Relevant and even prescient commentary on news, politics and the economy.

Zero-Sum Foolery 2 of 4: Doomsday Climate Machine

by Sandwichman

Zero-Sum Foolery 2 of 4: Doomsday Climate Machine

We have met the doomsday machine and it is us.

The “doomsday machine” became a household word after Herman Kahn speculated about building such a device in his 1960 book, On Thermonuclear War. Stanley Kubrick’s Dr. Strangelove: How I learned to stop worrying and love the bomb (1964), immortalized the doomsday machine in the following exchange between two Peter Sellers characters, President Merkin Muffley and Dr. Strangelove:

Muffley: Dr. Strangelove, do we have anything like that in the works?

Strangelove: A moment please, Mr. President. Under the authority granted me as director of weapons research and development, I commissioned last year a study of this project by the BLAND corporation. Based on the findings of the report, my conclusion was that this idea was not a practical deterrent, for reasons which, at this moment, must be all too obvious.

Muffley: Then you mean it is possible for them to have built such a thing?

Strangelove: Mr. President, the technology required is easily within the means of even the smallest nuclear power. It requires only the will to do so.

Muffley: But, how is it possible for this thing to be triggered automatically, and at the same time impossible to untrigger?

Strangelove: Mr. President, it is not only possible, it is essential. That is the whole idea of this machine, you know. Deterrence is the art of producing in the mind of the enemy… the fear to attack. And so, because of the automated and irrevocable decision making process which rules out human meddling, the doomsday machine is terrifying. It’s simple to understand. And completely credible, and convincing.

General Turgidson: Gee, I wish we had one of them doomsday machines, Stainsy.

Muffley: But this is fantastic, Strangelove. How can it be triggered automatically?

Strangelove: Well, it’s remarkably simple to do that. When you merely wish to bury bombs, there is no limit to the size. After that they are connected to a gigantic complex of computers. Now then, a specific and clearly defined set of circumstances, under which the bombs are to be exploded, is programmed into a tape memory bank….

Strangelove: Yes, but the… whole point of the doomsday machine… is lost… if you keep it a secret! Why didn’t you tell the world, eh?

Also in 1964, Rapoport’s Strategy and Conscience was published.

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“Post Post Work Post”

As one of those manufacturing people who improve throughput, I often read Sandwichman who writes for “Econospeak BlogSpot I hope you enjoy his analysis of robots replacing humans and the resulting availability of time off. Wait a minute, does a post work society giving time off really take place?

Automation may mean a post-work society but we shouldn’t be afraid, writes Paul Mason at the Guardian. Mason writes, “to properly unleash the automation revolution we will probably need a combination of a universal basic income, paid out of taxation, and an aggressive reduction of the official working day.

Don’t get me wrong. The Sandwichman is all for aggressive reduction of working time. But not because magical robots are going to usher in a Utopian (or dystopian) post-work society.

Let me tell you a secret: although machines are used to produce things, they are not about producing things. They are about power — the power of one human being with a will over other human beings with wills. Exchange value is a manifestation of this power relationship.

Twenty years ago, George Caffentzis explained “Why Machines Cannot Create Value.” His essay began, “Thirty years ago…

…my generation was told by economists, sociologists, and futurologists to expect a society in which machines had taken over most repetitive and stressful tasks and the working day would be so reduced by mechanization that our existential problem would not be how to suffer through the working day but rather how to fill our leisure time.

Twenty years plus thirty years makes fifty years. It might as well be a hundred years or a hundred and fifty. Perhaps fifty years from now some thinker will be predicting that some as yet unheard of technology is about to usher in a post-work society. Don’t believe it.

And no, it’s not because supply creates its own demand or because technology creates more jobs than it destroys.

Why did the most sophisticated analysts of the last generation go wrong and why is there a still continual stream of texts to this day like Rifkin’s The End of Work, which see in technological innovations the promise of a new era of workerless production?
Caffentzis asked in his essay.

And why twenty years later does Paul Mason regurgitate the Rifkinesque fantasy? Caffentzis answers his own question with an examination and defense of “Marx’s original claim that machines cannot produce value” and an update of that claim from the perspective of the late twentieth century. The essay is reprinted in In Letters of Blood and Fire, a 2013 anthology of Caffentzis’s essays.

