Friday, August 14, 2009

A Journalist Out of His Depth

by the Sandwichman

"It is characteristic of journalists to be long on social commentary and perception and short on conceptual analysis, and [John] Rae is no exception."

Who the heck was John Rae? The Scottish journalist was a key figure in originating the lump of labor myth, as it pertains to shorter working time. He didn't use the term lump of labor but instead decried the
"gross but evidently very seductive economic fallacy, which leads so many persons to think that they will all increase the wealth they individually enjoy by all diminishing the wealth they individually produce..."
Rae's argument was not that shorter hours of work diminished per capita output. On the contrary, Rae argued that shorter work time could not relieve unemployment because it would increase output per worker and thus obviate the need to hire more workers.

Intuitively, Rae's reasoning may seem persuasive until one realizes that Rae is assuming that the increased productivity will have no effect on cost, price, purchasing power of the workers or effective demand. An American economist, Charles Beardsley made short shrift of Rae's conclusions.

Nevertheless, Rae's rhetorical riposte to shorter hours as a remedy to unemployment got incorporated into employer objections to the eight-hour demand of unions while his empirical observations about productivity were noted by Sydney Chapman. The irony being that the 'dead' rhetorical part of his analysis has survived, handed down from textbook lore to blackboard dogma, while the 'living' empirical part has perished from the memory of mainstream economists!

So I was delighted to come across the following discussion by Aaron Fuller (2003) of Rae's characteristic "shotgun" style as deployed on another topic, Henry George's economics.
Rae's three-part critical examination of George's ideas is presented much like a set of "even-if" arguments encountered in the formal argumentation of a legal brief. He first rejects George's ideas because they are inconsistent with the empirical evidence—poverty is not increasing with progress. But, he contended, even if poverty were increasing, a second reason to reject George's ideas, independent of the empirical evidence, is George's alleged theoretical error and confusion. Finally, he maintained that even if the empirical evidence and the analytical arguments were on George's side, a third independent reason to reject George is that his solutions to the problems he identifies are either incorrect or inadequate. Such a scattered array of independent arguments is sometimes called the "shotgun" approach to argumentation. Potentially deadly at the close quarters of journalistic and legal persuasion where the form of the argument may be more important than its contents, it is less effective at the longer range of analytical scholarship where logical and factual consistency weigh more heavily than persuasiveness. Rae's journalistic shotgun approach to criticism, composed of scattered independent arguments, did little serious analytical damage to George's analyses. But serious analytical damage may not have been Rae's intent; instead, he may have been trying to persuade his readers that George was a dangerous agitator who, like the socialists discussed elsewhere in Contemporary Socialism, threatened to disrupt British institutions.


Edward J. Dodson said...

Henry George proved to be sufficiently dangerous to the status quo that the great monopolists of his day conspired to gain control of his discipline. They endowed chairs in political economy at major universities and then saw to it that professors willing to defend existing socio-political arrangements and institutions were hired to chair these departments. As a result, a generation of economics professors who accepted almost without question the teachings of their mentors moved into teaching positions all across the United States, Canada, the United Kingdom and other countries.

One economics professor who has documented this history is University of California professor Mason Gaffney. Back in 1994, Gaffney co-authored the book, "The Corruption of Economics," with British economist Fred Harrison. Anyone interested in this rather remarkable history of how the teaching of economics departed from a study of reality to an immersion into theoretical simplicity should read this book.

Much of what Gaffney and Harrison wrote was reinforced in the same year by a book on economists by the former economics editor of the Wall Street Journal, Alfred Malabre, Jr. Malabre picks up the story in the decades after the Second World War.

TheTrucker said...

What we see in the history of formal economics is always the same. Those who are supportive of those who have bags of wealth will inevitably find feathered nests in the "academic community", while those who disagree will not. Every now and then one or two persons manage to escape this general control mechanism and finagle a Nobel or something to gain a minimal notoriety and thus, an "authoritative" standing. But the folks in the universities are very much controlled by those who "endow" the universities. Such individuals are not in the ranks of the poor.

Most of the harm is done by recasting economics onto a mathematical framework because the majority of the common people do not understand calculus. And like it or not, they vote. And they have a certain respect for the calculus weenies. This allows the weenies to lie in support of their patrons.

The left is very concerned that all should be supported in learning calculus and that "proper" education is the key. Some of us care not for college and understand classical economics because it "makes sense". The battle must be won in the FREE and compulsory educational system. It cannot be won in the system supported by the rich.