Lump of Labor "Fallacy"
There's a really interesting dustup over at Wikipedia over the article on the "lump of labour fallacy." Tom Walker, of the Work Less Party (and blog), added some comments in rebuttal of mainstream economists' treatment of that alleged fallacy; his critique was based on the analysis in this article. Tom's comments were deleted by a subsequent editor, on the grounds that Tom was insufficiently credentialled and peer-reviewed: a rather odd position, given Wiki's status as a people's medium for circumventing professional academic gatekeeping. A vigorous debate over the editing ensued in the article's "discussion" forum.
The following remarks are based on my comment at Tom's blog.
It's not self-evidently false that machines or techniques that reduce the amount of labor necessary to do a job will reduce the amount of available work. Arguments that it is are typical of vulgar libertarianism: they are equivocal as to how far the present system can be taken as a proxy for a "free market." To say that something "can't happen" under the present state capitalist system, because that's "the way the market works," is nonsense.
In a real free market system, the bargaining power of labor would be such that jobs competed for workers, instead of the other way around. And cooperative ownership and self-employment would be much more widespread than at present. Under those circumstances, decisions to change production methods would be decisions by labor itself to increase its own productivity, with labor internalizing all the good and bad consequences of the decision. Under those circumstances, it would indeed be a fallacy that workers would suffer from increases in productivity.
But in the present government-cartelized system, with legally enforced privileges for land and capital that force labor to sell itself under terms of unequal exchange, it's hardly likely that labor will internalize all the benefits of changing the work process. The presence of the state in state capitalism causes changes that might otherwise be mutually beneficial, instead, to be a zero-sum game.
So it's quite likely, under such circumstances of privilege, that the benefits of increased labor productivity would accrue to the owners of capital, while the harm would accrue to workers.
We don't live in a free market economy, or anything remotely approaching it. In a government-cartelized, corporate-dominated economy like the present one, the rules of "how the free market works" go right out the window. For example, it makes no sense to use Say's Law to "prove" that overproduction is impossible. As Joseph Stromberg pointed out, under state capitalism J.A. Hobson could be closer to the truth than J.B. Say.
The following remarks are based on my comment at Tom's blog.
It's not self-evidently false that machines or techniques that reduce the amount of labor necessary to do a job will reduce the amount of available work. Arguments that it is are typical of vulgar libertarianism: they are equivocal as to how far the present system can be taken as a proxy for a "free market." To say that something "can't happen" under the present state capitalist system, because that's "the way the market works," is nonsense.
In a real free market system, the bargaining power of labor would be such that jobs competed for workers, instead of the other way around. And cooperative ownership and self-employment would be much more widespread than at present. Under those circumstances, decisions to change production methods would be decisions by labor itself to increase its own productivity, with labor internalizing all the good and bad consequences of the decision. Under those circumstances, it would indeed be a fallacy that workers would suffer from increases in productivity.
But in the present government-cartelized system, with legally enforced privileges for land and capital that force labor to sell itself under terms of unequal exchange, it's hardly likely that labor will internalize all the benefits of changing the work process. The presence of the state in state capitalism causes changes that might otherwise be mutually beneficial, instead, to be a zero-sum game.
So it's quite likely, under such circumstances of privilege, that the benefits of increased labor productivity would accrue to the owners of capital, while the harm would accrue to workers.
We don't live in a free market economy, or anything remotely approaching it. In a government-cartelized, corporate-dominated economy like the present one, the rules of "how the free market works" go right out the window. For example, it makes no sense to use Say's Law to "prove" that overproduction is impossible. As Joseph Stromberg pointed out, under state capitalism J.A. Hobson could be closer to the truth than J.B. Say.
posted by Kevin Carson | 9:53 AM
7 Comments:
In a government-cartelized, corporate-dominated economy like the present one, the rules of "how the free market works" go right out the window.
Yes, or put a slightly different way -- "to the degree that the market in question isn't free, the reasons a free market works don't apply."
It's not self-evidently false that machines or techniques that reduce the amount of labor necessary to do a job will reduce the amount of available work.
It is, actually. No matter who benefits from the reduction in labour costs - consumer or owner - there is now the same amount of widgets for lower cost. The difference in costs will be spent or saved somewhere, generating new work to service whatever the new desire is. You might argue that a free market would spread those benefits to consumers - which I agree with - but that doesn't change the job generation mechanism.
- Josh
BTW, this guy at the Work Less thing is not our friend.
- Josh
I should probably have distinguished between work and income: it's not self-evident that productivity increases will be translated into increased wages--they may be passed on as dividends or CEO pay, instead.
But I still don't believe the reduction of work claim is self- evidently false, either. Whether increased income is translated into equal amounts of demand (and hence work), regardless of what class the increased income goes to, is an issue in itself.
Again, I think J.A. Hobson's theory of underconsumption resulting from maldistribution of income is a better description than Say's Law of what happens under "actually existing capitalism." Mechanization might just lead to a smaller number of work hours necessary to produce the same level of consumption goods for the productive classes.
I'm not sure what you mean by Tom Walker being "our friend." If you mean he doesn't agree with everything I believe, that's correct; but then, you and I disagree on a lot, too. I probably agree with at least as much of Tom's ideas as with those of nominally "libertarian" groups like the ASI. Individualist anarchism is pretty much on the fringe of both the free market and the socialist communities, so there are very few people who agree with me on a majority of issues; in the realm of ideas, I take what I can use and leave the rest.
You and I disagree on how we ought to define property, a genuine and fundamental difference. However, most of our disagreements are over what we will expect will happen in the absence of a state. I expect more of the same - capitalism - and you expect a more radical shift in paradigm to mutual organisations.
By contrast, this guy might support your desired outcomes, but you know full well that his proposals to tweak the edges of a massive state will not generate the benefits you (or I) seek.
- Josh
It is, actually. No matter who benefits from the reduction in labour costs - consumer or owner - there is now the same amount of widgets for lower cost. The difference in costs will be spent or saved somewhere, generating new work to service whatever the new desire is.
That's ridiculous. It's not necessarily the case at all. Let us suppose Bill Gates personally gains a million dollars as a consequence of a particular technological efficiency introduced by him at Microsoft. Suppose further that consumers gain nothing - zilch - from this, because Microsoft chooses not to drop any of its prices. (A simplistic example for the purposes of argument.)
Now suppose Bill decides to invest this money in, say, an old and expensive painting. That painting might stay in his house for decades. That money did not lead to a million dollars "worth" of work (whatever that means!) being stimulated into existence. It merely "generated" a limited amount of work due to processing the sale itself and physically transporting the painting (far, far, less than a million dollars). The work done in producing that painting had already been paid for when the painting was first commissioned. The main effect of buying the painting is to shift a lot of value around. It clearly does not, in and of itself, cause any significant amount of work to be added to the economy relative to "what would have otherwise been".
You (Wild Pegasus) may choose to argue that such transactions which stimulate tiny and insignificant amounts of work relative to their monetary size are, in fact, marginal and unimportant in the grand scheme of things. But the onus is on you to prove that dubious-sounding point, if you wish to make it, because you are the one arguing that it is "self-evident" that less work will not result. It is hardly self-evident to me, as a socialist.
The previous owner now has the proceeds of his sale to spend or save as he chooses. The auction company - its owners and workers - now have more funds to save or spend.
Perhaps this isn't what you want Gates to do with the money, or how you think society ought to be structured, but the money moves through the economy nonetheless.
- Josh
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