Caffentzis’s explanation is erudite and probably redundant. Those who have misinterpreted Marx’s argument by viewing it through an economistic lens, will presumably do the same to Caffentzis’s defence of Marx.

That is, when someone insists that wealth refers to a vault full of gold coins and/or a warehouse full of useful stuff, that person will no doubt presume that a labor theory of value refers to some sort of ratio between the coins and the stuff. Thus the critics attribute to Marx the position that Marx fundamentally critiqued. Kill the messenger.

Set aside the coins and the stuff, please. Wealth refers to, on the one hand, disposable time and on the other hand, command over the labor of other people. That is to say wealth expresses a power relationship between people — always a precarious balance between autonomy and coercion. Precarious because “total power” over the other terminates the relationship by murdering the other.

Robots do what they do without autonomy or coercion. They do not desire time off from work “to seek recreation… to enjoy life… to improve the mind.” That which they do not possess — and do not want to possess — cannot be taken from them. Robots are already dead. Thus they cannot create value in the sense of giving up a portion of their autonomy.

This perspective is difficult to grasp not because of any inherent complexity but because it lies outside the distorting frame in which wealth and value are conventionally viewed. But it bears repeating:

Machines cannot creates value because they are already dead.

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Your Tax Dollars Subsidizing Methane Gas Emissions

Sandwichman at Econospeak has a post up on subsidizing Methane and the BLM. It fits in with the Bundy take over of the Wildlife Refuge Bldg. He credits 538 Politics for this exclusive The Armed Oregon Ranchers Who Want Free Land Are Already Getting A 93 Percent Discount We are paying for the air pollution and they are getting a hefty discount on the grazing of their cattle.

Sandwichman: Well, looky here. On the one hand, the minimum wage has declined substantially over the last several decades in real terms. But on the other hand, federal government subsidies to a small number of cattle ranchers has increased as the gap between the market price and the Bureau of Land Management grazing fees has widened.

According to a report from the Center for Biological Diversity, “fewer than 21,000 — or 2.7 percent of the nation’s total livestock operators — benefit from the Forest Service and BLM grazing programs in the West.” Furthermore;

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The Confederate Ideology: "At this cost the system is maintained."

by  Sandwichman  

The Confederate Ideology: “At this cost the system is maintained.”

invisible hand

Cornell students leaving Willard Straight Hall
“We presume that the citizens of Virginia are much like the ‘rest of mankind,’ and under ordinary circumstances have as much nerve as falls to the lot of common humanity. But they have long lived under the shadow of a great terror. Each slaveholder keeps a grim skeleton in his social closet, which may start into life at any moment. The ‘demon of hate’ which his life of wrong and outrage has invoked, haunts him night and day. He listens for the roar of the slumbering fires of the volcano upon whose sides he sleeps, and every sound that hurtles through the air, every footfall behind him, makes him fancy that the avenger is on his truck.” — Frederick Douglass, “The Reign of Terror in the South”

The sub-sub-title to John Ellis Cairnes’s eloquent The Slave Power described the 1862 book as “an attempt to explain the real issues involved in the American contest.” This blog post is an attempt to explain the real issues involved in the (too) long-enduring contest over “political correctness.” It comes to the conclusion that it is pretty much the same real issue as Cairnes identified. The spectre of political correctness emanates from the “grim skeleton in [America's... capitalism's] social closet, which may start into life at any moment.”

Undoubtedly, the “political-correctness police” exact a tremendous toll on the psyches of White Americans and have been doing so for several decades. To put all that torment in perspective, one is advised to read Alexander Cockburn from 1992, “Bush & P.C. — A conspiracy so immense…” Lewis Lapham from 2004, “Tentacles of Rage: The Republican Propaganda Mill, a brief history,” and Martin Jay from 2010, “Dialectic of Counter-Enlightenment: The Frankfurt School as scapegoat of the lunatic fringe.”

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Hughes on First?

Sandwichman cross post taken from Econospeak Have to admit, the spectre of mailman flying a gyrocopter onto the lawn of the Capitol building appeals to the Sandwichman’s weakness for eccentric idealists.

