The operative sentences are, first:
If it had been better they [machines] had never been invented; yet, as they are invented, the question is, what shall we do with them? Shall we refuse them ourselves, and send them to other nations? That would plainly be our absolute ruin. We shall then lose our market, and our employment. Can he possibly be a friend of the poor, who endeavours, or wishes to do this?and second:
There is, say they, a certain quantity of labour to be performed.... The principle itself is false. There is not a precise limited quantity of labour, beyond which there is no demand.The lump-of-labour fallacy has become the umbrella term for the mercantilist and Luddite versions. One of the arguments for free trade was that trade could be considered to be like a factory for transforming one kind of good into another. On that premise the on-shore or off-shore location of an actual machine would make no difference. Total output would increase, prices would decrease and people displaced from one industry would be re-employed in some other.
It seems to me that Rasbotham's "absolute ruin" argument at the top of the page and his "false principle" argument at the bottom both partake of an unrealistically universal and utilitarian view of commodity production and exchange. In this view, the economy is like a merry-go-round with an observer on the sideline and a rider. The observer sees the cycle of production and exchange going around and around. The rider experiences the merry-go-round as moving "forward" (albeit in a shifting sequence of tangents) and as necessarily stopping periodically for entry and exit.
Of course any attempt to universalize the experience of the observer or the rider to the other is futile. But it also should not be overlooked that the purpose of the merry-go-round is not to get somewhere. The vehicle appears first of all as spectacle and the "point" is not to get on and off, to get somewhere or even just to go around and around in circles but to participate in the spectacle.
It may be self-evident that evaluating a merry-go-round ride in terms strictly of distance traveled or time elapsed would be meaningless. But that self-evidence evaporates in the context of integrating the merry-go-round ride into a broader category of vehicles with the roller coaster, the Ferris wheel, the city bus, ocean liner and the intercontinental ballistic missile.
In short, as activities are shorn of their concrete particularity to be considered as abstract economic activities, any distinction between ceremony and utility becomes moot. Or almost moot, as the ceremonial aspects of certain oppositions, such as foreign/domestic, master/servant, rich/poor, work/leisure or innovation/tradition will inevitably reassert themselves selectively to challenge the universalizing utilitarian presumption. The lump-of-labour "fallacy" (that is to say the fallacy claim) is the quintessential glass house economist's fallacy -- the essentially contradictory attempt to impose an abstract order on a collection of activities that resist such stark, reductionist categorization and to project the inevitable flaws and ruptures in such an undertaking onto a culpable "other".
This is not so much to preclude economic analysis as to caution that analysis is, so to speak, "born in sin" and that the temptation to throw the first stone is a sign not of subtle erudition but of hubris and hypocrisy.