WORK LESS Institute of Technology

THE TELLS-YOU-WHAT-TO-THINK TANK
ABRIDGED KING JAMES VERSION

by the Sandwichman

In the beginning Capital created the newspaper and the academy.

And the newspaper covered current events; and the academy pursued the higher learning.

And Capital said: let there be ideology: and there was ideology.

And Capital saw the ideology, that it was bourgeois: and Capital divided the political economists from the factory workers.

And Capital called the ideology Truth, and he called criticism Fallacy. And from morning until evening was the length of the working day.

So Capital created man in his own image, in the image of Capital created he him; financier and factory hand created he them.

Now the socialist was more subtle than any beast of the field which Capital had made. And he said unto the factory worker, Yea, hath Capital said, Ye shall produce surplus value unto the Last Hour of the day?

And the factory worker said unto the socialist, We may work from dawn to dusk:

But of the fruit of our labour, Capital hath said, Ye shall not eat of it, neither shall ye touch it lest ye die.

And the socialist said unto the worker, Ye shall not surely die:

For Capital doth know that in the day ye eat thereof, then your eyes shall be opened, and ye shall be as capital, knowing the difference between leisure and fatigue.

And when the worker saw that the shorter day was good for life, and that it was pleasant and made one wise, she took of the fruit thereof, and did eat, and gave also unto her husband with her; and he did eat.

And the eyes of them both were opened, and they knew that their labour was being appropriated; and they sewed a banner together, and demanded an eight-hour day.

And the LORD Capital said unto the worker, What is this that thou hast done? And the worker said, The socialist enlightened me, and I did rest resist.

And the LORD Capital said unto the socialist, Because thou hast done this, thou art cursed above all cattle, and above every beast of the field; upon thy belly shalt thou go, and dust shalt thou eat all the days of thy life:

Unto the worker he said, I will greatly multiply thy divisions and thy alienation; in debt thou shalt bring forth commodities; and thy desire shall be to thy paycheck, and it shall rule over thee.

And the LORD Capital said, Behold, the newspaper is become muckrakish and the academy simmers with heresy: and now, lest they put forth their analysis, and embolden the workers to take also of the tree of state, and to live in liberty:

Therefore the LORD Capital convened a tells-you-what-to-think tank; And it was adorned with "fellows" and "seminars"; And these scholarly adornments lent it the cachet of the academy.

And the tells-you-what-to-think tank was nimble, like unto a newspaper; And it cranked out boilerplate for publication in the daily press.

And the LORD Capital saw that the tells-you-what-to-think tank was faithful and adaptive unto his each policy vacillation; that it was good.

So Capital created scores of tells-you-what-to-think tanks in his own image, in the image of Capital created he them; Heritage Foundation and American Enterprise Institute created he them; National Center for Policy Analysis and Centre for Policy Studies created he them; Fraser Institute and Friends of Europe created he them.

And Capital blessed them with endowments of cash, and Capital said unto them, Be fruitful, and multiply the boilerplate, and replenish the ideology, and subdue the earth: and have dominion over the scribes of the newspaper and over the eggheads of the academy, and over every living thing that moveth upon the earth.

RUTH LEA KNOWS SHE'S SPOUTING HOGWASH!

by the Sandwichman

Further to the lump of laffer revelation:

Dear Mr Walker

Ruth Lea

--------------

Dear Ms. Lea,

Thank you so much for your response to my message. I am afraid, however, that you have read my letter entirely too hastily and are mistaken. I am saying that your claim that reduced worktime policies are based on a fallacious belief in a lump of labour is hogwash. You do indeed imply that you know the claim is hogwash by calling the lump-of-labour fallacy "one of economists' favorite conceits" -- which would be to say the "fallacy" is an affectation of economists, not a true reflection of the beliefs of people who propose reduced worktime policies -- but I'm sure that seeming admission was inadvertent.

Your confusion no doubt arises from the awkward, archaic terminology of the so-called fallacy, so I will rephrase the matter in plain, contemporary English. You say that the French 35-hour work week was based on the notion that there is a fixed amount of work. That is wrong. The French policy was not based on any such notion. This is not to say that there may not have been some supporters who made the error, or that each and every slogan painstakingly pointed out that the amount of work was not fixed. It is simply to say that the economists who developed the policy were not a bunch of ignoramuses, as your claim would suggest.

Again, I would offer to send you a copy of my recent article and/or my article from 2000 detailing what is wrong with the fallacy claim (please note the word "claim"). Or, if you prefer, you may download them from the following URLs:

The 'Lump of Labor' Case against Work-sharing: Populist fallacy or Marginalist throwback? (2000)

Why Economists Dislike a Lump of Labor (2006)

Respectfully,

Tom Walker

THE LUMP OF LAFFER REVELATION

by the Sandwichman

Meet Ruth Lea. Ruth sits upon a scarlet coloured beast, full of names of blasphemy, having seven heads and ten horns She is Director of the Thatcherite Centre for Policy Studies. She is on the University of London Council and is a Governor of the London School of Economics.