From the Tampa Bay Times, here is the letter that Doug Hughes was delivering to 535 members of both houses of Congress.

Dear ___________,
Consider the following statement by John Kerry in his farewell speech to the Senate —

“The unending chase for money I believe threatens to steal our democracy itself. They know it. They know we know it. And yet, Nothing Happens!” — John Kerry, 2-13

In a July 2012 Gallup poll, 87% tagged corruption in the federal government as extremely important or very important, placing this issue just barely behind job creation. According to Gallup, public faith in Congress is at a 41-year record low, 7%. (June 2014) Kerry is correct. The popular perception outside the DC beltway is that the federal government is corrupt and the US Congress is the major problem. As a voter, I’m a member of the only political body with authority over Congress. I’m demanding reform and declaring a voter’s rebellion in a manner consistent with Jefferson’s description of rights in the Declaration of Independence. As a member of Congress, you have three options.

1. You may pretend corruption does not exist.
2. You may pretend to oppose corruption while you sabotage reform.
3. You may actively participate in real reform.

If you’re considering option 1, you may wonder if voters really know what the ‘chase for money’ is. Your dismal and declining popularity documented by Gallup suggests we know, but allow a few examples, by no means a complete list. That these practices are legal does not make them right! Obviously, it is Congress who writes the laws that make corruption legal.

1. Dozens of major and very profitable corporations pay nothing in taxes. Voters know how this is done. Corporations pay millions to lobbyists for special legislation. Many companies on the list of freeloaders are household names — GE, Boeing, Exxon Mobil, Verizon, Citigroup, Dow …
2. Almost half of the retiring members of Congress from 1998 to 2004 got jobs as lobbyists earning on average fourteen times their Congressional salary. (50% of the Senate, 42% of the House)
3. The new democratic freshmen to the US House in 2012 were ‘advised’ by the party to schedule 4 hours per day on the phones fund raising at party headquarters (because fund raising is illegal from gov’t offices.) It is the donors with deep pockets who get the calls, but seldom do the priorities of the rich donor help the average citizen.
4. The relevant (rich) donors who command the attention of Congress are only .05% of the public (5 people in a thousand) but these aristocrats of both parties are who Congress really works for. As a member of the US Congress, you should work only for The People.

1. Not yourself.
2. Not your political party.
3. Not the richest donors to your campaign.
4. Not the lobbyist company who will hire you after your leave Congress.

There are several credible groups working to reform Congress. Their evaluations of the problem are remarkably in agreement though the leadership (and membership) may lean conservative or liberal. They see the corrupting effect of money — how the current rules empower special interests through lobbyists and PACs — robbing the average American of any representation on any issue where the connected have a stake. This is not democracy even if the ritual of elections is maintained.

The various mechanisms which funnel money to candidates and congress-persons are complex. It happens before they are elected, while they are in office and after they leave Congress. Fortunately, a solution to corruption is not complicated. All the proposals are built around either reform legislation or a Constitutional Amendment. Actually, we need both — a constitutional amendment and legislation.

There will be discussion about the structure and details of reform. As I see it, campaign finance reform is the cornerstone of building an honest Congress. Erect a wall of separation between our elected officials and big money. This you must do — or your replacement will do. A corporation is not ‘people’ and no individual should be allowed to spend hundreds of millions to ‘influence’ an election. That much money is a megaphone which drowns out the voices of ‘We the People.’ Next, a retired member of Congress has a lifelong obligation to avoid the appearance of impropriety. That almost half the retired members of Congress work as lobbyists and make millions of dollars per year smells like bribery, however legal. It must end. Pass real campaign finance reform and prohibit even the appearance of payola after retirement and you will be part of a Congress I can respect.

The states have the power to pass a Constitutional Amendment without Congress — and we will. You in Congress will likely embrace the change just to survive, because liberals and conservatives won’t settle for less than democracy. The leadership and organization to coordinate a voters revolution exist now! New groups will add their voices because the vast majority of Americans believe in the real democracy we once had, which Congress over time has eroded to the corrupt, dysfunctional plutocracy we have.

The question is where YOU individually stand. You have three options and you must choose.

