In economics it is assumed that one can, to an extent, substitute one factor for another. So, when one buys a machine that takes the place of some workers, one is substituting capital for labor. Similarly, one can often use less energy in a production process by buying more efficient machines or processes, in effect substituting capital for energy. This happened at the time of the late 1970’s “oil shocks”. As the price of oil went up, industry learned how to become more efficient with energy, often actually lowering costs in the process. The result was a cut in the demand for oil and consequently a fall in its price despite the efforts of the OPEC cartel.

The substitution of factors depends on the costs of each. When wages for a specific task are low it doesn’t pay to buy an expensive machine to replace the labor. If wages go up, it may make sense to buy the machine. This will tend to keep wages down for that specific task.