Dear Bill McBride,
Thank you for bringing up the so-called "lump-of-labor fallacy" in your Calculated Risk blog post,"Older Workers and the Lump of Labor Fallacy. I think this is an important topic because it brings to light one of the most dogmatically held and utterly baseless convictions of conventional economists -- that anyone who doesn't assume a self-propelled, perpetually-expanding economy is guilty of some bizarre "fallacy". Of course, to be consistent economists would also have to accuse advocates of any "job creation" strategy whatsoever of the fallacy. After all, the amount of work to be done isn't fixed! In some mythological long run the demand for labor is determined solely by its supply. But consistency isn't the strong suit of lump-of-labor fallacy claimants.
Let me introduce myself. I have written two published scholarly articles examining the lump-of-labor fallacy claim and its history. These also happen to be the ONLY two scholarly articles published that have investigated the status of the claim. My conclusion is that the so-called fallacy is a canard, a fraud, a libel.
There is no fallacy because, in the first place, people DO NOT assume a fixed amount of work. They may assume a given amount of unemployment, but in the face of persistent high levels of unemployment such an assumption is hardly "fallacious". Second, there is no "fallacy" in the sense of a canonical, demonstrated logical fallacy because economists who proclaim the fallacy are all over the map when it comes to explaining the "implicit" assumption of a fixed amount of work that they allege people make. Third, there is no economic fallacy, because the fallacy claim originated as a journalistic propaganda line that was only subsequently absorbed uncritically into economics textbooks. Fourth, there is no fallacy because modern accusations of the fallacy leave out a key component of the original -- the heinous motive of the unions to restrict output so that they could impose their dictatorial socialistic will on honest, innocent hard-working employers.
Without some sinister "ulterior design" to restrict output, the lump-of-labor fallacy claim is incoherent drivel. With it, it is a foaming-at-the-mouth, reactionary conspiracy theory.
Let me introduce you to the origin of the fallacy claim. The London correspondent for the New York Times, identified only by the initials F.H.J., filed a dispatch on October 6, 1871 on the engineers' strike for the nine-hour day in Newcastle, England. In the dispatch, the correspondent conceded the plausibility of the strike leader's argument that better rested workers will work harder during a shorter day and cited the opinion of A.J. Mundella, MP, that the strikers were sincere in their declarations.
"But," the correspondent interjected, "I find it very difficult to take this view." "The League is only an offshoot of the Unions, and the great object of the Unions is to surround production with all manner of restraints and restrictions, so that it shall not be accomplished too fast or by a small number of workmen." And why do the unions pursue such a negative policy? "Their theory is that the amount of work to be done is a fixed quantity, and that in the interest of the operatives, it is necessary to spread it thin in order to make it go far."
In 1891, David Frederick Schloss (also a journalist, who was, however, generally sympathetic to unions and the claim for a shorter work day) added the quaint "Theory of the Lump of Labour" sobriquet to the fallacy claim. In the early 20th century, the National Association of Manufacturers conducted a relentless propaganda campaign against the eight-hour day, alleging a union conspiracy to restrict output based on a fallacious belief in a fixed amount of work. Soon after that, the fallacy claim started appearing in college economics textbooks with various "explanations".
The assertion that proponents of shorter working time or early retirement or critics of unmitigated (and even government promoted and protected) mechanization, automation, trade or immigration policy commit a lump-of-labor fallacy has been refuted many times. Of course it is true that in the long run the amount of work to be done is not a fixed quantity. It is also true that over most of the last 200 years, the demand for labor has expanded, albeit not always in perfect synchronization with the supply of labor. It is also true, though, that over that same period the hours of labor were reduced substantially and that not all the increase in demand was a spontaneous result of market forces. But the fallacy claim does not admit of nuance or concrete circumstance.
If you continue to believe that the lump-of-labor fallacy claim is a legitimate, scientific critique of proponents or opponents of any policy that runs counter to free-market fundamentalism, by all means, please demonstrate where I have erred in "The 'lump-of-labor' case against work-sharing or "Why economists dislike a lump of labor. However, if you find that you cannot refute those articles, please have the intellectual integrity to retract your unsubstantiated fallacy claim and apologize to Paula Span at the New York Times for your reckless remark.
Tom Walker, (the Sandwichman)
- Jobs, Liberty and the Bottom Line
- Time on the Ledger: Social Accounting for the “Goo...
- Intermediate Goods and Duplication
- The Long Term Problem of Full Employment
- The Source and Remedy of the National Difficulties...
- Grundrisse: "Capital (like property) rests on prod...
- Economic and Philosophical Manuscripts of 1844: "W...
- McCulloch on Combination Laws
- Submission to the White House Task Force on Middle...
- Thinking Along the Right Lines
- The Problem with "The Problem of Social Cost"
- State and Prospects of Manufactures