Now the third myth, what I call the superiority myth. It’s often said that those who forget about the helpful side of technological progress, those complementarities from before, are committing something known as the lump of labor fallacy. Now, the problem is the lump of labor fallacy is itself a fallacy, and I call this the lump of labor fallacy fallacy, or LOLFF, for short. Let me explain. The lump of labor fallacy is a very old idea. It was a British economist, David Schloss, who gave it this name in 1892. He was puzzled to come across a dock worker who had begun to use a machine to make washers, the small metal discs that fasten on the end of screws. And this dock worker felt guilty for being more productive. Now, most of the time, we expect the opposite, that people feel guilty for being unproductive, you know, a little too much time on Facebook or Twitter at work. But this worker felt guilty for being more productive, and asked why, he said, “I know I’m doing wrong. I’m taking away the work of another man.” In his mind, there was some fixed lump of work to be divided up between him and his pals, so that if he used this machine to do more, there’d be less left for his pals to do. Schloss saw the mistake. The lump of work wasn’t fixed. As this worker used the machine and became more productive, the price of washers would fall, demand for washers would rise, more washers would have to be made, and there’d be more work for his pals to do. The lump of work would get bigger. Schloss called this “the lump of labor fallacy.”
And today you hear people talk about the lump of labor fallacy to think about the future of all types of work. There’s no fixed lump of work out there to be divided up between people and machines. Yes, machines substitute for human beings, making the original lump of work smaller, but they also complement human beings, and the lump of work gets bigger and changes.
But LOLFF. Here’s the mistake: it’s right to think that technological progress makes the lump of work to be done bigger. Some tasks become more valuable. New tasks have to be done. But it’s wrong to think that necessarily, human beings will be best placed to perform those tasks. And this is the superiority myth. Yes, the lump of work might get bigger and change, but as machines become more capable, it’s likely that they’ll take on the extra lump of work themselves. Technological progress, rather than complement human beings, complements machines instead.
Then leisure pursuits will become work
We will redefine work
But the capitalist mindset of so-called oroductive labor will need to be changed. Making MORE meh birthday cakes won’t be productive . Making one beautiful, splendid cake will be
A real corollary
In the early1980’s our company opened up a subsidiary in Mexico. The subsidiary did low wage labor currently being done by our U.S. vendors.
The savings on low wage unskilled labor wage huge of course, but it took no jobs away from employees of our company.
But by the mid-1980’s, we began training Mexican engineers how to do our skilled mf’ging processes at our US facility.Then we brought key mfg’ing operators from Mexico to do the skilled mfg’ing operator jobs.
The our company’s mfg’ing operators knew full well they were training the Mexican replacements, and our mfg’ing engineer knew they were training their replacements in Mexico.
However at that time our company also had and had always had a full employment policy for our employees — that is no lay-offs even under severe recessions and downturns from time to time in sales. So they weren’t worried…… then.
What was happening was that instead of machines improving our overall productivity, it was low cost foreign labor. We then began to fully automate as our volumes (sales) increased dramatically due in large part to our product’s more competitive business much of which was foreign sourced low cost labor. BTW. this began long before NAFTA.
Our domestic automation absorbed the new higher volumn business without having had cut employment …. and in fact improved it because in the end it made us even more competitive so increased our volumes even more…. though at the expense our competitors & high skill vendor’s operations — who then absorbed the overall losses of labor.in our industry. But, our company didn’t have to hire as many new employees as would have otherwise been required by not automating.
Eventually, well before China entered the WTO our company moved much of Mexico’s subsidiary work to new Chinese subsidiaries…. labor costs in China, fully burdened with company paid dorms and all meals in addition to hourly paid costs,, were ~15$ – 20% of Mexican wages initially. As Chinese gov’t mandated higher wages over time, our domestic automation was xferred to our Chinese subsidiaries and our company[‘s “full employment” policy changed of course…. layoffs began slowly in small numbers, but steadily.
My point is there’s no lump of labor as the post by Sandwich nan illustrates but before machines take over making things humans made with domestic labor, lower cost labor in foreign nations will be replaced by non-domestic lower wage labor as long as that is a better roi on capital investments than the increasingly lower costs of automation.
In other words, there doesn’t have to be a lump-of-labor for automation to give labor a lump.
Overall, from a domestic point of view only, there the only between increasingly lower cost automation and foreign low cost labor is which returns the greatest roi on capital.
As I’ve always said, capital knows no allegiances, other than to profits..
I’ve always been leary of the argument that improving labor productivity always results in some mystical force which compensates by increasing the demand for labor. This assumes that labor captures all or most of the benefit of the higher productivity. If a worker is paid more, he will spend that increment on goods and services. That will increase the demand for labor. If a capitalist is paid more, he will buy income producing property and just drive up the price of income producing assets and drive down the return on investment.
It’s like the arguments about raising taxes. Will the taxes be paid by the customers, the managers or the shareholders? It’s usually a mix, but it’s usually all about power and little about economic theory.
We’ve seen a lot more of the latter.
I find it very peculiar that economic theory has no place for “power.”
while there may be no lump of labor, at any given time in a given place there very likely IS a lump of labor. and when the wheels of the economy grind out their greater good for the greater number, there will be some people ground to dust.
this is similar to paying workers for the piece. it didn’t take labor long to figure out that this meant that a fast worker would set a pace that would drive the slow worker… or normal workers who would like to walk all day and not be forced to run to keep up. i think this is a sane attitude, economists, and bosses (strangely enough) think it’s a lazy attitude and the man who can’t keep up is either lazy or … well, survival of the fittest.
oddly enough, i think many if not most bosses (and fast workers) have figured this out. it’s strange that the economists have not.
Economic theory tends to get a bit leery when discussing power. I think it’s because power doesn’t fit into the traditional 18th century economic framework. I don’t think the absence is peculiar; I think it is telling.
You are absolutely right about there existing a short term lump of labor. It’s like a game of musical chairs. In theory, the guy stuck without a chair can go off and make a new one, but by then, the party might be all out of cake and ice cream.
A lot of white collar guys, find blue collar work attitudes strange. The blue collar guys tend to know who is boss and where the ceiling is. Over and over, one reads of a white collar guy in a blue collar who is asked to slow down to fit in with the other workers. It’s a different set of values, based on a different reality.
Economists are usually white collar. Producing more papers, giving more talks and otherwise being more productive can advance one’s career and get one more money. If economists were blue collar and faced fixed pay, they’d limit their publication, speaking and so on.
i heard another perennial fallacy on the radio today: national radio for smart people was interviewing oklahoma (nebraska?) assemblywoman about REPUBLICAN legislature voting big tax increase after years of tax cuts that were going to boost the economy and bring in new business.
seems they didn’t. and even the R’s can see the state is falling apart.
but, she said, we have a balanced budget law so we aren’t in the mess the Federal government is in with huge debts.
then she explained that the Feds were going to have to cut entitlements to reduce it’s huge debt.
actually, i think i count four fallacies that won’t die..