Monday, November 3, 2008

Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (1)

The days are gone when it was necessary to combat the naïve assumption that the connection between hours and output is one of direct variation, that it is necessarily true that a lengthening of the working day increases output and a curtailment diminishes it. – Lionel Robbins

On August 26, 1909, Sydney J. Chapman unveiled his economic theory of the hours of labour in his presidential address to the Economics and Statistics Section of the British Association for the Advancement of Science meeting in Winnipeg, Manitoba. The theory was subsequently published in The Economic Journal (Chapman 1909). Chapman's analysis arrived at several remarkable and far-reaching conclusions. First, the length of working day that would be best for workers’ welfare is shorter than the length that would produce the largest output. Second, the play of competition would tend to make the working day too long, even from the standpoint of production. Third, improved methods of production would lead to a progressive reduction of the optimal length for the working day. As a consequence, renewed conflict over the length of the working day would break out from time to time.

Not only were those conclusions novel from the point of view of conventional economic theory, they also had important practical implications for public policy regulating the hours of work. If the hours of work established by the market were likely to be too long, even from the perspective of total output, then legal limitation of the working day could aid not only equity but also economic efficiency. This possibility challenges the popular myth – often presented as an economic truism – that there is a "trade-off" between equity and efficiency goals and, furthermore, that economic efficiency is best served through the workings of a competitive market. Chapman’s theory calls both of those suppositions into question. It does so from within the tradition of neoclassical economics, using the approved tools and standard assumptions.

The leading economists of the day acclaimed Chapman's theory. Alfred Marshall (1961) cited Chapman's theory as authoritative. So did Marshall's successor at Cambridge, A.C. Pigou (1920), who based his own discussion of working time in The Economics of Welfare on Chapman’s theory. Lionel Robbins (1929) referred to Chapman's article as having effectively dealt with "one of the chief problems of the analysis of economic equilibrium" (p. 25) – i.e., the determination of the hours of work in industrial civilization. John Hicks (1932), called the theory the "classical statement of the theory of 'hours' in a free market" (p. 102n), and presented a meticulous six-page précis of it.

Twenty-four years after Hicks had proclaimed Chapman's theory authoritative, H. Gregg Lewis (1956) referred to something completely different as the "orthodox approach" to analyzing the individual supply of labour time. According to the newly-crowned orthodoxy, individuals choose how many hours they want to work based on their relative preferences for income and leisure. In the income-leisure choice model, leisure is viewed as a normal consumer good – no different from shoes, cabbages or sealing wax. Between the earlier classical statement of the theory of hours and the later orthodoxy lay a gulf and an enigma. In his history of worktime thought, Chris Nyland (1986) described the unchronicled transition as a matter of "now you see it, now you don’t" (p. 32).


Abstract: Sidney Chapman's theory of the hours of labour, published in 1909 in The Economic Journal, was acknowledged as authoritative by the leading economists of the day. It provided important insights into the prospects for market rationality with respect to work time arrangements and hinted at a profound immanent critique of economists' excessive concern with external wealth. Chapman's theory was consigned to obscurity by mathematical analyses that reverted heedlessly to outdated and naïve assumptions about the connection between hours and output. The Sandwichman is serializing "Missing: the strange disappearance of S. J. Chapman's theory of the hours of labour" on EconoSpeak in celebration of the centenary of publication of Chapman's theory. (To download the entire article in a pdf file, click on the article title.)

No comments: