Home > Uncategorized > The Lump of Labour Fallacy — and Virtual Reality

The Lump of Labour Fallacy — and Virtual Reality

I’ve been suggesting here and elsewhere for some time now that we’re likely to see significant unemployment as a result of advancing automation technology. Anytime this argument is made, economists are likely to bring up what’s known as the “Lump of Labor Fallacy.” 

The idea here is that people like me are falling into the trap of assuming that there is some fixed amount of work that needs to be done in the economy. Those of us who are economic rubes believe that if we automate or offshore some of those jobs (or allow immigrants to do them), then that means we’ll have unemployment—since, after all, there’s only so much work that really needs to be done.   This limited and fixed requirement for work is referred to as a “lump” of labor. (The Lump of Labor Fallacy seems to be closely related to the “Luddite Fallacy” which I discuss at some length in my book, The Lights in the Tunnelget the free PDF).

Anyone who suggests that automation may present a problem in the future is nearly certain to be accused of falling for the Lump of Labor Fallacy. This is true even if the person doing the suggesting is a trained economist. In August of 2009, Gregory Clark, who is on the economics faculty at U.C. Davis, wrote an article  for the Washington Post in which he suggested that job automation would create a massive underclass that would need to be supported via taxation and redistribution. (Actually, Clark’s argument was a milder case of what I have been talking about because he seems to believe that the impact from automation will be limited to those without advanced education and skills. I think that’s wrong. Automation is coming for nearly everyone: we’re going to see knowledge workers with college degrees get hit hard within the next decade.)

As soon as Clark’s article came out, the reflexive accusations of “Lump of Labor Fallacy” quickly appeared: Tim Worstall, Will WilkinsonEconoSpeak.  Is it really true that anyone who worries about the impact of technology on employment is “committing the fallacy?”

As Tim Worstall points out in his comments on a post I wrote for Angry Bear, human beings have unlimited needs and desires while resources (including human labor) are limited . This implies that if you automate the jobs that are involved in fulfilling our current needs and desires, then we’ll quickly decide that we want something else—and that, of course, will mean that labor will shift into producing whatever becomes the next flavor of the moment. 

I basically agree with what Tim is saying. Therefore, I am not committing the Lump of Labor Fallacy. I don’t belive that the amount of “work” that needs to be done is in any way limited. It may well be infinite. I just think that machines will be able to do the work. Or I think many of our desires will be delivered digitally—and therefore autonomously. Human labor may well be a limited resource, but what if it becomes a largely superfluous resource? The amount of sand in the world is limited too, you know.

Think for a moment about our evolving needs and desires. A great many people (for reasons that continue to elude me) seem to “need” to spend a great deal of time on FaceBook. We need to receive Tweets. We really need video that streams directly to our laptop because it sucks to have to stand in line at the Blockbuster store.  While there are certainly some jobs that are created by these new desires, let’s face it: the vast majority of the “work” gets done automatically by giant server farms and by fiber optics.  

If we project that digital fulfillment trend all the way to its possible conclusion we end up with some form of advanced virtual reality (VR) technology. This could potentially mean that a computer might be able to interface directly with your brain and create simulated experiences that were basically indistinguishable from reality.

If truly advanced VR ever arrives, it will introduce all kinds of interesting (and disturbing) economic questions: If a virtual experience is just as good as the real thing, will there still be demand for tangible goods? If you can live like a billionaire in the VR world, will there still be a strong incentive to seek wealth? Why not live in a rat hole  but “live” in the Playboy Mansion? Will we even have a real-world economy? Perhaps everyone will just stay plugged in…until the lights go out.

It may be a good thing that VR is a long way off. In the meantime, there can be little doubt that machines, and computers are going to play an increasingly important role in producing tangible goods and services. And they will get nearly all the work when it comes to our evolving digital desires. After all, if you lose your job at the widget factory, you’re unlikely to find work delivering Tweets.

There’s no lump of labor. There’s plenty of work to be done. And machines will do it.

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  1. June 9, 2010 at 12:44 pm

    “I don’t belive that the amount of “work” that needs to be done is in any way limited. It may well be infinite. I just think that machines will be able to do the work.”

    I have to say that that is really quite impressive. You’ve gone, in three sentences, from rejecting the lump of labour fallacy to restating it and then asserting that it’s true.

    For, we cannot have an infinite number of machines. Therefore machines cannot do all of the infinite work. Thus there will always be things for human labour to do.