Sincerely,

Douglas M. Hughes

See also: WHAT IS OUR ONE DEMAND?

See also: Martin Gilens and Benjamin I. Page, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens”

Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic-Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.

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Cheese-eating Job Creators (and the lump-of-labor fallacy)

I have been following Sandwichman for a long period of time. Since I do shop floor throughput exercises which no economist appears to understand in a micro sense, Sandwichman comes the closest to what I deal with on a day to day basis.

Paul Krugman in 2003:

“Traditionally, it is a fallacy of the economically naïve left — for example, four years ago France’s Socialist government tried to create more jobs by reducing the length of the workweek.”

Paul Krugman in 2014:

Well, I hadn’t looked at this data for a while; and where we are now is quite stunning:

“Since the late 1990s we have completely traded places: prime-age French adults are now much more likely than their US counterparts to have jobs.

“Strange how amid the incessant bad-mouthing of French performance this fact never gets mentioned.”

Now that you’ve mentioned this fact, Paul, how about revisiting the cogency of the lump-of-labor fallacy claim?

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Piestein

by Sandwichman  (re-posted with author’s permission):

In his Essay Concerning Human Understanding, John Locke affirmed, “I do not question but that human knowledge, under the present circumstances of our beings and constitutions, may be carried much farther than it hitherto has been, if men would sincerely, and with freedom of mind, employ all that industry and labour of thought, in improving the means of discovering truth, which they do for the colouring or support of falsehood, to maintain a system, interest, or party, they are once engaged in.”

In Takings: Private Property and the Power of Eminent Domain, Richard Epstein, henceforth Professor Piestein, gave the quintessential demonstration of how to employ “all that industry and labour of thought… for the colouring or support of falsehood.” In his “philosophical preliminary” chapter, “A Tale of Two Pies” Professor Piestein purported to illustrate, with a drawing of two pies, a Lockean perspective on “how natural rights over labor and property can be preserved in form and enhanced in value by the exercise of political power.”

Here is what Professor Piestein’s pies looked like. Sandwichman coloured them in to make them prettier:

And here is what Professor Piestein wrote about his pies:

The larger pie indicates the gains that are possible from political organization. The outer ring represents the total social gains, while the dotted lines indicate the proportion of the gain received by each individual member. The implicit normative limit upon the use of political power is that it should preserve the relative entitlements among the members of the group, both in the formation of the social order and in its ongoing operation. All government action must he justified as moving a society from the smaller to the larger pie.

A couple of questions go unasked and, of course, unanswered by Professor Piestein.

Why should we assume that the unequal endowments are the consequence of natural rights rather than a backward projection of the inequalities imposed in political society by its rulers? Second, even if the unequal endowments had been present in nature, why should that make the more fortunate individuals entitled to a proportionately larger share of the social gains, since they are, after all, social gains? In The Natural and Artificial Rights of Property Contrasted (1832), Thomas Hodgson wrote:

Laws being made by others than the labourer, and being always intended to preserve the power of those who make them, their great and chief aim for many ages, was, and still is, to enable those who are not labourers to appropriate wealth to themselves. In other words, the great object of law and of government has been and is, to establish and protect a violation of that natural right of property they are described in theory as being intended to guarantee.

What would Locke say? I’ll not waste your time with a pile of extraneous exegesis and superfluous hermeneutics. Number VIII of Locke’s Essays on the Law of Nature was titled, “Is Every Man’s Own Interest the Basis of the Law of Nature? No.” Number VIII was the source for several of the arguments in Chapter Five, “Of Property,” in Locke’s Second Treatise on Civil Government.

What part of the word “no” did Professor Piestein not understand?

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"Of Property" and the Mercantilist Fallacy

  Sandwichman at Econospeak offers a look at a piece of history:

“Of Property” and the Mercantilist Fallacy

“Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.”

The above is the core of what is commonly referred to as John Locke’s “labour theory of property.” It is a extraordinarily compelling narrative, resplendent with “self-evident truth” (“We hold these truths to be self evident…) and nearly indiscernible ambiguity (what does “labour” mean? what’s “mixing” got to do with it?).
It is widely acknowledged by Locke scholars that his economic views were essentially mercantilist. Keynes suggested that Locke stood with “one foot in the mercantilist world and one foot in the classical world.” However that may be, chapter five of Locke’s Second Treatise on Civil Government, “Of Property”, is relentlessly, incorrigibly, two-footedly mercantilist. And nobody seems to have noticed (except possibly John R. Commons).

