WORK LESS Institute of Technology

WHY SOME ECONOMISTS DISLIKE SHORTER WORKING TIME (part 3 of 7)

True believers and left-wing kooks

A conspicuous rhetorical feature of the lump-of labor fallacy claim, especially in the mass media, is to suggest that not only are reduced work time policies based on a fallacious assumption but that the fallacy is so blatant that no self-respecting economist would fall for it – only cranks, left-wing kooks or trade union hacks. “It's hard work being a left-wing kook these days,” wrote Bruce Bartlett. “The socialists [in France] figured that there was only so much work to do, so if people were only allowed to work 35 hours per week, rather that 40 hours, then this meant that eight workers would be needed to do the work that seven workers did previously.... Economists call this the "lump of labor" fallacy....”

In a letter to the poet, T.S. Eliot, dated April 5, 1945, Keynes designated shorter hours of work as one of three “ingredients of a cure” for unemployment. The other two ingredients were investment and more consumption. Keynes regarded investment as “first aid,” while he called working less the “ultimate solution.” This specification of reduced work time as one of three strategic choices for maintaining employment echoes a comment in a letter written three years earlier regarding a Treasury memorandum on purchasing power and consumers’ goods in the post-war period. A more thorough and formal presentation of his view appeared in a note Keynes prepared in May 1943 on “The Long-Term Problem of Full Employment.” In that note, Keynes projected three phases of post-war economic performance. During the third phase, estimated to commence some ten to fifteen years after the end of the war, “It becomes necessary to encourage wise consumption and discourage saving, –and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours."

In chapter 5 of Structural Change and Economic Growth, Pasinetti also addressed full employment as a goal of economic policy. He concluded the consequence of technical progress was that effective demand “inevitably manifests a tendency to become under-satisfied, i.e. to generate unemployment, as time goes on.” Pasinetti identified two ways to offset this tendency, by adding new commodities or “by a decrease either in the proportion of active to total population or of the length of the working week or of both.” He protested that this was not the same as saying that technical progress gives society a choice between more goods or more leisure.” Rather, Pasinetti claimed, it reveals “the fixed framework within which the choice has to be made.” It is thus not simply a choice but a necessity to choose confronting society if it is to avoid technological unemployment.

What Keynes and Pasinetti have in common besides the view that the reduction of working time is one way to bolster employment is that their analyses have not been rebutted by any of the authors who allege that such views are based on a fallacious belief in a fixed amount of work. Nor have any of those authors specifically criticized Commons’ suggestion in Industrial Goodwill for varying the hours of work to flexibly distribute a fluctuating total amount of work. Commons summed up his proposition as follows,

Elasticity has to be provided somewhere to meet these fluctuations [in demand for labor]. The elasticity may be provided by laying off a part of the force in hard times and taking them back in good times, or by reducing hours all around in hard times and increasing them in good times. The one method is the method of unemployment for some, the other the method of distributing unemployment and regularizing employment for all.

Did Keynes, Pasinetti or Commons assume a fixed amount of work to be done? Keynes’ stated assumption was of discrepancies between savings and inducements for investment. Pasinetti’s was of a structural tendency toward technological unemployment. Commons assumed a business cycle fluctuation in the demand for labor. The three assumptions are not even necessarily compatible with each other. For example, Keynes spoke of a shorter work time as a cure for unemployment while Pasinetti suggests that unemployment may be a consequence of a failure to reduce working time. Both Keynes and Pasinetti addressed structural unemployment while Commons was concerned with cyclical unemployment. But to be sure, all three treat reducing working time not merely as something that would be “pleasant, if we could afford it” or even as an attractive luxury that is within the means of an affluent society but precisely as a strategy for creating or preserving employment. If those economists’ underlying assumptions translate into a lump-of-labor fallacy, it is perplexing that no critic of reduced working time has seen fit to point it out.

Part 4

Posted by sandwichman at June 26, 2005 08:02 AM