    Now, I do want you to understand that I am not simply trying to make fun of your thesis. I can see some very interesting things that can be explored with your line of thought: that increased automation is going to mean less requirement for human labour in the production of what we generally think of as economic goods: food, housing, clothing, software perhaps and so on. Hey, maybe Pixar really will make human movie actors redundant etc. And I’m absolutely certain that there will be some fairly wrenching changes along the way: the Enclosures as farming become less labour intensive were not fun for most people, large economic changes almost always do leave at least some people washed up and peripheral to the rest of the economy.

    However, the thing I think you’re missing is that the universe of “economic goods” is vastly larger than what we’re used to thinking of as being those economic goods.

    While the transition might be painful, the end state of having automation delivering pretty much all of our physical wants and desires does not exhaust the wants and desires that can be fulfilled by people. Humans, being a social species, will always want human interaction. And those desires of the mind are already in some ways economic goods that can be provided by paid human labour. That’s where the infinity comes from and that’s something that’s not replaceable by automation.

    • June 9, 2010 at 10:40 pm

      As a long time observer of both humanity and technology I think you touch on a significant truth in your final paragraph.

      The DIFFERENCE between an economy of abundance and an economy of scarcity is fundamentally one of kind. An economy of abundance is one based on MATERIAL WEALTH.

      Our present economy is based on material wealth. Everything in our economy is predicated in the use of natural resources, with value added by human labor, to create physical products. It is this economy which is threatened by automation, because labor is being replaced with machines. This economy derives all value based on scarcity.

      Henry George pointed out quite well that the market exists for one purpose, to supply human desires, those desires consist of NEEDS and WANTS.

      There is a secondary human drive that also affects Markets, and that is the instinctive human desire to establish social status to improve mating chances. Most of the problems in human society are caused by the human drive to seek status. In a market based on scarcity, this results in Physical Wealth becoming a symbol of status, and thus to the various problems we see rampant in our current economic situation, greed, corruption, massive wealth concentrations, etc. It is also why poverty exists amid plenty. All wealth beyond subsistence is diverted into status seeking. It is this economy which is entirely unsustainable in a future of automation.

      But an economy of abundance is based on NON Physical wealth. It cannot be based on physical wealth because material goods will have minimal value. Natural resources will be not only become so easy to obtain that they will have no value, the ability to infinitely recycle material resources, as well as to create “intelligent matter” with morphological abilities, means material wealth will lose all value.

      It will not however remove the two basic drives that create the market. Human desire, and human social status seeking.

      Thus, “wealth” in an economy of abundance will continue to be driven by the same biological drives, but switch from Physical goods, to Non-physical. Microsoft is a case in point. It was founded entirely in non-physical goods. You can’t pick up and carry a line of code, or nibble on a fresh byte. It’s value based entirely on KNOWLEDGE. In an economy based on Non-physical wealth, IP will be the currency of the future, and while poverty will remain, it will cease to be a poverty in material goods, and thus will eliminate most physical privation. Poverty itself is unlikely to ever be eliminated because it is a social status phenomena as much as a physical one. I seriously doubt that even as we enhance ourselves and our abilities we will decide to change such fundamental aspects of ourselves as our sexual psychology.

      However, we will continue to improve human ability. In my opinion, the end result of automation will merely accelerate this trend, by freeing humanity from the lowest level of the market, that which supplies NEEDS, i.e food, shelter, and medical care (all of which will be automated) it enables all human labor to be directed at the production of human WANTS, which will always continue to increase. Increasing automation will enable realization of human wants more easily, but as wants become satisfied, new wants are very likely to continue to be created.

      Thus an economy of abundance should be able to provide jobs in proportion to human desires, and automation at this point will enable enhancement of human ability, leading to new levels of want. Eventually humanity is likely going to be so integrated with our machines that AI will be indistinguishable from humanity itself.

      Thus, the true danger zone is the transition period between an economy of scarcity, and once of abundance. I strongly believe we are already in the middle of that transition, and that immediate action to provide a social safety net that can provide a buffer during this transition is vital. However, given the current situation, it is unlikely to be enacted soon enough to prevent the massively disrupting effects of large scale permanent unemployment that the collapse of our present economic system will inflict.

      • June 9, 2010 at 11:21 pm

        Correction. An economy of abundance is based on NON MATERIAL WEALTH (missed a typo)

    • June 13, 2010 at 6:11 pm

      And what happens when machines begin to pass Touring tests?

