Textbook Lore versus George Gunton's Economic Theory of the Eight-Hour System

by the Sandwichman

Economics textbooks throughout the first half of the 20th century -- right up to and including Paul Samuelson's widely-adopted textbook of the 1950s and 60s -- repeatedly stressed the fallacy of union "theories" underlying their agitation for shorter hours. According to those textbooks, the fallacious union rationale for shorter working time was based on the assumption (the "lump-of-labor fallacy") there was only a fixed amount of work to go around and that if each worker did less of it, more could be employed.

Where did this alleged "union theory" come from?

The most likely suspect would appear to be the writings of George Gunton. Gunton, a disciple of shorter hours pioneer Ira Steward, was commissioned in 1889 by Samuel Gompers of the American Federation of Labor to write a pamphlet, "The Economic and Social Importance of the Eight-Hour Movement," outlining his theory of the eight-hour system. Gunton's pamphlet was thus the authorized statement of union reasoning behind their eight-hour campaign. Furthermore, in his pamphlet, Gunton claimed that if the eight-hour system were generally adopted in the US, the demand for workers would be increased by an amount approximately equal to the number of hours withdrawn from the market by currently-employed workers. This claim was soon rebutted by John Rae who pointed out that the redistribution of hours of work was "not a simple sum in arithmetic."

Even conceding that Gunton's claim does indeed look suspiciously like a theoretically-naive "simple sum in arithmetic," it is, nevertheless, more of a digression from Gunton's overall argument than its culmination and conclusion. What Rae did, in his retort to Gunton, was to ignore Gunton's own argument and retrofit a correspondingly simplistic argument to the obviously simplistic claim. Subsequent textbook authors followed suit, albeit with even less attention to the integrity of the original source. If we were to assume that textbook authors knew what they were doing in passing along the lump-of-labor claim, it would most accurately be described as dissembling and propaganda. However, it is more likely that the episode is simply one of arrogant prejudice swallowing its own tale.

Despite his lapse of making a sweeping and perhaps preposterous claim about the immediate results of the general adoption of the eight-hour system, Gunton's economic argument for the eight-hour system is actually rather sophisticated and dynamic -- much more so than what came to be the standard textbook treatment of the issue of shorter working time.

What was Gunton's argument, then? Briefly, Gunton argued that it is final demand that ultimately determines the amount of goods that can be profitably produced and sold and that the benefits of increased use of capital equipment derive from increasing returns to scale of production. Proceeding from those principles, it followed in Gunton's argument that higher wages and expanded employment would result in increased consumption which, in turn, would enable intensified use of machinery and thus a lower per-unit cost of production. As a consequence, under Gunton's assumptions, it is not necessary that the higher wages infringe on profitability.

Whether or not Gunton's assumptions hold up under rigorous scrutiny, they are unmistakably dynamic assumptions rather than static ones. The charges that they assume a fixed amount of economic activity, exhibit antipathy to technological improvement or call for restriction of output by workers are 180 degrees wide of the mark. And, remember, this is the official statement issued by the leading national organization of trade unions of the theory behind their eight-hour day campaign.

To credibly attribute some other motive or theory to unions would require -- at the very least -- either the citation of some other supposedly authoritative source or an explication of the discrepency between the trade unions’ stated rationale and their actual theory as demonstrated by practice. Do the textbooks do this? No. In fact, most accounts go no farther than to refer to the lump-of-labor theory/fallacy as if it were an uncontested fact that unions subscribed to it. In other words, whilst Gunton’s theory is at least plausible, the textbook accounts of the lump-of-labor are utterly unfounded. It is the legacy of that unfounded hearsay that continues to echo, uncorrected and generally unquestioned, in mainstream analyses of policies for the reduction of working time.