Branko’s Lumps
In a post at his blog globalinequality today, Branko Milanovic claims that “Robotics leads us to face squarely three fallacies.” He then proceeds to “debunk” technological unemployment, satiation of human needs and the environmental carrying capacity of the earth. He concludes his post with the assurance that “history teaches us” we have nothing to fear regarding limits to growth, exhaustion of natural resources and replacement of humans by machines.
A week ago, I posted Outlaws of Political Economy in which I documented the total absence of evidence for the alleged false belief in a fixed amount of work. The fallacy claim, I argued, is a negative projection that is compulsively repeated by economists.
In my post, I cited the entry on “Economic Law” from the 1893 Palgrave’s Dictionary of Political Economy. In turn, the Palgrave’s entry cited an 1892 article, in German, by J. Bonar that I was unable to locate [update: found it]. But the search for it led me to Bonar’s 1893 book, Philosophy and Political Economy, described by Warren Samuels as “one of the most remarkable works in the history of economic thought.” In that latter book, Bonar discussed Niccolo Machiavelli’s notion of a “fixed quantity of happiness” and mentioned Francis Bacon’s enunciation of the same basic idea — that one person or country’s gain is a another’s loss. The rationale, in a nutshell, of mercantilism.
Following up on the Bacon quote, I discovered much the same sentiment had been expressed by Michel de Montaigne nearly a century earlier and a millennium and a half earlier by the mime author, Publilius. In short, long before the fallacy became a “fallacy,” it was a maxim that circulated among the most distinguished literati, Montaigne, Machiavelli, Bacon…
Publilius’s maxim translates as “Profits in trade can be made only by another’s loss.” Montaigne’s is “One man’s profit is another’s loss.”
It just so happens that James Bonar also delivered a series of lectures in 1910 addressing the “subtle fallacies which are apt to invade the reasoning of trained economists in spite of learning and discipline.” One of the sources of error that Bonar discussed in his first lecture was “the existence and prevalence” of “watchwords” or “maxims” that keep alive biases inconsistent with the economist’s reasoning. A watchword is “a detached phrase that has taken the place of an argument” and may even become “a substitute for an argument.”
In his fifth lecture, Bonar specifically addressed one of those tricky watchwords, “in the long run” and replied, 106 years before the fact, to one of Milanovic’s key arguments about “the lessons of history”:
It is not easy to show that the invention of new machines will tend to increase wages. This was the tendency first supposed by Ricardo; but he changed his mind and wrote: “The same cause which may increase the net revenue of the country may at the same time render the population redundant and deteriorate the condition of the labourer.” It was this change of view that made McCulloch doubt the infallibility of Ricardo. The more orthodox position (if we allow that any position of Ricardo’s could be heretical) was that machinery tends in the long run to employ more labour than it has displaced; this was to be the consolation of the hand-loom weaver, thrown out of work by the factory system. It was to be a sufficient vindication of an economic principle, that, if it did not fit the facts now, it would fit them at some time in the future. But in the case of machinery there were more economic principles asserted than one. One seems quite to fit the facts: that there is a tendency under the regime of machinery towards a greatly increased production at less cost. It was a different proposition that the increased product tends to be equally shared. The economist has no warrant for saying that any economic tendency exists which by itself brings about good distribution. The sharing of property was matter of law and political institutions, in some countries religious prejudices; and the conditions so established might prevent any such consummation. It does not seem true that economic tendencies are all made beneficial by length of time any more than a man is necessarily made better by growing old. There is no saving virtue in the ”long run.”
An economist from the 1930s named John Maynard Keynes also took issue with the policy relevance of the legendary long run. Ironically, our old mime friend, Publilius also had something proverbial to say about the long run: “Patience is a remedy for every sorrow.”
A very common trope about nuclear power in the 50’s and 60’s was that eventually it would be “too cheap to meter”. As if that fact would ever have been enough to keep the capitalist owners of power plants from their power to extract rents. There being nothing “too cheap to meter” if the meter is connected to a ka-ching machine.
And Robot Labor to the extent it exists already (which is plenty) and to the extent it might exist in the future will ALWAYS be subject to that same dynamic. Sure the goods may in principle pour out at next to zero marginal cost to the people who deployed the robots. But who gives a shit about that? People who disagree might want to Google on “epi-pen” or “martin skrelli”.
There are theoretical paths forward that will deliver these wonderful results. You can consult the really inspiring book Looking Backward by Bellamy published in 1888.
“Bellamy’s novel tells the story of a hero figure named Julian West, a young American who, towards the end of the 19th century, falls into a deep, hypnosis-induced sleep and wakes up one hundred and thirteen years later. He finds himself in the same location (Boston, Massachusetts), but in a totally changed world: It is the year 2000 and, while he was sleeping, the United States has been transformed into a socialist utopia. The remainder of the book outlines Bellamy’s thoughts about improving the future. The major themes include problems associated with capitalism, a proposed socialist solution of a nationalization of all industry, the use of an “industrial army” to organize production and distribution, as well as how to ensure free cultural production under such conditions.
The young man readily finds a guide, Doctor Leete, who shows him around and explains all the advances of this new age; including drastically reduced working hours for people performing menial jobs and almost instantaneous, Internet-like delivery of goods. Everyone retires with full benefits at age 45, and may eat in any of the public kitchens. The productive capacity of the United States is nationally owned, and the goods of society are equally distributed to its citizens. A considerable portion of the book is dialogue between Leete and West wherein West expresses his confusion about how the future society works and Leete explains the answers using various methods, such as metaphors or direct comparisons with 19th-century society.”
In retrospect Bellamy’s book is now seen as somewhat less realistic than an older novel published in 1865:
Alice’s Adventures in Wonderland
I don’t think it is unrealistic at all. In fact Bellamy’s vision of the future may be more right than wrong to the point where “big brother” owns and controls every aspect of society. If you look at China for example he is way more correct in vision than the US but it seems we are becoming more government owned and controlled every day and surely looked upon only as a “lump of labor”. If you live in China you are already just a “lump of labor” with no real voice or rights. …Then there is the French example where the citizenry openly rebelled and “let the workers eat cake”. This lopping off heads of the elite to gain respect and equality would never be possible in our society today would it?
Bill have you actually real ‘Looking Backward’? You seem to have it confused with ‘1984’.
And I have no idea of where you thought you were going with the French Revolution angle, In particular you are tone deaf to the whole context of Marie Antoinette’s famous (if possibly apocryphal) “let them eat cake”. The French Revolution was not in origin about redistribution as such. Nor was the Reign of Terror really about gaining “respect and equality”. From where I sit you are talking in sound-bites.
“Patience is a remedy for every sorrow.”
That is an awesome quote for the “it’ll all work out someday” types.
Though I have to say Milanovic is one of the only modern lump of labor fighters I’ve seem concede even this much:
“Yes, the shorter our time-horizon, the more that proposition seems reasonable. Because in the short term the number of jobs is limited and if more jobs are done by machines fewer jobs will be left for people.”
“The long run” does a lot of work while it sits in the background as an almost unspeakable assumption.
Bruce when I read in further detail Sandwichman’s “Outlaws of the Political Economy” at Econospeak and especially all the following comments there were priceless perspective. Reading those comments gave me a much greater perspective. I also reread the bio of Walter Reuther and the more recent happenings of the labor movement does shed much light as did the story about the Knights of Labor…Interestingly I see the transition of Scientific management to the beginnings of Lean thinking as part of the new capitalism of globalization. This is where the main tenants of “Lean” being faster, cheaper, better and reduced waste become incorporated into the capitalist-globalism business model of economic gain that recognizes no borders or nations laws or sovereignty.