    • Martin Babicek
      September 13, 2010 at 1:10 pm

      “There are some jobs that people can do better than machines – prostitution and headshrinking” – Kurtzweil

      (I personally doubt headshrinking – AI could be better, especially with brain-machine interface and prostitution don’t have a chance against brain stimulation :-)

  2. Sandwichman
    June 9, 2010 at 2:28 pm

    As author of two published articles on the lump of labor fallacy, I can attest to the infinite amount of work there is to be done explaining the irrelevance and fallacy of the lump of labor fallacy claim. There is indeed an infinite amount of “work” that could be done. But that’s irrelevant. What’s relevant is the amount of REMUNERATED work that can be offered on the job market.

    “Infinite” sounds like a big number. But it isn’t. It’s an imaginary that refers obliquely to the realm of real numbers. You could as easily have an infinite amount of unicorns as you could an infinite amount of work. The wages to pay for an infinite amount of work would also be infinite — and who has that kind of money???

    Please forget about infinite amounts of work and, while your at it, stop worrying about some futuristic end of work. Let’s deal with the present for the time being. And consider just the following FIVE MILLION MISSING JOBS. Now five million jobs wouldn’t solve the current unemployment in the U.S. but it would be more than a drop in the bucket. I’ve estimated how many jobs have been forgone in the U.S. as a result of the obstacles imposed on work time reduction by perverse tax and regulatory incentives.

    My methodology borrows from one used by Edward F. Denison, one of the founders of growth accounting but employs a more rigorous procedure to estimate the historically-evolving optimal length of the work year. It calculates and projects a conservative trend of optimal work time reduction based on a 1909-1957 benchmark period (chosen to mirror Denison’s earlier calculations). Based on the projected trend, I estimate that at the peak of the business cycle, the U.S. economy underperformed by approximately 6% what it could have if hours had continued to decline at trend. I assume that productivity improvements contribute to employment growth and use Okun’s Law to derive an underemployment estimate from the underperformance estimate.

    All of my assumptions in calculating this five million missing jobs estimate are either standard, customary, conservative or based on the best, authoritative neoclassical theory. Some of them, accordingly, are “questionable” but largely in the direction of my estimate being an underestimate. I would post a full explanation of the estimate but only in response to popular clamour. Do people really want to know where the jobs are or are they more interested in flogging dead horses and fixed ideas?

    • August 4, 2010 at 3:35 pm

      I don’t feel one should be so fast to assume “infinite demand” as a given; I feel the evidence suggests “limited demand” is more accurate, or at least, that demand will grow more slowly than productivity improvements. Here is why I think that.

      For predicted mainstream economic results related to self-adjusting economies to hold, we need to assume both infinite demand as well as the continuing value of most paid human labor relative to advancing intelligent technology. I feel both of these are suspect assumptions, and Martin Ford does a great job in talking about the second of them (robots, other automation, better design, and even voluntary social networks reducing the value of paid human labor). I feel he conceded too quickly on the first point though, accepting infinite demand as a given. :-)

      On “infinite demand”, I would suggest thinking about “Maslow’s Hierarchy of Needs”,

      http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

      which suggests that human needs shift from material aspirations to more self-actualizing aspirations as basic physical needs are met (including spiritual ones). The higher needs generally don’t require much materially to be met. We are talking, at that point, people wanting paint and canvas to make their own things rather than people wanting labor-intensive finished works of art. (I mention this in the knol “Beyond a Jobless Recovery”).

      Also, we are in an age of a growing environmental consciousness of “voluntary simplicity” and “reduce, reuse, recycle” as well as people realizing that they have gotten to the point of diminishing returns (or even negative returns) on having more stuff around. People are starting to realize they would rather have more time to play with the stuff or raise their children well.

      Almost all our mainstream religions talk about spiritually advanced people moving beyond an obsession with stuff and competition over it. And E.F. Schumacher talks about other aspects of a “middle way” in “Buddhist Economics”: “While the materialist is mainly interested in goods, the Buddhist is mainly interested in liberation. But Buddhism is “The Middle Way” and therefore in no way antagonistic to physical well-being. It is not wealth that stands in the way of liberation but the attachment to wealth; not the enjoyment of pleasurable things but the craving for them. The keynote of Buddhist economics, therefore, is simplicity and non-violence. From an economist’s point of view, the marvel of the Buddhist way of life is the utter rationality of its pattern—amazingly small means leading to extraordinarily satisfactory results.”