In "It's time to break the Government's web of tax fallacies" (Daily Telegraph, Feb 20), Ruth Lea links up the hoary claim about a lump-of-labor fallacy with the... umm... proposition that tax cuts are April showers that inexorably bring the May flowers of enhanced revenues. But I'll let Ruth explain:

One of economists' favourite conceits is the "lump of labour fallacy", which is rooted in the proposition that there is a fixed amount of work to be done in an economy - a "lump" of labour - which can be shared out in different ways to create fewer or more jobs.

May I suggest there are two fallacies of similar ilk that beset the current debate over taxation and public spending? (cont.)

No, Ruth, may I suggest that you are spouting made-up, boilerplate, right-wing balderdash.

UPDATE: RUTH LEA KNOWS SHE'S SPOUTING HOGWASH!

Note to MaxListeners:

Please feel welcome to send letters to the Telegraph editor at: dtletter@telegraph.co.uk

Send your letter in plain text in the body of the message, not as an attachment. Include your name, address and telephone number or your letter won't be considered for publication. It is also best to include the article's title and date in the subject line: "It's time to break the Government's web of tax fallacies: Feb. 20."

You might want to also mention that you heard about it on MaxSpeak and send a copy of your letter to Ruth Lea, ruth@cps.org.uk. My epistle to the Telegraph:

Sir -

Around ten years, I first heard the claim of a so-called lump-of-labour fallacy and puzzled over its seeming incoherence. Six years ago, I decided to respond to the claim, which required that I first investigate its history and classic formulation. What I found out is that the fallacy claim is clap-trap -- a sheer piece of made-up, boilerplate, right-wing balderdash. My findings (more moderately phrased, of course) were published as "The 'lump-of-labor' case against work-sharing: Populist fallacy or marginalist throwback?" in a chapter in Working Time: International trends, theory and policy perspectives (Routledge, 2000).

In her view in today's Telegram, Ruth Lea spouts the hoary platitudes about policies for reduced working time being based on a belief in a fixed amount of work. This is simply a lie and a most tiresome and pernicious one. It is indeed a Sisyphusian effort responding to the ceaseless and ignorant promulgation of one of the "economists' favourite conceits," as Lea termed it. Perhaps someday people will come to realize how much damage has been done by the spread of this falsehood and from that point on will never again listen to the promulgators.

Tom Walker
#1 - 725 Salsbury Dr.
Vancouver, BC V5L 4A1
604 255-4812 (daytime and evening)

TAKE THE REST OF THE DAY OFF

by the Sandwichman

Neely Tucker at the WaPo does a very thoughtful riff on the Boston Fed study, "Measuring Trends in Leisure," the Sandwichman castigated a couple of weeks ago on MaxSpeak, here and here.

Excerpt:

Hurst and fellow authors report working-age Americans (ages 21 to 65) have the equivalent of five to 10 extra weeks of leisure time each year, compared with 1965, thanks to better technology and shorter work hours. Most of it is in 20-, 30-minute chunks. People spend most of it watching television. A companion study, with a longer lens, says that Americans spend about one-third fewer hours at work today than they did in 1900.

This would be truly startling were it not for the herd of researchers who compute the same data and come to the complete opposite conclusion -- that Americans work harder and longer than perhaps ever before. Work, in this view, has become something between a religion and a cell-phone-and-BlackBerry-fueled neurotic obsession that goes on in the office, at home and in between.

LUMP WATCH

by the Sandwichman

Europe: Economic facts of life
Giles Merritt International Herald Tribune

FRIDAY, FEBRUARY 17, 2006

The whole row is as absurd as it is heated. In the first place, it rests on one of the oldest misconceptions derided in economics textbooks - the lump of labor fallacy is the mistaken notion that there is only a given amount of work to be done in an economy, or a fixed number of jobs to be divided up; in reality, more workers generate more economic activity.

To the editor, International Herald Tribune

I'm in favor of the free movement of people so it pains me to see Gilles Merritt use bad arguments on behalf of a good cause. The lump-of-labor fallacy claim may well be derided in (some) economics textbooks but that's only because textbook authors tend to repeat thngs that were said in previous textbooks without checking the original sources. Having traced the sources and written published and currently in-review scholarly articles on the strange history of the fallacy claim, I can assure you that it's a red herring. Opposition to immigration isn't necessarily based on the "notion that there is only a given amount of work to be done in an economy." It can also more realistically relate to fears that the alternative sources of labor can be -- and often are -- used by employers as a wedge in bargaining.

A couple of years ago, it was hilarious to watch employers like Siemens and Daimler-Chryler threaten to move jobs 'off-shore' unless they got union concessions on wages and hours and at the same time read pompous invocations of the lump-of-labor fallacy in denunciation of the shorter hours that the workers were being pressured to give up. But according to the textbooks, presumably the export of those jobs should have just generated more economic activity and so the displaced workers would immediately be re-employed (albeit at a lower wage, perhaps). Again according to the textbooks, lower wages should generate even more economic activity and thus lead, eventually to higher wages. Had those silly workers only read the textbooks they might have realized that they really had nothing to lose (in the long run) by refusing concessions. That is, assuming the textbooks know what they are talking about.