Why would this even matter?


Yeah, sure, we are told, ad nauseum, about how PROPERTY is the be all and end all of freedom, democracy and prosperity. A comic-book, social Darwinist pseudo-Locke lends the right-wing libertarian anti-tax mantra a veneer of moral righteousness and intellectual gravitas.

And it’s crap.

But there are bigger fish to fry: LABOUR.

While socialists and even liberals may be inclined to circumscribe the sanctity of property, they are loath to gainsay the hallowed individualist framing of labour. Some folks even think it’s downright revolutionary to insist on the worker’s right to the whole product of labour. Labour, though,  is only conventionally something an individual performs. Labour is social. Labour power is best understood as a common-pool resource.
The ideology of labour as an extension of the self is pervasive, persuasive and pernicious. From that perspective, solidarity is a voluntary act of magnanimity that can be “terminated at will” just like a redundant employee. As individuals, the relationship between workers is accidental; their relationships with the employer and with the state are what matters.

The inescapable mercantilism of Locke’s notion of natural law puts that individualist ideology in a different light. In his Essay on the Law of Nature, Locke was adamant that “the rightness of an action does not depend on its utility; on the contrary, its utility is a result of its rightness.” “It is impossible,” Locke wrote, “that the primary law of nature is such that its violation is unavoidable. Yet, if the private interest of each person is the basis of that law, the law will inevitably be broken…”

Here is where the mercantilism comes in: “when any man snatches for himself as much as he can, he takes away from another man’s heap the amount he adds to his own, and it is impossible for anyone to grow rich except at the expense of someone else.” To avoid any mistake, Locke reiterates his objection to positing “every man’s self interest the basis of natural law”:

“For in such a case each person is required to procure for himself and to retain in his possession the greatest possible number of useful things; and when this happens it is inevitable that the smallest possible number is left to some other person, because surely no gain falls to you which does not involve somebody else’s loss.”

An unequivocal zero-sum game. “No gain falls to you which does not involve somebody else’s loss.” “It is impossible for anyone to grow rich except at the expense of someone else.”

Now there are those who will object that Locke modified his views between the earlier Essay on the Law of Nature and his later Second Treatise on Civil Government. Not so. In the latter, and especially in the chapter “Of Property,” Money plays a pivotal role in repealing what has become known as the spoilage limitation:

“He that gathered a hundred bushels of acorns or apples, had thereby a property in them… He was only to look, that he used them before they spoiled, else he took more than his share, and robbed others. And indeed it was a foolish thing, as well as dishonest, to hoard up more than he could make use of.”

Someone who took so much that it spoiled before he could use it did a foolish, dishonest thing and robbed others. In short, if you take so much that it rots, it was never yours to take.

How does Money nullify that limitation? The person who gathers more perishable goods than he can use can exchange it for durable Gold or Silver. Problem solved.

Locke was a staunch metallist who insisted on the intrinsic value of Money as represented by its weight and fineness. This is not some incidental biographical trivia. Locke’s well documented views on Money were decisive in the monetary reform and re-minting of British coinage in the 1690s.

According to Locke, it was not the absolute quantity of Gold and Silver a nation held that determined its wealth but the proportion of Gold and Silver it held relative to the holdings of the rest of the world:

“Riches do not consist in having more Gold and Silver, but in having more in proportion, than the rest of the World, or than our Neighbours, whereby we are enabled to procure to our selves a greater Plenty of the Conveniencies of Life than comes within the reach of Neighbouring kingdoms and States, who, sharing the Gold and Silver of the World in a less proportion, want the means of Plenty and Power, and so are Poorer.”

A zero-sum game. What was “one man’s gain is another’s loss” in useful things is mitigated by its transmutation into metal Money where one man’s gain is still another’s loss but is at least not a net loss (through waste). This later proviso, though, only holds good for Money with an intrinsic value of specified weight and fineness.