      See also the sci-fi book “Midas World” by Frederick Pohl, based around a 1950s short story about a world where the poor are those who are forced to consume to keep industry going, and the rich get to have real jobs and have small houses and spend time with nature and spirituality. From the Wikipedia article on “Midas World”: “In this new world of cheap energy, robots are overproducing the commodities enjoyed by mankind. So now the “poor” are forced to spend their lives in frantic consumption, trying to keep up with the robots’ extravagant production, so that the “rich” can live lives of simplicity. This story deals with the life of a man named Morey Fry, who marries a girl from a higher class. She is unused to a life of consumption and it wears at their marriage. …”
      (There is a spoiler after that on the page, so ideally read the story first. Even just saying what the problem is, as I just did, diminishes the shock value of that story when you first read it, sorry.)

      Also, as another data point, while it’s true that, say, Bill Gates has a very big house (much of it essentially a hotel for entertaining), as a percentage of his wealth, it is very tiny. So, even if we were all billionaires with a huge need to entertain for business reasons, there are demonstrated limits there. Still, if everyone was a billionaire, a big house might just seem like a big hassle, because everything that you own also owns you. Or at least, you have to get extra household robots to dust it. :-)

      So, I feel the argument that healthy people have infinite personal wants in a material sense is subject to question on a range of theoretical, empirical, religious/historic, and imaginative grounds.

      And as far as wants related to digital items, those are very easy to satisfy, as was suggested in the article, and they probably also are not infinite for similar reasons — to begin with, humans only have a limited capacity for paying attention, and there is only so much time in the day.

      ==

      This is mostly unrelated, but regarding the point added the end of the article, studies with stressed monkeys in cages (or stressed rats, etc.) resorting to addictive behavior to relieve their stress is not the best way to predict how such animals will behave under more normal circumstances in an interesting environment. See the study 1970s study “Rat Park” described on Wikipedia for more on that. That study showed how addictive behavior emerges out of an unhealthy environment (and probably material consumerism is an addiction emerging out of a USA with widespread socio-economic problems). Directly stimulating the brain’s pleasure center may be an exception, but if it is, it may be the main exception to that general idea that healthy organisms will engage in a variety of behaviors. But it does connect in the sense of asking, are “unlimited wants” a sign of ill health or an unhealthy and socially and intellectually impoverished environment? Is mainstream economics, in that sense, the study of what poor, sick, stressed, and even insane people do? How can mainstream economics move beyond that, in the same way psychology is moving beyond studying the diseases mind to studying the healthy mind (like with the positive psychology movement)?

  3. Genomik
    June 9, 2010 at 4:21 pm

    One of the things I like about technology forecasting is tHAT if you have a unique point of view that might happen you may be able to make a difference in tomorrows world. For instance I agree about automation affecting the jobs of tomorrow. On the other hand the jobs of today is a much harder argument and there are soooooo many people involved. Its a crowded trade.

    I agree that there may be work to be done in the future, but maybe not so many paying jobs. Martin, you were alluding to a world of VR, essentially the Matrix. I completely agree that this may come to pass. I was recently in the Philippines. Many people there (and the rest of the world) are varying levels of poor. Their reality sucks. their job prospects suck. VR on the other hand is a rich brilliant world, much better than their reality. China is very concerned about its population playing video games, but what about 70% of the world that sucks. The govs are corrupt, unemployment is rampant. VR is nirvana.

    Align that trend with Synthetic Genomics ala Craig Venter who is working towards making synthetic food. We may complain about Organic Food, but poor people will eat it up, no problem. In fact the world needs GMO food to protect forests etc. If food production can be automated to some extent (and it already has here) then what you get may be cheap food, very cheap.

    So add cheap food and VR and you get populations that are very happy to eat a bit and escape into fantasy island.

    Another line of reasing is that work essentially exists because there are inefficencies. People need to intermediate. Computer automation has allowed people to disintermediate. This has already occured via Amazon, eBay and many other website and business processes. The Economist had an article recently that portals were gaining ground rapidly in China. All the little mom n pop shops were being competed against by portals. When I was in Thailand I was amazed at how many people had little stalls selling stuff – chintz, clothes etc. Soon it will be bought off the Internet in Asia. The Economist pointed out that a new job is evolving in response to this trend, the delivery person who would deliver this product to your door from a fullfiloment center. It did however say that this new delivery job apid much less and seemed more work than owning a little business. The customer ends up paying less for their product and is happy,.

    So there is lump of work that seems to be evolving to a different lump of work, but overall it is more efficient so not as much money goes into the whole begining to end retail process. This is no small thing, millions of mouths, maybe Billions make a small living like this in the world.

    I guess if those disintermediated could live in a Shantytown and eat GMO gruel and watch the Matrix all day that may not only be compelling, it may come to pass in the next 10-20 years.