Tom Walker
Vancouver, BC
Canada

Dear Giles Merritt,

You have fallen into the "it's in the textbooks it must be true" trap (almost as treacherous as the "I heard it from a think-tank so it must be true" trap). I've researched the so-called lump of labor fallacy extensively and it has no business being in the textbooks or elsewhere in economic discourse as other than a historical curiousity. I would be glad to send you copies of one or both of my articles on the history and validity of the fallacy claim. One of them was published in 2000 in the book Working time: International trends, theory and policy perspectives, the other is under second-stage review by the Journal of Economic Issues. If after reading those articles, you remain convinced that the fallacy claim is genuine I would be delighted to debate you on the MaxSpeak blog. Below [above] is the text of the letter I sent to the editor of the IHT:

WELCOME MOMENTUM READERS!

Here are some links to references mentioned in "The political economy of working less and living better."

Managing without Growth by Peter Victor and Gideon Rosenbluth.

April 2005 article in BC Business on the Work Less Party.

Queensland government submission on the Reasonable Hours Test Case.

Plus a couple of extras:

Georgia Straight column by Charlie Smith, "Leaders ignore oil depletion."

Georgia Straight item featuring Bill Rees, "We create a huge footprint."

SO MUCH LEISURE, SO LITTLE TIME

by the Sandwichman

And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. - Adam Smith

The "deception" Smith referred to in his Theory of Moral Sentiments was the idea that strenuous effort would bring riches, which in turn would bring ease. He ridiculed that belief on the part of the individual but then, paradoxically, praised it from the standpoint of society as the providence of an "invisible hand."

It is easy to be charmed by Smith's eloquence in the passage that begins, "The poor man's son, whom heaven in its anger has visited with ambition..." Thus charmed, the reader is led by a succession of small, seemingly-logical steps to a gross exaggeration and distortion of the disutility of work.

Then, when Smith finally pulls his redemptive rabbit out of the hat, the enchanted reader embraces it with relief and credulity. And lets pass the sublime hyperbole that, "the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for."

The deception was not nature's but Smith's. He made a magical solution seem plausible compared to a caricature whose credibility and morality had been stretched to the breaking point.

Valuing work -- whether it be market or non-market -- at the "opportunity cost" of foregone leisure is the same kind of Trojan horse as the fabled loathsomeness of Smith's poor man's son's toil. It embeds the quality of the activity inside a quantitative black box that tells me it's all the same whether my work is painful or pleasurable or whether my leisure is engaging or tedious. To that injury, the Becker shuffle adds the insult that some Chicago Boy knows better than I whether I'm fishing for food or for fun.

According to the scheme, I get to choose to optimize my utility but somehow I don't have the option of discerning that I didn't actually have a choice. So, remind me then, how does choice happen in the absence of discernment?

Pat Hallihan writes, "I watch way too much TV and play video games as opposed to something really relaxing like going camping. Why? TV fits time slots of 1/2 to 2 hours and requires no discernable prep time. Video games can fit into smaller frames down to 5 minutes but you most likely need at least 15 minutes. People go to dinner and a movie when they have a whole evening because it requires little preparation. To do something truly constructive and good for the soul you need time to relax and plan your activity, then make preparations, and then go out and do it. It is this type of time that has been lost to us."

Cathy O'Keefe writes, "Leisure cannot be defined simply as time not spent at work. Leisure has four essential attributes all recognized in the social psychology literature. They are:
1. Perceived freedom: People must have the freedom to choose the activities/non-activities that they consider enjoyable. They must be free from the obligations of family, work, or home activities.
2. Perceived competence: there must be a sense that a person is equal to the challenge for those activities that are freely engaged in. This competence doesn't have to be objectively measured. If it's good enough for the individual, it's competence.
3. Intrinsic motivation: this means that you can't be paid, rewarded, or coerced into the activity. It must come from the heart, an enjoyment that is completely generated from within.
4. Positive affect: This refers to self-determination and control within the leisure process."

Even watching TV may be leisure up to a certain point. But that point has arrived when one has neither the time nor the energy to do something else that would be more fulfilling.

"How do you measure that?" You don't. Just like with TV, you arrive at a point where measurement ceases to add anything to understanding but where the compulsion to measure at any cost subtracts from it. The Boston Fed paper, Measuring Trends in Leisure, is an exercise not in measurement but in clairvoyance. Smith's beggar, "who suns himself by the side of the highway," becomes for Aguiar and Hurst those less‐educated adults who, over the past 40 years, "have experienced the largest gains in leisure."

