Noah Smith has written a column at BloombergView, “Don’t Believe What Jeff Sessions Said About Jobs,” which scolds Attorney General Jeff Sessions for “terrible economics.” That may be a bit like carping about Charles Manson’s hairstyle or critiquing David Duke’s academic integrity. But there is something far more dangerous going on with Smith’s knee-jerk invocation of the lump-of-labor fallacy to rebuke Sessions and, presumably, those who might find Sessions’s claims credible.
In effect, Smith is falsely equating Sessions’s rationale for the expulsion of 800,000 young people who have grown up in the U.S. to Dean Baker’s advocacy of work-sharing. Lest that appear to be hyperbole, here is how Smith described Sessions’s terrible economics: “It’s a classic application of a well-known fallacy called the Lump of Labor — the idea that there are a fixed number of jobs in the world, and those jobs get divvied up among people.” And here is how Omar al-Ubaydli framed his counterpoint to Dean Baker’s case for shorter workweeks: “Proponents of work-sharing believe an economy requires a fixed amount of work to be performed by a limited number of people.”
But Smith’s is only a relatively tame implementation of the fixed amount of false equivalency racket. Would you believe “collective bargaining = genocide”? Pierre Cahuc and André Zylberberg traversed the obscene false equivalence distance from work-time reduction to genocide in The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy:
The idea that any country’s economy, and a fortiori the world economy, contains a fixed number of jobs or hours of work that can be parceled out in different ways is false. When used to justify the policies that reduce the length of the individual work week, it may lead to unintended consequences. … It can even be dangerous, as when it leads to the notion that getting rid of “superfluous” manpower (the Jews of Nazi Germany in the past, immigrants from many countries in the present) will give work back to indigenous residents.
Of course the above claim is not only false but absurd in the extreme. Work is “parceled out” all the time. A shift manager at Starbucks fills available hours with interchangeable baristas. The number of jobs or number of hours doesn’t have to be “fixed” to allow them to be parceled out in different ways. Nevertheless, Cahuc and Zylberberg ride their vile hobby horse from the ominous-sounding “unintended consequences” of reducing the work week to the downright dangerous notion of getting rid of unwanted populations, which somehow begins to sound almost benign compared to those terrifyingly vague unintended consequences. The slippery slope only needed to be greased one short step to encompass the principle of collective bargaining. That step was taken by Thomas Cree in “The Evils of Collective Bargaining in Trades’ Unions” when he described the “economics upside down” that underpinned trade unionism and collective bargaining:
But now, there is a more serious evil than any of the foregoing. It is this, that the power of the union is exercised to enforce regulations which limit production and waste labour. Most workmen believe (and the belief is not confined to workmen) that increase of production per man is an evil. They think they are benefiting their class by doing each as little as possible, so as to make the work go over a greater number; and the desire to relieve the society of out-of-work allowance is a reason for enforcing that view. This is at the root of the demand for an eight hours’ day, and for a say in the management in shops, and also a cause of the objections to piecework. In this view exceptional industry is no longer a virtue—it is a fault to be punished not only by disapproval of fellow-workmen but, in some cases, by penalties. In some trades, if a man earns more than a certain wage he is fined, and his employer is fined as well.
As did many of his fellow dogmatists, Cree felt it instructive to obscure the claim of a false belief in a fixed amount of work by embedding it in the “regulations which limited production” and the supposed impulse toward slacking and shirking. The rationale, however is that “most workmen believe… that increase of production per man is evil”… because they assume that there is only a fixed amount of work to be done and thus if one man does more of it than there will be less left for others. This argument was explicated in David Schloss’s canonical explanation of “the Theory of the Lump of Labour”:
In accordance with this theory it is held that there is a certain fixed amount of work to be done, and that it is best in the interests of the workmen that each shall take care not to do too much work, in order that thus the Lump of Labour may be spread out thin over the whole body of work-people.
Schloss’s “Theory of the Lump of Labour” conformed to a template that already was more than a century old, having been expressed in similar terms in 1780 by the Lancashire magistrate, Dorning Rasbotham, in response to factory riots the previous year. Successive iterations of the complaint against the economic illiteracy of workers, handed down from Rasbotham to Schloss, adhered to what Albert O. Hirschman diagnosed as the “rhetoric of reaction.” Workers enjoyed “the best of all possible worlds.” Any effort on their part to “coerce” employers into paying higher wages or operating shorter hours would inevitably result in — as Cahuc and Zylberberg put it — “unintended consequences” that would make them worse off.
But, in what Noah Smith calls “one case where economists get it absolutely right” the consensus of economists — outside of Econ 101 textbook orthodoxy — is far less unanimous than he presumes. Among those economists who directly refuted the fallacy claim are Maurice Dobb, A.C. Pigou and Robert Hoxie. Economists who indirectly countered the fallacy claim in their analysis include Sydney J. Chapman, John Maynard Keynes, Joan Robinson, Luigi Pasinetti, John R. Commons, Dorothy W. Douglas, John Maurice Clark and Thorsten Veblen. Amazingly, objections and counter-arguments raised by these economists are never mentioned — and obviously never addressed — when the fallacy claim is trotted out. What kind of getting it “absolutely right” is that?
In my view, two of the most effective repudiations of the fallacy claim came from Dobb and Hoxie, both of whom presented alternative explanations for why workers might appear to want to “restrict output.” Dobb argued that what workers were after was not maximizing aggregate earnings but maximizing earnings relative to expenditure of time, effort and bodily “wear and tear.” Hoxie argued that the tactics and strategies of trade unions were not based on some abstract idea of what was happening in the “economy as a whole” but on everyday experience in a local economy. Dobb referred to the “Work Fund” fallacy, which was another name for the lump of labor:
…trade unionists in the nineteenth century were severely castigated by economists for adhering, it was alleged, to a vicious ‘Work Fund’ fallacy, which held that there was a limited amount of work to go round and that workers could benefit themselves by restricting the amount of work they did. But the argument as it stands is incorrect. It is not aggregate earnings which are the measure of the benefit obtained by the worker, but his earnings in relation to the work he does — to his output of physical energy or his bodily wear and tear. Just as an employer is interested in his receipts compared with his outgoings, so the worker is presumably interested in what he gets compared with what he gives. A man who works longer hours or is put on piece-rates, and increases the intensity of his work as a result, may earn more money in the course of the week; but he is also suffering more fatigue, and probably requires to spend more on food and recreation and perhaps on doctor’s bills.
Hoxie re-branded the lump of labor as the “fixed group demand theory” and concluded that this theory, in practice, “is simply the application by the unions of the principle of monopoly, admittedly valid”:
There is much scorn of unionists by economists and employers because of this lump of labor theory with its corollaries. This scorn is based on the classical supply and demand theory and its variants. Supply is demand. Increased efficiency in production means an increase of social dividend and increased shares, which in turn increase production and saving. Therefore, the workers cut off their own noses when they limit output or limit numbers. The classical position is undoubtedly valid when applied to society as a whole, if there is any such thing, and in the long run. But the trouble is that, so far as the workers are concerned, there is no society as a whole, and no long run, but immediate need and rival social groups.
Both Dobb and Hoxie called attention to the central conceit of the economists’ scorn for unionist “theories” — that somehow those who do not embrace the economic orthodoxy must have a view of economics that is “upside down” relative to the “true” theory. which is to say, same-but-different, with difference indicating deficiency. To put it bluntly, othering.