  4. June 9, 2010 at 4:50 pm

    “If truly advanced VR ever arrives, it will introduce all kinds of interesting (and disturbing) economic questions: If a virtual experience is just as good as the real thing, will there still be demand for tangible goods? If you can live like a billionaire in the VR world, will there still be a strong incentive to seek wealth? Why not live in a rat hole but “live” in the Playboy Mansion? Will we even have a real-world economy? Perhaps everyone will just stay plugged in…until the lights go out.”

    Sounds like you’ve been reading The Futurological Congress.

  5. June 9, 2010 at 9:12 pm

    First off, let me introduce myself. I am a blogger and futurist like you, and just finished reading your book Lights in the Tunnel.

    In brief, you have repeated the exact same thing I have been saying to people for years, indeed since I first read Engines of Creation. I have also been studying and observing the ongoing progress of technology for over 25 years. You did an excellent job logically explaining why we are rapidly advancing into a jobless future and why it is VITALLY important that we begin to create a transitory social safety net to offset the enormous cost in human suffering which will occur as the economy of scarcity collapses prior to the eventual creation of an economy of abundance.

    Those are the need to guarantee the basic Human NEEDS of Food, Shelter, Healthcare, Security, and most importantly Education. I liked your suggestions for how to fund, and the incentives system you recommend.

    However, there have been many developments recently which show some small promise of mitigating in a small way some of the worst cases. This is the rapid development in “printing” of all sorts of things, from tissue printers to electronics printers to 3d object printers. These technologies not only continue to improve rapidly, they offer the possibility of such a rapid advance to a fully automated economy that it may minimize the transition phase to an economy of abundance prior to the worst case job eradication which is likely to occur due to Narrow AI. If printing develops quickly enough, it will massively reduce the cost of living for all humanity in terms of resources needed, and costs of production. It could even become a prototype of the Drexler concept of a “Food Machine” if it progresses fast enough to become a viable means of mass producing clone foodstocks.

    But in response to the post above, I must in the strongest terms possible refute your statement that “VR is a long way off”

    If your sole definition of VR is the “Total Immersion” of the Matrix movies, you could be correct. But that level of VR is completely unnecessary for “Good Enough VR” of Audio Visual immersion.

    I discussed A/V immersion VR extensively in 3 articles on H+ Magazine

    http://hplusmagazine.com/editors-blog/virtualization-rise-avatar-open-sim-project

    http://hplusmagazine.com/editors-blog/virtualization-avatar-mirrorworlds-part-two

    http://www.hplusmagazine.com/editors-blog/virtualization-virtual-reality-part-3

    Basic A/V immersion VR is likely to begin making an impact within five years, and likely to be ubiquitous within 10. This potentially impacts automation enormously, as Virtual Workers (Narrow AI software running a virtual human appearing avatar) would allow massive automation of the bulk of “unskilled” labor, as large numbers of service jobs could be quickly replaced by non physical software agents that can be continuously upgraded for minimal capital.

    Thus, I strongly recommend you examine the strong likelihood of “Good Enough” VR and it’s probable impact on the extremely near term future.

    • August 4, 2010 at 4:05 pm

      As another person thinking about this for decades, I could not agree more with your suggestion that: “… it is VITALLY important that we begin to create a transitory social safety net to offset the enormous cost in human suffering which will occur as the economy of scarcity collapses prior to the eventual creation of an economy of abundance.”

      Major positive possibilities include some mix of a basic income (Social Security for all from birth), a gift economy (like GNU/Linux, even for 3D object designs), local subsistence production using advanced technology like 3D printers, and global and local resource-based planning. We need to avoid the negative options that just burn up abundance at great risk, like war, endless schooling, endless bureaucracy, and greatly expanded prisons.

  6. Josh
    June 10, 2010 at 11:58 pm

    Automation, yes, and I agree with your (gloomy) conclusions – but no mention of outsourcing jobs to China and India? Even the few jobs left by automation move there. And here we are. And then what?

    • June 11, 2010 at 11:23 am

      If you take a book at my book (which is free in PDF), I do discuss this issue, and point out the problems with it. However, in the long run, I think automation will be a more important issue that offshoring–and it will impact those countries that are currently benefiting from offshoring. In fact there is evidence of this now.

      For example, Wal-Mart is going to continue to exert enourmous pressure on Chinese manufactures for a lower price. Wal-Mart will do this in part because the people shopping at its stores in the US have no money (because their jobs have been automated or offshored). The result will be the introduction of more automation in China. It is happening already…millions of Chinese textile jobs have been eliminated by automation already for example.