BIG CROCK CANDY MOLEHILL

by the Sandwichman

Tim Worstall at TCS Daily gets all dewy-eyed about the "American Social Model", based on the TRUTH ("There's only one small problem with this idea. It turns out not to be true."), FACTS ("there's one uncomfortable little fact...") and PROOF ("The latest empirical proof") contained in the Gary Becker-inspired data torturing exercise performed by Mark Aguiar and Erik Hurst for the Federal Reserve Bank of Boston. I suspect from its eager reception by Worstall, and earlier from the Economist , that the study's conclusions will soon become an article of faith for the you-never-had-so-good crowd.

There's only one small problem with Aguiar and Hurst's truefactproof: it's all a question of judgment and data quality. The authors at least have the integrity to say so in their conclusions, even if their abstract hypes the extent to which their interpretation "documents" what they suppose it does.

Page 30: "Any definition that distinguishes “leisure” from “work” is a matter of judgment." Check.

Page 33: "The ability to examine different patterns in time use over four decades hinges critically on the quality of data within each of the time‐use surveys." Check.

Let's start with data quality, since that's no doubt the last thing that would occur to a booster like Mr. Worstall. Aguiar and Hurst compared data from five surveys, conducted by three different organizations over the course of nearly 40 years -- in 1965, 1975, 1985, 1993 and 2003. Just to give some sense of the subtlety of what's involved in such an exercise, the 1965 survey consisted of interviews with 2,001 individuals, 776 of whom were from Jackson, Michigan.

Now, I'm sure Jackson, Michigan is a wonderful place to conduct a survey. But whether a survey conducted there is comparable with one that is nationally representative is another matter. Also, it turns out that the 1965 sample included only 17 non-working men. You can weight your demographic categories all you want, but you'll never be able to weight a very small, unrepresentative sample into a representative one. Garbage in, garbage out.

One does have to admire the daring with which the researchers benchmarked their apple, orange, peach, pear and banana comparisons, though. They benchmarked the market work reports from the surveys to market work data in larger studies. In other words, the results of these surveys were fairly robust on questions that required much less of a subjective judgment. Cool. And unpersuasive.

Speaking of judgments, how does one deal with the fact that time spent traveling to an activity is included in the activity? For example, driving to Mickey D's for a happy meal counts as leisure, while driving to the store to shop for groceries would be non-market work. Notice the difference? I didn't think so.

Caring for ill or elderly family members is, of course, a leisure activity because it would be too complicated to count it otherwise. Ditto for child care. Likewise, watching TV probably accounts for a sizable chunk of the increased leisure of those less-educated adults who have been especially blessed with increased leisure over the past 40 years. Three cheers for TV! It sets the underemployed, on-call, contract, just-in-time, precarious, contingent workers free!

It short, while the study may provide some interesting food for thought, it is in no way conclusive. It is proof only that you can massage some counter-intuitive and headline-grabbing conclusions out of an odd assortment of loosely-similar surveys.

LEISURE AS A FACTOR OF PRODUCTION

I. The butt-on-a-slide model
The canonical labor supply model is typically graphed to look like a minimalist line sketch of a butt on a slide. So I’ll call it the butt-on-a-slide model to afford it the disrespect it deserves.

II. Nemo contra deum nisi deus ipse
You can’t replace something with nothing. You can’t substitute a nullity for a theory. Except, it seems, in economics.

III. The marginal utility of evasion
By treating leisure as a "normal good" rather than as a factor of production, the canonical labor supply model opposes a theory not with another theory but with an evasion of what the earlier theory says.

IV. Life is excessively complicated
To the extent that Chapman’s analysis is "complicated" or an "amalgam," that might more constructively be laid to the nature of the problem Chapman was analyzing rather than any fault of his own.

V. Queensland's summary of Sandwichman's synopsis of Chapman's theory
The Sandwichman OWNS S.J. Chapman. I'm not happy about that but if you do a Google search on S.J. Chapman and Hours of Labour all you get (with the few exceptions I'll mention) is me droning on unrequitedly about the damn thing for six or seven years.

VI. Sandwichman's synopsis of Chapman's theory
The fastidious critic might object that a summary of a synopsis, followed by a synopsis, followed by a fragment of the original text (which is itself a summary of the "more technical parts" of the argument) is "repetitive." Not at all.

VII. Chapman's footnote
And now... drumroll... the moment you've all been waiting for: Sir Sydney Chapman's technical footnote itself!

EPILOGUE Economists! Wash your hands!
There hasn't yet been a "macroeconomics of fatigue and unrest" but perhaps there should be one.

REFERENCES

LEISURE AS A FACTOR OF PRODUCTION: EPILOGUE

Economists! Wash your hands!

by the Sandwichman

...some of us who have an economic bent of mind get into the way... of thinking too much of the quantity of external wealth produced and too little of the balance between internal and external wealth. – S.J. Chapman

... as if the power of compelling or inducing men to labour twice as much at the mills of Gaza for the enjoyment of the Philistines, were proof of any thing but a tyranny or an ignorance twice as powerful. – Charles Wentworth Dilke

Ignaz Semmelweis was a physician at the Vienna Allgemeines Krankenhaus in the middle of nineteenth century. One day in 1847, his colleague, Dr. Kolletschka, cut his finger while performing an autopsy. Soon afterward, Kolletschka contracted a virulent fever and died.