Postscript

Some readers may have wondered at the parenthetical reference to John R. Commons back in the second paragraph. Commons didn’t specifically address the passages I cited from the Essay on the Law of Nature. In fact, it wasn’t published until 20 years later. Nor did he discuss Locke’s influential writings on Money. But he did make a point in a reply to a critic that is germane to my argument here.

The context of Commons’s observations is crucial to the significance of his remark, so I will reproduce a substantial excerpt here:

My point of view is indeed personal, as was said by Professor Homan of all institutional economists. It is simply my own experience in collective action from which I drew a theory of the part played by collective action on individual action. It may or may not fit other people’s ideas of institutionalism. It started, indeed, with my trade-union membership and my later participation in labor arbitration; then turned to drafting a public utility law designed to ascertain and maintain reasonable values and reasonable practices; then to drafting and participating in administration of an industrial commission law with the similar purpose of reasonable practices applied to employers and employees; then to representing the western states before the Federal Trade Commission on the Pittsburgh Plus case of discrimination; then to aiding the House Committee on Congressman Strong’s bill for stabilization of prices; meanwhile administering and developing a plan for unemployment insurance finally enacted into law.

I do not see how anyone going through these 45 years of participation could fail to arrive at two inferences, conflict of interest and collective action. Even the state itself turned out to be merely collective action of those in possession of sovereignty.
Meanwhile I was necessarily studying hundreds of decisions, mainly of the United States Supreme Court, endeavoring to discover on what principles they decided disputes of conflicting interests under the clauses of the Constitution relating to due process, to taking property and liberty, and to equal treatment. I found that none of the economists had taken this point of view, and none of them except Professor Ely, had made any contributions that would make it possible to fit legal institutions into economics or into this constitutional scheme of American judicial sovereignty.

Drumroll… Now here’s his point:

Going back over the economists from John Locke to the orthodox school of the present day, I found they always had a conflicting meaning of wealth, namely a material thing and the ownership of that thing. But ownership, at least in its modern meaning of intangible property, means power to restrict production on account of abundance while the material things arise from power to increase the abundance of things by production, even overproduction.

A simple point but a profound and subtle one. Ownership is not the same as the material thing owned. But beyond that, the restrictive implication of ownership is contrary to the abundance implication of the material things owned.

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Five Million Jobs?

guest post by Sandwichman

Five Million Jobs?

“It is remarkable, in view of the virtual unanimity of opinion among economists as to the general shape of the relationship between hours and output, that the effect of hours shortening has received so little attention in published projections. It is often completely ignored even in their description.” – Edward F. Denison, “Employment and Hours of Work: Their Contribution to Past Growth and a Projection of the Future” in The Sources of Economic Growth, 1962.

In the early 1960s, Edward Denison, the founder of growth accounting, estimated that roughly one-tenth of the economic growth that occurred between 1909 and 1958 in the U.S. could be attributed to the “effect of shorter hours on [the] quality of a man-hour’s work.” That would have translated into approximately three million jobs created — except Denison also assumed that the optimal working time for output was 48.6 hours a week, 52 weeks a year (the 1929 annual average)! So he subtracted “the effect of shorter hours on [the] quality of a man-year’s work” from his estimate of growth, leaving an implied net loss of around 200,000 jobs over the 48-year period. What those calculations show, more than anything, is how sensitive any employment projections are to the framing assumptions. We will soon have occasion to tweak these assumptions to generate a range of employment estimates, but first a word about the long-term trend in hours of work.

Joseph Zeisel, writing in the Bureau of Labor Statistics Monthly Labor Review in 1958 called the long-term decline in the industrial workweek, “one of the most persistent and significant trends in the American economy in the past century.” That is, it had been a persistent and significant trend up until around 1940. After a brief spike during World War II, however, the length of the average workweek in manufacturing quickly receded to pre-war levels and then remained essentially unchanged for 65 years, with only minor, short-lived fluctuations reflecting the ebb and flow of the business cycle. By March 2010, the average manufacturing workweek lasted six minutes longer than it had in August 1945.