  7. June 11, 2010 at 4:42 am

    Two things:

    First, the desires of man are not unlimited. Does man desire unlimited food? No. Does man desire unlimited clothing? No. Shelter? No. Health care? No. Toys? No. There is, per capita, that is per worker, only so much that man demands. And with the Internet, and with increasing use of its social functions, such as Facebook, this may actually be decreasing. Man is time limited in his consumption. With only 24 hours in the day, he can only use and consume so much. Even the pathological, with their yachts and jets, are so limited. And for most people, that level of consumption is just not worth the trouble, although many are put through greater trouble for much less. And there is still the Third World…

    And from the other side of the problem, it seems that where in the past labor was the limiting factor of production, this is no longer the case. Capital is. As we are seeing capital increase in concentration, (automation,) it is contracting in the extent to which it uses labor. Thus we see an increasing surplus of labor, for which there is inadequate capital to support its employment. Your thesis. In the absence of this capital, Worstall proposes people service each other. But this does not address the problem, which is that the mass of people will have no claim on any of this material production, except perhaps as servants of the owning class. A libertarian wet dream. The Third World problem, a lack of demand, will only be aggravated. Marx’s nightmare: Not only will the few control the means of production, they will have no use for the proletariat.

    The caveat, of course, is that capital is also limited: It is limited already, and we cannot expect, at present rates, that it should increase at a rate greater than the rate of population growth. In its purest and most necessary form, capital is energy, and it is the availability of energy which limits the application of fixed capital. Since increasing automation requires (directly) increasing the energy inputs, this might be a limit to the degree of automation possible, at least in processes where the ‘energy cost’ of labor is greater than that of automated processes. Will the availability of energy remain limited, that is will its price level be maintained, or will it come down, or will it go up?

    Though more modern processes may be more energy efficient than older ones, there is a limit to how efficient an automated process can be. But if this is below the energy cost of labor in a process, then labor will become excluded. Clearly this limit is lower in the ‘thinking’ professions, and it is there as well that the energy cost for labor is highest. So, should automated processes develop sufficiently, it is the thinking professions where labor, ultimately, should be preferentially excluded, given a limited availability of capital. That is, with sufficiently advanced automation, but limited capital, we should expect the professor to be displaced rather than the shoemaker. Indeed, with sufficiently advanced automation, the whole higher educational enterprise becomes unnecessary.

    • Martin Babicek
      September 13, 2010 at 1:34 pm

      People are very inefficient in energy terms – food, clothing, housing, commuting into work, at least 4 people for 1 machine, and most less educated jobs need some machine anyway. Machine is using almost all energy for production, living organism is using almost all energy for sustaining life. Man will never be more energy efficient than machine – forget that part of Matrix :)

  8. Dan DiMicco
    June 11, 2010 at 6:23 pm

    You are right but only to a point and in total you have missed the big truth. The number of jobs lost to distortions of free trade as practiced by our major trading “partners”, i.e. TRADE MERCANTILISTS, and stupidly allowed and even supported by our own failed trade policies, out weighs those jobs lost to productivity by 5 to 1. The other main issue you completely ignore is that if we are so much more productive, then we should have been even more globally competitive in creating more manufacturing and manufacturing jobs in those increased productivity operations, here at home. To that point we have been anything but adding those jobs and in fact we have been losing the manufacturing processes/plants/products that we have been infinitely more productive at, just as fast, if not faster. Our jobs crisis is much deeper and more fundamental than the shallow argument you present.

    • June 13, 2010 at 6:28 pm

      I’d suggest that your response is shallow in the long term, irrespective of whether it’s true in the present.

      econfuture’s concerns are about the future, not the present, and certainly not about the present…other than as a test of his hypothesis.

  9. Peter T
    June 13, 2010 at 9:21 am

    If the “Lump of Labour” fallacy IS a fallacy, then surely it would apply at all times and places? Yet a glance at pre-industrial economies, or at the undeveloped world, shows large amounts of unused labour. For example, hunters and gatherers worked around 4-5 hours a day and Wikipedia gives the hours per year of a 13th century English peasant as 1620 hours – 250 hours a year less than a modern manufacturing worker.

    In my observation, India and similar countries are full of people working very little, and often there are elaborate social arrangements to share what work there is among several people (one to hold the towel, one to turn on the tap, one to ensure the soap dispenser is full….).

    Not having the benefit of an education in classical economics, these societies seem to have failed to realise they were living a fallacy.