The sad event nevertheless gave Semmelweis a clue to the mystery that had been bothering him: why did the first division at the hospital, operated by surgeons and medical students, have a much higher rate of maternal death from childbed fever than did the second division, operated by midwifes?

He subsequently observed that doctors who performed autopsies in the morning attended childbirths after washing their hands with only soap and water. In response, Semmelweis instigated a rule that doctors had to wash their hands in an antiseptic solution of chlorinated lime after working with a cadaver. Subsequently the mortality rate in the first division plunged dramatically.

Semmelweis’s methods were rejected by his boss at the hospital, Johann Klein, who refused to renew his appointment as assistant in obstetrics after his first two-year term expired. Semmelweis then went back to his native Hungary where he worked unpaid in a private hospital, obtaining similar clinical results and yet another dismissal. He then wrote a book about his methods that was poorly received by the medical establishment.

There is some suggestion that Semmelweis contributed to his own isolation by being “undiplomatic” and unsystematic in the way he advanced his ideas. That may be so, although there are plenty of truly stupid and reactionary ideas that succeed expressly through the lack of tact, consultation and full disclosure.

Of course in the long run, Semmelweis’s insights were vindicated and the medical profession did adopt appropriate hygienic precautions. I bring up Semmelweis because Chapman’s theory addressed a matter of industrial hygiene. It was contemporary with, and in some sense complementary to Frederick Winslow Taylor’s project of “Scientific Management.” In the decade after Chapman’s theory was published, there was intense interest in the “psycho-physics of work” and the “economics of fatigue and unrest.” It came to be generally accepted that working too much was bad for an individual’s health.

But there’s a macrocosmic dimension to the hygienics of working time that hasn’t been widely grasped -- the plausible proposition that too much market activity may be bad for society and for the environment. That “thinking too much of the quantity of external wealth produced and too little of the balance between internal and external wealth” can be as bad for society as for individuals. That “compelling or inducing men to labour twice as much” may be as much an incubator of tyranny and ignorance as a symptom.

The fevers of global warming, peak oil and the war in Iraq may have as their proximate causes the “addiction to oil” but underlying that specific item of consumption is the unreflective pursuit of economic growth for growth sake. There hasn't yet been a “macroeconomics of fatigue and unrest” but perhaps there should be one. S.J. Chapman’s theory has an important contribution to make to such an macroeconomics.

LEISURE AS A FACTOR OF PRODUCTION VII

Chapman's footnote

by the Sandwichman

And now... drumroll... the moment you've all been waiting for:

Sir Sydney Chapman's technical footnote itself!

From S.J. Chapman's Hours of Labour (Economic Journal, September, 1909, footnote 1, pp. 363-365) new graphs added by Tom Walker, May 1999.

The argument in the more technical parts of this address, concerned with the determination of the length of the working day, may be conveniently summarized with the aid of the following figure[s]. In order to avoid the complexities arising from the redistribution of labour between the industries of a country, suppose that only one industry exists. Measure units of time in the working day along OX, and units of money along OY.

Consider first the unbroken lines which represent the influences governing employers. The curve P expresses the long-period variations with the length of the working day of the marginal value of a fixed quantity of labour: the opinion that these can be represented by a curve has been defended in the body of this address. If On hours are worked, this daily value of labour and the wage will ultimately be Onda; if Ob hours are worked, this value and wage rises to Oba; if Oe hours are worked, it falls to Oba - bef.

The meaning of the curve P will now be plain. The curve is supposed to rise in the first instance because increasing the daily hours of labour would at first raise the level of efficiency, and if it did not, the larger wage would. But P must begin to fall at some point, and eventually cross OX, as is demonstrated in the body of the address. Actually, of course, P could not start at OY, because a man when engaged for only a fraction of his time daily could not live on the proceeds of his work, but it has been so drawn in the figures to enable us to picture the value and wage of labour by the area between the curve P and the co-ordinates.

The curve ck represents the immediate variations of the marginal value of a fixed quantity of labour with the length of the working day on the assumption that the normal working day has been Ob. Hence the value of the normal product of the last minute of the working day Ob is bg. Ex hypothesi Obgc must equal Oba. If the working day is lengthened to Oe the product will at first be augmented by bekg, but finally by a gradual decline it will sink to Oba-bef.

The influences guiding the operatives are expressed in the dotted lines, the meaning of which must now be explained. Draw any vertical line dl to the left of b. Then dn is the addition made in the long run to the money income of the operative when the Onth increment of time is added to the working day. Let dm be the long-period value to the operative, when his income is Onda, of the leisure destroyed by the addition of the Onth increment of time to the working day. The curve I is the locus of the point m. Evidently, starting at a, it will lie throughout its length below P, increasingly departing from P (because leisure is subject to the law of diminishing utility and the value of leisure rises with income), and cut OX to the left of b.

