Sunday, February 27, 2011

Dobb on the "Work Fund" Fallacy (1928)

It is sometimes said that while the employer is interested in securing a low wage-cost, the worker is interested in securing a high level of earnings, and that, since by increased efficiency both things can be simultaneously attained, employer and worker should have a like interest in the speeding up of work and in all methods which promote this result. In the past a similar, but more general, argument has been advanced to the effect that anything which hinders an increase of output is damaging to worker and employer alike and 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.

Saturday, February 26, 2011

Dobb on Hutt

To use the ideas of others as ninepins*  to one's game is an excellent mode of exposition. But the ninepins must be ascetically chosen as such and the attack on them subordinated strictly to the general strategy of the game. Moreover, if one handles them to this purpose, one needs to do more than justice to one's adversaries-to give to their words more logic than the words actually hold. Otherwise the game is apt to be too cheaply purchased. This Mr. Hutt does not always do. And one is left with the feeling that zeal for his thesis often causes his exposition to do less than justice to his predecessors' meaning, while in the attempt to be comprehensive in his historical review he does imperfect justice to the intricacy of the problem which he attacks.

Thursday, February 24, 2011

Hutt vs. Keynes

It's hard to know where to begin with W.H. Hutt's Full Employment and the Future of Industry. The premise is so intuitively implausible as to provoke perverse wonderment that maybe there is something to it after all.

Sunday, February 20, 2011

Full Employment and the Future of Industry (W.H. Hutt, 1945)

Perhaps it is still not too late to attempt to put things right. Full employment and a prosperous industry might yet be achieved if what I propose to call the three "basic principles of employment" determine our planning.

Saturday, February 19, 2011

On Tracts

"Tracts might be read once, or not read at all and thrown away. They might be preserved simply for the inspection of the clergyman or the visitor on his subsequent rounds. And, being paper, an immensely large number of tracts must have gone to light fires or to serve baser but more vital domestic purposes which religious writers would understandably not care to mention." -- R.K. Webb, The British Working Class Reader

Thursday, February 17, 2011

Mr. Tufnell's Pamphlet Versus Mr. Ewart's Testimony

"What do you suppose to be the chief motive for the operatives here advocating the Ten-Hour Bill?"

The question posed by Edward Carleton Tufnell, examiner for the 1833 Royal Commission on Employment of Children in Factories; the reply to that question from Peter Ewart, master cotton-spinner and weaver of Manchester; and Tufnell's appropriation, revision and condensation of Ewart's reply constitute the fountainhead for the lump-of-labor fallacy claim. Tufnell's appropriation conveniently left out details that would enable the reader to critically assess the argument's validity, reliability and robustness. He also shifted the form of the proposition in question from supposition ("what do you suppose to be the chief motive...") to assertion ("The Union calculated...").

Matthew Hancock's Economic Asininity

Matthew Hancock, Conservative MP for Suffolk West, wrote the following opinion piece at The Spectator:
Miliband's economic immaturity

As an economist working in politics, I’m sometimes shocked at some of the arguments about the economy. But today’s statement on welfare reform is economically shocking.

Tuesday, February 15, 2011

In Ireland the Peasantry Bring Up their Children in a Mud-Cabin...

Mrs. B.: In Ireland the peasantry bring up their children in a mud-cabin, the door of which answers also the purposes of window and chimney.

Caroline: Then would it not be better that the labouring classes here should, like the Irish, accustom themselves to hardships and inconveniences, rather than indulge in a degree of comfortable accommodation, the privation of which, in a season of distress, is attended with so much misery?

Monday, February 14, 2011

Puffery: "A Most Salutary Error"

Times of London: "Every page teems with intelligence equally curious and startling in relation to the designs of these confederated workmen, the dexterity of their machinations, and the vast extent of their power."

The Gentleman's Magazine: "for the information which we embody in our pages, we are chiefly indebted to a pamphlet recently published, the author of which appears to be perfectly conversant with the nature and tendency of these extensive, mischievous, and misguided coalitions."

Friday, February 11, 2011

Dr. Adam Smith's Distinction between Productive and Unproductive Labour

Unfortunately, the paper with the above title, read by Peter Ewart on February 7, 1817 to the Literary and Philosophical Society of Manchester, has been lost to posterity. Of the seven papers Ewart read before the Society, only his "On the Measure of Moving Force" was published. The latter paper -- presented November 18, 1808 -- is significant as a precursor (or 'bridge') to the discovery of the first law of thermodynamics.

Besides being a contributor of scientific and economic papers to the Literary and Philosophical Society, Peter Ewart was a talented millwright, manufacturer and employer of children. In 1816, his cotton mill employed 192 people, 120 of whom were between the ages of ten and eighteen and another 14 were under the age of ten.

Saturday, February 5, 2011

April Fools

"...a prize competition to identify new and innovative thinking about policies to create jobs..."

The Hamilton Project of the Brookings Institution has announced a "Policy Innovation Prize" of "$25,000 Awarded For The Best Proposals to Create Jobs and Enhance Productivity." The deadline for submitting proposals is 5:00 p.m. EST on Friday, April 1, 2011.

Sandwichman wryly observes that the April Fools deadline may be appropriate.

Friday, February 4, 2011

Is the Economic System Self-Adjusting?

JOHN MAYNARD KEYNES, from a 1934 BBC radio address
I was asked recently to take part in a discussion among English economists on the problem of poverty in the midst of potential plenty, which none of us can deny is the outstanding conundrum of today. We all agreed that, whatever the best remedy may be, we must reject all those alleged remedies that consist, in effect, in getting rid of the plenty. It may be true, for various reasons, that as the potential plenty increases, the problem of getting the fruits of it distributed to the great body of consumers will present increasing difficulties. But it is to the analysis and solution of these difficulties that we must direct our minds. To seek an escape by making the productive machine less productive must be wrong. I often find myself in favor of measures to restrict output as a temporary palliative or to meet an emergency. But the temper of mind that turns too easily to restriction is dangerous, for it has nothing useful to contribute to the permanent solution. But this is another way of saying that we must not regard the conditions of supply -— that is to say, our facilities to produce -— as being the fundamental source of our troubles. And, if this is agreed, it seems to follow that it is the conditions of demand that our diagnosis must search and probe for the explanation.