The chart above shows the decline in weekly manufacturing hours from 1850 to 1950, the levelling off of hours after World War II and a trendline extrapolating from the 1850-1950 rate of decline. In the broader economy, annual hours of work continued to decline after World War II, but at a slower rate than they had previously.

Furthermore, the increased participation of women and students in the workforce, a sectoral shift of employment away from manufacturing and toward services and the expansion of part-time work contributed to the post-war decline in annual hours. Annual hours for full-time workers showed even less movement. The chart below shows “potential” and actual annual hours from 1909 to 1958 as reported by Denison and annual hours from 1950 to 2009 as reported by the Conference Board’s Total Economy Database.

Had the annual hours of work continued to decline at the rate they did from 1909 to 1958, average annual hours in 2009 would have been about 14% lower than they were. What might the effect on job creation have been? Recall that Denison’s estimates were based on his assumption that the optimal length of the workweek for total output was 48.6 hours, 52 weeks a year. He also supposed that maximum productivity would occur at 33.9 hours a week. Below that latter figure, output was assumed to fall faster than hours as hours declined. But is it reasonable to assume that the optimal hours for both output and hourly productivity would remain the same from 1909to 2009? No.

Not unless we are prepared to defend the proposition that technology has remained unchanged or that the optima are unaffected by technology.
To estimate the job creating potential of shorter hours, I assume that the trend of hours of work from 1909 to 1958 approximates the amount of working time that would be optimal for output. This suggests that in 1909 the optimal workweek was indeed 52 hours and in 1958 it was 39.6 hours. Projecting that trend indicates an optimal workweek of 29 hours in 2009 (or, alternatively, 32 hours a week with five weeks’ vacation). Since a longer than optimal week subtracts output from the optimal potential, we can estimate that about six and a half percent of potential output was wasted by excessive hours of work.* That is to say, people were too worn out to produce as much as they otherwise could have. In terms of jobs lost, this represents over five million jobs.

I’ve used some fairly conservative benchmarks to anchor the trendline. If I had chosen 1940, instead of 1958, as the endpoint, then the trend would have indicated an optimal working year of 1400 hours and around 11 million potential jobs foregone. Also, Sydney Chapman’s theory of the hours of labor shows that hours determined in a hypothetical competitive market tend to be longer than optimal with regard to output. So even the pre-1940 trend may overstate the length of working time that would be optimal. The assumption that the given hours of work in 1909 and 1958 were optimal is, in effect, unrealistic. But to produce any estimate at all it is necessary to make such an unrealistic assumption. In the period since World War II, a significant payroll tax and regulatory bias against reducing the standard full-time hours of work has emerged, more or less “freezing” weekly hours at the forty-hour standard established in 1938 by the Fair Labor Standards Act.

Remember, these are not work-shared jobs, created by redistributing a given number of hours of work. They are productive jobs associated with an expanded output. Whether or not that additional economic growth would be a good thing is another matter I will examine in due course. For the present, however, what I want to call attention to is the seeming indifference of conventional economists to a rather considerable untapped potential source of job creation.

*An explanation of how maintaining excessively long hours over the long run actually detracts from total output can be found in Sydney Chapman’s 1909 Economic Journal article, “Hours of Labour.” Initially, an extra hour of working time (beyond the hypothetical long run optimum) adds an increment of output to the daily total, but over time, say a few months, the accumulated fatigue leads to a diminished pace throughout the day and a lower total daily output. The optimum is thus determined by the amount of time and effort can be sustained over the long run.

To estimate how much output is subtracted by excessive hours, we use an idealized, smoothed work curve that assumes a rise in hourly productivity through the early hours of the day followed by a plateau and decline of productivity as fatigue sets in. These changes can be represented by a sine curve, which is convenient for calculation of the area under each segment of the curve, representing the variation in hourly productivity. For example, the diagram below represents work curves for 1909 and 1958. As indicated, the output per worker in 1958 was a bit more than twice the output per worker in 1909. That greater total output, however, occurred in a much-reduced number of hours of work: 2704 hours in 1909 and 2060 hours in 1958. If we assume that annual hours in both 1909 and 1958 were optimal, given the respective levels of technology, then increasing annual hours in 1958 to the 1909 level would have reduced total output in 1958 by around 22%.

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