Apart from the satisfaction or dissatisfaction of working, therefore, the far-sighted operative who took into account the value of leisure would choose a normal day Oi, which is less than Ob (the choice of far-sighted employers in combination). When the normal day is Oi the marginal value of leisure to an operative with a wage Oiha would be ih, which equals the long-period marginal earnings attributable to the Oith increment of time in the working day.

Now, let L indicate the long-period values to the operative of the effects of different lengths of working day on the absolute satisfaction or dissatisfaction involved in the labour itself, L being otherwise interpreted, when units of money are measured along OY' as well as along OY, and the parts of the curve below OX indicate the prices which would be paid to escape the dissatisfaction involved in working, and the parts above OX the money value of the satisfaction involved in working. As some of the time devoted to production will probably be pleasant to the operative when the length of the working day is most favourable to his enjoyment of work, we may assume that L need not lie throughout its length below OX. Then the working day which perfectly wise operatives would choose would be On, the point n being such that nm = nl, the attainment of which equation is the condition under which the operative's satisfaction is maximised. If, as is theoretically conceivable but practically impossible, L lay further above OX for the abscissa Ob than I lay below it, the length of day most advantageous to the operative would be greater than Ob.

If normal hours are On, the operative who lives for the day and is aware that more work, measured by results, means proportionately more pay, will obviously desire hours longer than On for the following reasons. The product attributable to the Onth increment of working time is greater than dn, since dn represents the gain resulting from the Onth. less the loss occasioned by the reduction which will ultimately take place in the productivity of the operative's earlier hours in consequence of the addition of the Onth increment of time to the working day. For similar reasons the short-period or immediate value of leisure might be less than dm. Again, the money measure of the disutility of the Onth increment of working time is less than nl, because nl measures the results from the fact that the Onth increment of working time diminishes capacity in earlier hours to enjoy labour or sustain fatigue.

It is evident, therefore, that a balance of gain accrues to the operative from the work of the Onth unit of time, when everything, including wages is taken into account, but the effect of the work on the Onth unit of time on the gain associated with the rest of the working day ignored; and, further, that the balance of gain attributable to the Onth hours will not disappear, though it may contract if the working day be slightly extended. Hence we must conclude that operatives who are not alive to the reactions of long hours on efficiency and capacity to enjoy life and work will tend to choose a longer working day than is wise from their point of view. However, to repeat, they will not approve such long hours as employers who are equally blind to future reactions, because the latter, if purely self-interested, make no allowance for the disutility of labour to the operative or the utility to him of leisure.

In the event of progress in methods of production the new position of P would be such that the area enclosed between it and the co-ordinate axes would be increased. P in its new position might cut OX at b, but in all probability the new intersection with OX would be to the left of b. It is not likely to fall to the right of b, since improvements in the mechanical aids of labour seldom mean that work is rendered less exhausting.

Even if the new curve P passed through b, the new position of I would practically mean its intersection with OX to the left of i because of the enhanced value of leisure. Further L, though it might rise higher than before, would probably descend sooner and at least as steeply. It is to be observed in addition that but for interest, rent and heavy depreciation charges, industrial progress would bring about movements of P involving more considerable augmentation of the area contained between P and the co-ordinate axes.

Improved education, apart from its effect on efficiency, would bring about a subsidence of the curve I, so that in its new position it would cut OX to the left of i. The effect wrought by progress on short-period forces need not be worked out in detail. The general conclusion is manifest that progress may be expected to be accompanied by a progressive curtailment of the working day.

LEISURE AS A FACTOR OF PRODUCTION VI

Sandwichman's synopsis of Chapman's theory

by the Sandwichman

The end is nigh. Not that end, silly, just the end of this series. The fastidious critic might object that a summary of a synopsis, followed by a synopsis, followed by a fragment of the original text (which is itself a summary of the "more technical parts" of the argument) is "repetitive." Not at all. In fact, a close reading might even detect discrepencies between the three summaries.

But the purpose of this seeming redundancy isn't to dwell on discrepencies. It is to enable a learning process that can only occur through a stereoscopic layering of similar but slightly different perspectives on the same subject matter. It is not content that governs the slow unfolding of understanding here as much as it is resonance. A three-chord progression, one might say. Or a cubist pedagogy. Recall Picabia's seemingly misanthropic complaint that "for you to like something it is necessary for you to have seen and understood it a long time ago." Taking that insight a step further, for you to recognize that you've seen something it is necessary for you to have seen it before.

