially capital goods. In a negative political atmosphere, such investment may be seriously impaired and improvements in the living standards of workers may therefore be delayed.