Re: PK on the lump of labor fallacy

[Tom Walker <timework@xxxxxxxxx>]

Dear Professor Krugman,

The so-called 'lump of labor fallacy' you refer to in your column of October
7, 2003 is a crock (see my "The 'lump-of-labor'case against work-sharing:
populist fallacy or marginalist throwback?" in _Working Time: International
trends, theory and policy perspectives_, eds. Lonnie Golden and Deborah M.
Figart, Routledge, 2000).

A legend about the fallacy has indeed been passed down in introductory
economics textbooks to generations of students, but that is about the full
extent of its status as "economic knowledge." The spurious claim that
advocates of reduced work time routinely commit such a fallacy is
responsible for more policy impasses than is any alleged belief in a fixed
amount of work.

As an advocate of shorter work time, I always found it puzzling that I was
supposed to believe in a fixed amount of work -- a concept that didn't make
much sense to me. So I did what any responsible scholar would do: I went to
the sources.

It wasn't easy. Textbooks that referred to the lump of labor fallacy didn't
footnote the fallacy; they simply repeated it as well-known and
self-evident. I was eventually lucky enough to find what appears to be the
earliest usage through a full-text search in JSTOR and I discovered that the
lump of labor fallacy wasn't exactly as represented in the textbooks.

That early usage, by D.F. Schloss in 1892, was anecdotal rather than logical
and, as the author remarked, had nothing to do with the length of the
working day. Schloss was discussing workers' attitudes toward piecework. It
was, I believe, only after the anti-Eight-hour-day activities of the
National Association of Manufacturers in the early 1900s blurred the issue
that Schloss's anecdotal and sarcastic remarks about piecework came to be
viewed by textbook authors as some sort of  'well-established economic
principle' regarding working time.

Aside from its dubious genealogy, there are several things wrong with the
lump of labor fallacy as a fallacy. First, no one has ever bothered to, nor
could they, demonstrate (not just assert) that advocates of shorter work
time either typically do or must necessarily "assume that there is a fixed
amount of work to be done." Without such a demonstration the charge of
fallacy is simply a red herring. Second, the various explanations given by
textbook authors for why the supposed fallacy is a fallacy do not jibe.
There is something essential missing in each of these explanations, which
perhaps explains why it is so necessary for the authors to ad lib. Finally,
a 'fixed amount of work' is not a logical absurdity however unrealistic it
may seem in light of empirical observation of past, long-term trends.
Economists make unrealistic assumptions all the time and call them
simplifying assumptions.

And speaking of simplifying assumptions, one was made by J.R. Hicks in 1932
to facilitate his analysis of economic growth. That was his assumption that
the given length of the working day was optimal. Hicks knew that his
simplification was, in a sense, counter-theoretical because he understood
and acknowledged the theory of the hours of labor as it had been presented
by Sir Sydney Chapman in 1909. In fact, Hicks referred to Chapman's analysis
as the "classical statement of the theory of 'hours' in a free market." Of
course, nowadays economists continue to make the same simplifying assumption
without even realizing they are making an assumption, let alone that it runs
counter to the established (but untaught) economic theory. They wouldn't
think of asking what happens if they relaxed that unlikely, unacknowledged
and wholly unconscious assumption.

How pathetic. Economists remember and preach their ersatz lump-of-labor
fallacy but have forgotten Chapman's genuine analysis of the hours of labor.
Think of the arid circles policy debates must wander in if the single most
worker-friendly region of economic policy intervention were ruled 'out of
bounds' simply because economists refuse to critically examine a trivial bit
of textbook lore.

Tom Walker
604 255 4812