From "The ‘lump-of-labor’ case against work-sharing: Populist fallacy or marginalist throwback?”(in Working Time: International trends, theory and policy perspectives, Edited by Lonnie Golden and Deborah Figart, London and New York Routledge, 2000. )

Chapman revisited the issue of the hours of labor in his presidential address -- delivered in Winnipeg, Manitoba -- to the British Association for the Advancement of Science, Section on Economic Science and Statistics (1909). That analysis came to be considered the "classical statement of the theory of 'hours' in a free market" (Hicks 1932: 102n.; Nyland 1989). Arthur Pigou restated Chapman's argument in Economics of Welfare (Pigou 1952; 462-469). Alfred Marshall referred to Chapman's analysis as authoritative, as did Lionel Robbins (Marshall 1961: 695; Robbins 1929: 25). Concluding his footnote reference to Chapman and Pigou, Hicks declared, "There is very little that needs to be added to the conclusions of these authorities." Very little, perhaps, other than the strange occurrence that although Chapman's argument has never been challenged, economists today are oblivious to its major conclusions. Most are unaware not only of the theory's authoritative status but even of its existence.

Unlike Rae, Chapman saw no particular danger in workers' views -- "fallacious or otherwise" -- about the mechanics of distribution (Chapman: 365). On the contrary, Chapman suggested that such attitudes probably had protected workers "against the injurious consequences of short-sightedness."

Chapman began his discussion of the hours of labor by reviewing the mass of evidence that reductions in the hours of work had not led to proportionate declines in output. Chapman attributed the phenomenon to the fact that as production methods become more intensive, workers require more leisure time to fully recover from the fatigue of work. He emphasized that in modern industry fatigue was increasingly psychological, resulting from the demands of modern industry for specialization and mental concentration as well as from the workers' attitude toward leisure rather than from the strictly physiological demands of the work. When the hours of labour were reduced, the better-rested workers were often able to produce as much or more in the shorter hours than they had previously in longer hours.

The total value of the output from standard working days of different lengths would thus initially increase as the day became longer but eventually the total output -- not only the output per hour -- would decline as the standard day became too long to allow the worker to recover sufficiently from fatigue. Beyond a certain point, each additional hour of work would continue to add a quantum of output to the current day's total output but only at the expense of reducing the next day's hourly pace. What that point was, Chapman maintained, depended on the intensity of the specific production methods and thus would vary in response to changes in those methods.

Having established the idea of an optimal length of standard working day that would maximize output, Chapman next turned to the questions of whether such an optimal length would likely be established by the workings of a free market and whether the optimal length of day for output coincided with the optimal length from the perspective of the workers' welfare. His conclusions in both cases were negative.

From the perspective of the employer, Chapman argued, the optimal length of day for output could only be achieved if all employers acted in enlightened accord. This is because the maintenance of the long-term optimum would always require some short-term restraint. A single employer could never be entirely certain of reaping the benefit of that restraint. Another firm could always potentially offer a small wage premium and hire away the first firm's well-rested workers. For employers, the optimal output work-time would thus be a form of investment without equity:

The reforming employer would run the risk of paying the whole cost of the labour value created by shorter hours and getting little in return; other employers might secure and exhaust the new labour value and no permanent good would be effected (1909: 361).

From the perspective of the worker, the optimal length of day could, for all practical purposes, be considered to be shorter than the optimal length of the day for output. Chapman considered three elements in assessing the optimal day for the worker:
· the wage, which Chapman assumed for the purpose of analysis to exactly equal the worker's marginal productivity;
· the marginal value of leisure, which Chapman assumed to vary in response to changes in the level of wages; and
· the disutility of work, which Chapman assumed to also be a function of the length of the working day -- during some intermediate period of the working day, Chapman assumed that work could often be experienced as pleasurable.

Chapman maintained that in forming their ideal of a working day, workers' would disregard the effects of changes in work time on efficiency, and hence on wages. As a consequence they would tend to prefer a working day longer than would be prudent in the long run, even though it would not be as long as that preferred by employers acting competitively. Thus the exclusive concern of both employers and workers with immediate self-interest would bias the preferences of each toward longer than optimal hours (1909: 367).

In the two decades following Chapman's address, his demonstration of market failure in the determination of working time led to systematic empirical study of the relationship between fatigue and work intensity. According to Nyland (1989), however, attention to the question of work intensity faded during the 1930s and after, largely because "the fact that worktime had both a temporal and intensive character made it difficult to utilise marginal productivity theory to determine the return on various factors of production" (1989: 33). As a simplifying abstraction, economists assumed that the given working day was of optimal length.

Eventually, the hypothetical -- and antithetical -- status of that assumption came to be overlooked. Economists negligently reverted to a pre-Chapman faith that unencumbered market forces would spontaneously lead to the establishment of an optimal length of work time.

Next: Chapman's footnote

LEISURE AS A FACTOR OF PRODUCTION V

Queensland's summary of Sandwichman's synopsis of Chapman's theory

by the Sandwichman

The Sandwichman OWNS S.J. Chapman. I'm not happy about that but if you do a Google search on S.J. Chapman and Hours of Labour all you get (with the few exceptions I'll mention) is me droning on unrequitedly about the damn thing for six or seven years. The exceptions are the Derobert article in the Journal of the History of Economic Thought, a mere mention in a comment on Derobert by Spencer and a submission on the "Reasonable Hours" test case to the Australian Industrial Relations Commission from the government of Queensland. In print, you have to go back to Nyland's 1989 "now you see it, now you don't" story about the strange disappearance of Chapman's theory from neo-classical economics.