    I would add that the issue is not really one of whether “work” can be found, but what kind at at what social cost. This is, I think, what Gregory Clark was talking about. If there is labour surplus to what is needed to provide the material basis of society (as there is in most societies) then the excess tends to be soaked up in ritual. Warfare seems to have been a favourite, but so does the rich paying people to hang around and adore them (footmen, pages, courtiers and so on). This is the real possibility of the future – a return to the past.

  10. June 13, 2010 at 6:45 pm

    I, too, have been concerned about unemployment due to automation for several years.

    I believe the trouble exists outside the lump of work fallacy and instead exists in human retrainability. Will humans be capable of producing value in a world where they are unable to keep pace with technological innovation?

    Kurzweil sees humans and machines merging so that humans can keep the pace. This could work, but it will come to the economically wealthy first, and will extend their economic lead tremendously.

    I see a TREMENDOUS widening of “the rich get richer” gap coming upon us very quickly, and some nights it makes it difficult to sleep. :-(

    I was born and raised a conservative Republican. Try as I might, I see no solution outside massive redistribution of wealth over the next several decades to allow humanity to cross this gap in a (relatively) humane way.

    That conclusion does not fit well with me, as it appears to be economically disincentivizing (sp?). Please feel free to debunk my notions, I’ll thank you and sleep better for it. :-)

    • August 4, 2010 at 3:53 pm

      Here is the breakthrough idea, what if no extrinsic (external to the task) incentives are needed to have a productive economy? What if all that is needed is the intrinsic rewards of doing a good job? Or the intrinsic reward of programming a robot to do a task well?

      See:
      “Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes” by Alfie Kohn

      http://www.alfiekohn.org/books/pbr.htm

      “Our basic strategy for raising children, teaching students, and managing workers can be summarized in six words: Do this and you’ll get that. We dangle goodies (from candy bars to sales commissions) in front of people in much the same way that we train the family pet. In this groundbreaking book, Alfie Kohn shows that while manipulating people with incentives seems to work in the short run, it is a strategy that ultimately fails and even does lasting harm. Our workplaces and classrooms will continue to decline, he argues, until we begin to question our reliance on a theory of motivation derived from laboratory animals. Drawing from hundreds of studies, Kohn demonstrates that people actually do inferior work when they are enticed with money, grades, or other incentives. Programs that use rewards to change people’s behavior are similarly ineffective over the long run. Promising goodies to children for good behavior can never produce anything more than temporary obedience. In fact, the more we use artificial inducements to motivate people, the more they lose interest in what we’re bribing them to do. Rewards turn play into work, and work into drudgery. …”

      Sure, bribes can work to get other people to do specific stuff for you, there is no doubt about that. Basically, giving out extrinsic rewards, whether positive ones like money or negative ones like beatings, is a way for people to control other people. But what if we could build a society that was built around intrinsic motivation and so people did not to be so “controlled” by others in such a behaviorist “do this and get that” way? What if we built a society more oriented towards people doing what they wanted? Google on “The Abolition of Work” by Bob Black for more ideas on that.

      Besides, there is an irony that on the one hand we worry about robots doing all the work, and then we worry that if all people had, say, a “basic income” like Social Security, then no one would work and nothing would get produced. Which is it? Could it be that some small percent of the populace will always want to make things for fun? And with the amplifying power of automation, that small percentage will be enough to supply everyone, just like a few programmers creating GNU/Linux can supply billions of people with useful free and open source software? I wrote more on that in an essay called “Post-Scarcity Princeton”.

  11. June 14, 2010 at 12:06 am

    I’ve written on this issue recently (http://xmltoday.org/content/its-effects-evolution-job-market) and believe strongly that Clark is fundamentally correct here. Manufacturing jobs were easiest to automate originally because the operations being down were typically of a limited range, repeated endlessly, using human beings as machines. Once machines were designed that could emulate this, then humans became redundant.

    Automate information technology and eventually you reach a stage where the next wave of jobs are – information managers, who emerged in the 1950s in order to process and coordinate what was ultimately the action of a corporate machine. The standardization of shipping containers spelled the end of the longshoreman, since you could then build equipment that could be used to move these shipping containers automatically. The standardization of business process means the same thing for businesses.

    What is happening now is that we are hollowing out those areas of employment that ultimately can be replicatable, involves monitoring and action, or involves data acquisition and dissemination. Unfortunately, this accounts for a huge percentage of the overall jobs at hand. Most of what are left are facilitator jobs – helping make it easier for people to integrate with the systems, and even these will likely eventually go away as information systems build up around these integration points.

