[bnhinchman]

I skipped ahead in Human Action a bit, and one mention in one of the lectures in the AE section had me recalling an essay I read from Bastiat once, where machinery was discussed as being labor facilitating and not labor reducing.

In the Candlemaker’s Petition, for example, the principle of free trade can be applied to machinery. Workers who hand stich shoes, let’s say, may resent a recent invention by the shoe company owner because he needs less hands to do work; the machine, for the sake of example, does the work of 30 people, so if 50 workers are needed, the owners lays off 30 workers.

Of course, morally speaking there’s nothing wrong with this. The company is the private property of the owner, but thinking from the immediate perspective of the employees laid off…if they make the argument that the machine is evil and ought to be outlawed because it interferes with their labor, what is the best way to approach this? In essence, economically, is there a law of some sort that shows how machinery created to improve labor (through time, quality or general mass production, for instance) does not aid unemployment and, indeed, the workers laid off would somehow be better off (despite society on a macro scale benefiting from the invention)? It seems the argument comes from the utilitarian perspective instead of the benefit gain/loss from the workers laid off.

[jmherbener]

There are two reasons that problematic unemployment cannot occur on the unhampered market economy. The first is the diversity of resources in their productive capacities. Because of these differences in productivity, each person is the efficient producer (i.e., the low cost producer) of something compared to other persons. So each person can out compete other persons in his area of comparative advantage.

The second reason is that human person are scarce relative to the surface area of the earth. In other words, there are sub-marginally productive (and therefore, idle) land sites, but not sub-marginally productive persons. Each person who is willing to work in the division of labor can find employment at a wage commensurate with the value of his labor’s productivity. As the human population rises, more entrepreneurs can start up more enterprises to employ more persons as long as we don’t run out of surface area on the earth to put the additional people and their production processes.

These two reasons combined form the argument behind the law of association, i.e., that everyone who has any labor ability at all can participate in the division of labor.

The argument against those who claim that it benefits labor to prevent capital accumulation is that the principle cannot be generalized and hence, it is nothing more than special interest pleading. As soon as one generalizes the principle, i.e., no one should work with any capital goods whatsoever, one can see the fallacy. The argument then is really that all other workers must work with capital so that I and my workers in the weaving industry, say, can maintain our standards of living working without capital. But, standards of living depend on our productivity which depends on our capital stock. So the weavers who retain their jobs with the new capital goods will have a higher standard of living than before. The workers who move into other lines of production with have their wages determined in the same way as everybody does, by the value of their labor’s productivity, which depends heavily on the capital goods they have to work with. Hopefully for them, capitalists and entrepreneurs will continue the process of capital accumulation and thereby, raise their wages and standards of living in the future.

[rt]

If the people denouncing machinery were right, humanity would have started out with 0% unemployment. But with inventions such as the wheel, factories, steam engine, railroads etc. etc. unemployment would have increased steadily and we would be at 70% unemployment right now, no? History shows empirical evidence that over the long term the argument against machinery is false.

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