The Queensland government, it so happens, based its account of Chapman's theory on my discussion of it in "The 'lump-of-labor' case against work-sharing: Populist fallacy or marginalist throwback?" Anyone who has read all four previous posts in this series might have noticed that although I've been talking about Chapman's theory, I haven't actually described it yet. That's called building suspense. Now comes the denouement -- in three parts, no less.

Today, the "executive summary": the Queensland government's summary of my synopsis. Tomorrow, the "introduction": my synopsis of Chapman's theory. Friday, the illustrious "footnote" itself, supplemented by my four part reconstruction of Chapman's diagram.

From the government of Queensland's submission to the Australian Industrial Relations Commission on the "Reasonable Hours" test case:

5.2 Working hours and productivity: an economic analysis

The impact of longer hours on productivity has been a traditionally complex and controversial question in economics. Much of the conflict arising from this debate has stemmed from the difficulty in determining a time frame around which to measure productivity changes. For instance, a short-term view may yield vastly different conclusions in terms of the impact of extended hours on productivity than a long-term view, when the fuller consequences of working extended hours have begun to materialise.

5.2.1 Theoretical review

The study of the relationship between work intensity and fatigue owes much to S.J Chapman's theory of the hours of labour, where in 1909 Chapman demonstrated market failure in the determination of working time (Walker 2000). This argument initially involves the establishment of a concept of 'optimal hours'. The main points of this argument can be summarised as follows:

· a mass of evidence indicating that reductions in hours of work had not led to proportionate declines in output;
· modern industry fatigue was increasingly less physical in nature and more a combination of psychological and physiological as a result of specialisation and increased need for mental concentration;
· the reduction of hours allowed better-rested workers to produce as much or more in the shorter hours;
· the total value of the output would initially rise as the working day increased but eventually the total output as well as the output per hour would decline as the working day became so long that it prevented adequate recovery from fatigue for workers;
· this is the case because, beyond a certain point, each additional hour of work would be contributing to the output of the current day's total output but at the expense of the following day's output capacity; and
· the intensity of the work involved would dictate the point at which total output begins to fall and thus the length of the 'optimal' working day.

The second half of this argument explores whether the free market can arrive at the 'optimal' length of day, and can be summarised as follows:

· the maintenance of a long-term optimum by employers would require short-term restraint;
· each individual employer could never be certain of reaping the benefit of their restraint as another firm could potentially entice the employer's well-rested workers away with a wage premium;
· therefore the optimal output work time is a form of investment without equity;
· simultaneously, Chapman (1909) assumed that workers would choose a longer working day than was prudent (although not as long as the working day preferred by employers), primarily because of a general short-sightedness that would mean workers would consider their immediate earning capacity more than their longterm earning capacity¹; and
· the outcome in a free market situation would therefore be one where employers and employees acting in self-interest would each tend to select a working day that was longer than the 'optimal' hours.

Curiously, since this early work by Chapman, economics has frequently assumed that market forces alone will deliver the optimal length of work time despite never having discredited Chapman's arguments. Economists have attempted to estimate the optimum output week, using analysis of long-term productivity trends. For example, Denison (1962) estimated the optimum output week to be close to 48.6 hours; suggesting that moderate reductions in work time below this amount could be offset by gains in productivity up until the point of maximum hourly productivity, which he predicted to be 33.9 hours.² Reductions in work time below this point, he projected, would result in a more than proportionate fall in output.

Since the 1960s the exploration of reduced working hours has concentrated on the prohibitive nature of fixed labour costs, which imply an increase in average hourly labour costs with the reduction of hours of work and therefore negative employment effects.³ However Walker argues that the cost per unit of output is vastly more relevant than the average hourly cost of labour. He contends, "If hourly productivity increases more than hourly labour costs, the net result is a decrease in unit labour costs". The difficulty with this in practice is that employers would incur hourly cost increases immediately, whereas the productivity adjustment would only be realised over an extended period of time. Returning to Chapman's theory of hours, given the high fixed costs of labour, the investment by employers in reducing working hours is even greater with the time it will take to achieve productivity gains.⁴ Walker concludes that fixed labour costs do indeed impose a formidable barrier to reducing working hours but that contrary to popular thought, this is not because of the increased unit labour costs but rather the intrinsic risk in investing in potentially mobile workers.

¹ Chapman (1909) considered three elements in gauging the optimal day for the worker; 1) the wage, 2) the marginal value of leisure and 3) the disutility of work.
² Walker , 2000.
³ Hart, 1987.
⁴ The time taken for a return on this investment would be dependent upon four factors; (1) the ratio of fixed costs to variable costs, (2) the size and timing of wage hikes, (3) the size of the productivity gains and (4) the time it takes to achieve them.

Next: Sandwichman's Synopsis of Chapman's theory