    Our economic system is predicated upon humans doing these rote tasks and receiving the means of their livelihood from the performance of these tasks. Eliminate the tasks, then you eliminate the means by which a livelihood can be achieved. In time, the system will collapse, as wealth becomes concentrated in a few hands with little means to roll that wealth back into the economy in any meaningful fashion. Since this is a sovereign responsibility (all economies are political in nature), this will also result in the dis-integration of many of the world’s primary sovereign states, potentially including the United States as economies are forced to become more localized to become meaningful.

    • August 4, 2010 at 3:58 pm

      Some of this hollowing out was predicted in 1964, in “The Triple Revolution” Memorandum sent to President Johnson, although it was a bit ahead of its time.

      http://educationanddemocracy.org/FSCfiles/C_CC2a_TripleRevolution.htm

      “The industrial system was designed to produce an ever-increasing quantity of goods as efficiently as possible, and it was assumed that the distribution of the power to purchase these goods would occur almost automatically. The continuance of the income-through-jobs link as the only major mechanism for distributing effective demand — for granting the right to consume — now acts as the main brake on the almost unlimited capacity of a cybernated productive system.”

  12. Serge N
    June 14, 2010 at 5:20 am

    I agree that what we are witnessing is a collapse of the economy of scarcity and emergence of the economy of abundance. And, by the way, if there is a condition of true abundance, then we probably don’t need the tools like money to measure that abundance or stock market to channel that abundance to “most efficient use” … just think about it…
    I probably will be somewhat more optimistic than many posts here since some trends that I’d like to point out indicate that there well might be lights at the end of the tunnel :)

    It seems that societal adaptation to the very real issues raised here (thank you Martin! Very timely and very well done!) is well under way and progresses along several lines, involving actions by the governments as well as deeper changes in the economies.

    Some government measures such as redistribution of wealth and retraining programs, have been around for quite some time. Other, such as massive “quantitative easing” captured the public imagination just recently and it appears that money printing is here to stay and interestingly enough that will not lead to increased inflation for multiple reasons:
    – on the one hand the deflationary forces such as globalization, automation, technological innovation and declining population growth have gained tremendous strength and represent what is known as powerful “secular trends”;
    – on the other hand injecting money into the economy the way it is conducted now (stimulating production instead of consumption) leads to increased supply of goods and services which is a recipe for further deflation;
    – and finally, human wants are indeed not unlimited. It is a well known fact that wealth distribution is extremely uneven, and consider what people who have money are doing with it. Some as Bill Gates are giving it away, some are just sitting on it and some are engaged in financial speculations for the sake of the process itself.

    Some deeper societal adaptations occur by themselves. For example, collapsing population growth rates around the world cause increase in the share of elderly among population thus helping to mitigate the threat of high structural unemployment. Japan is a good example. Despite relentless automation and years of deflation unemployment there is still about 5%. And by the way, Japan’s example is very important in many other ways. Just check their low mortgage rates and the currency rate (which has risen substantially since 1990) despite 20 years of money printing, or their 200% (wow!) debt to GDP ratio about which nobody appears to care (poor Greece – it’s key difference from Japan is that Japan can print it’s money while Greece can not) …just an observation :)

    Other adaptations involve some purposeful organized actions but appear to emerge spontaneously. For example:
    – open source movement which includes now not just software (Linux, OpenOffice) but also 3D printing (Fab@Home) and robotics (Willow Garage);
    – ongoing merger of man and machine (enhancement, regeneration, implants, artificial limbs and organs);
    – some people here(http://p2pfoundation.net/Free_Currencies) and here(http://www.thetransitioner.org/wiki/tiki-index.php?page=open+money) even talk about open-sourcing money thus ending the central bank monopolies and associated with it scarcity of money and extremely uneven wealth distribution.

    It appears that a major economic paradigm shift is under way. Competition and scarcity are being replaced by cooperation and free sharing. Such a system will also be more efficient since it will eliminate waste associated with guesswork involved in initial design of a product or service, pushing product to the market and production of unneeded stuff. Basically, final consumers will collaborate in producing what they really need and will share it for free. Why should they share it for free? Partly because they can, partly because it’s cool and partly because the General Public License (GPL) upon which many open-source projects are built demands so :)

    Where all these developments will eventually lead? Read the Scriptures (especially 1 Corinthians ch 15) and listen to Kurzweil, he talks about the same :) But, it’s a different and a far bigger topic altogether.

  1. August 4, 2010 at 9:16 am
  2. August 4, 2010 at 1:39 pm
  3. August 25, 2010 at 4:51 pm
  4. October 19, 2010 at 8:44 am

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