by Sydney J. Chapman (translated and condensed by the Sandwichman)
Let me now summarize my main conclusions, and humanize them by restoring the moral and social elements from which our premises were to some extent abstracted. I have hitherto spoken of progress in such terms that the critic would have some excuse for charging me with narrowness of vision. Progress is not summed up in improvements in productive methods that reduce the cost of things, nor in these improvements combined with the application to production of ideas that render work pleasanter and more educative. Nor is it wholly, or in bulk, summed up even if we add improvements in distribution (resulting in a more satisfying sharing of wealth) and a greater responsiveness of production to the needs of the community. The essentials of what most of us really understand by progress are to be found only in the world of consciousness – in the spiritual constituents of the universe. I mean something we cannot exactly define if we are not philosophers – and hardly then – but something implying a full living, with understanding of life and its surroundings, including its ethics, and a living with volitional powers strong enough to enable us to follow our lights. As all this is actually, though vaguely, desired in some degree by humanity generally, it is no doubt covered by the satisfactions measured in demand, but the admission of its reflection on one plane cannot be regarded as its adequate inclusion in our social philosophy.
The most important aspect of the question of the length of the working day consists in its relation to the most intimate constituents of progress. Let us call progress in this sense "culture" – a term, perhaps the best of the single terms available, to convey my meaning. Now the world appears to be so designed that culture has on the whole a proportionately important place in the most primitive economic conditions. The hours of labor in such conditions may be long, but work is not so continuously absorbing that social intercourse during work is impossible, while variety of experience, contact with nature, and the calls made on initiative afford that intimacy with life as a whole, and that evocation of moral forces, which must be obtained in later stages of civilization largely through systematic education and books. I have argued above that each step in civilization brings intensified specialism. Work is by no means rendered non-cultural ultimately, but its cultural aspects are specialized, as are its objective aspects. Interest may be deepened on the whole, but it is no longer diffused; the need for thought and purpose may be no less than before, but the thought and purpose are of a confined character. The intensification of economic life that is implied is in itself all to the good, but the community must lose something of culture unless corresponding with this intensification there is an expansion of leisure and a specialized use of leisure for the purposes of culture. Certain expressions that have come into common use would seem to be significant of the needs and dangers of an industrial society highly advanced on the technical side. Thus we speak of the "cultured" classes and the "leisured" classes. For the attainment of culture, leisure is essential today as it was not in the past in quite the same sense, "culture" being broadly defined. I need not say that a "progress" that meant the "specializing out" of leisure for the sole enjoyment of one class would not commend itself to any reasonable person; and I do not discern any danger of "progress" of this sort; but there is some danger lest the growing importance of leisure generally, and of a proper use of leisure, should not be fully realized. Tangible things force themselves upon our attention as the more intangible do not, and some of us who have an economic bent of mind get into the way, in consequence, of thinking too much of the quantity of external wealth produced and too little of the balance between internal and external wealth. In ultimate terms, to those who care to put it that way, all wealth is life, as Ruskin insisted. There hardly appears to be any risk of a general underrating of external goods, but there is some risk of an underrating of the new needs of the life lived outside the hours devoted to production – which should themselves be, not a sacrifice to real living, but a part of it – and of an underrating of the dependence even of productive advance upon the widespread enjoyment and proper use of adequate leisure and an adequate income.
Showing posts with label chapman. Show all posts
Showing posts with label chapman. Show all posts
Monday, August 17, 2009
Saturday, August 15, 2009
Hours of Labour 11
by Sydney J. Chapman (translated and condensed by the Sandwichman)
All advanced industrialism today feels the strain of an accumulation of forces tending to bring about a reduction of the working day and will continue to be. However, a firm limit is imposed on the reduction of hours by the steep interest and depreciation charges on machinery when it works only a fraction of the time for which interest must be paid. Buildings deteriorate in value at least as much when shut up as when they are occupied; machinery continues to wear out, and sometimes rapidly, when it is idle; and the reserve fund necessary because the market may contract at any time and because machinery may at any time be rendered obsolete, is independent of the length of the working day. Many inventions involve an extended use of capital per head. Interest and depreciation charges, on the one hand, discourage the use of some innovations that require heavier capital investment, and, on the other hand, prevent those applied from reducing hours so much as they otherwise would.
To what extent depreciation and interest charges discourage shortening of the hours of labor depends, of course, on the relation between wages and payments for capital in the expenses of a business, which varies by industry. A rough calculation, nevertheless, for a particular industry of the saving in hours that might be effected by the continuous running of plant may be relevant. In the industry for which I have obtained figures, interest and depreciation would be reckoned ordinarily at 10 percent on the capital, about half for each, while wages would be in the neighborhood of 12 percent. Now, it being assumed provisionally that the depreciation charge varies as the hours worked, that the rate of interest is a constant, that the equipment of the industry remains as before and labor tends neither to leave the industry nor to flood into it, and that other costs of production are not affected, we find that hours could be reduced from ten to eight without any loss of wages, were the continuous running of plant substituted for the ten hours' day.
Actually, of course, some of the gain would be taken in the form of higher wages. Further, it must be noticed that the assumptions made do not accurately correspond with fact, though they are satisfactory for the purposes of a first approximation. On the one hand they lead to an over-estimate of the advantages of continuous running, because twenty-four hours of work could not possibly be squeezed into a twenty-four hours' day, and because the cost of artificial light during night work is disregarded, as are also the costs connected with awkward points in organzation, with the sharing of responsibility for the proper treatment of machinery, and with the fact, universally experienced, that night-shifts are not so productive as day-shifts. On the other hand, they lead to an under-estimate of the advantages of continuous running, because the cost of depreciation, as we have seen, is not proportional to the daily hours of work, because the shorter hours would raise the efficiency of labor, and because the demand for capital would be reduced, as would also the demand for land for manufacturing purposes. The inevitable contraction of the demand for capital is a point to be emphasized. If working hours per day were raised from ten to twenty-four, then, the reaction on the efficiency of labor still being disregarded, the old output could be obtained with five-twelfths of the old capital; the consequence would be a fall in interest, an augmentation of the amount of the plant per head of the people working with it at one time, and, therefore, an increased output per head.
In view of its great economies, the shift system calls for very careful consideration. The magnitude of the advantages that the wage-earners might hope to derive from its more extensive application has been denied, on the ground both of theory and of experience of those businesses in which it has been tried. But theoretic objections of a fundamental nature will be found to reduce to false doctrine concerning the determination of wages; and it must be remembered that as the benefits accruing from the comparatively few cases in which the shift system is practiced are by competition spread over the whole community, the gain of any individual is cut down to a very small figure. It must not be supposed that the effect of its universal adoption would be equally negligible.
Without general recourse to shift systems I cannot see any immediate prospect of much additional leisure for the mass of the population. Shifts could be designed so that no one shift would be particularly disagreeable to work in, and, if all shifts did not offer equal advantages, the workers could be moved round, being assigned for so many weeks to each shift. The shifts for foremen, and the management generally, which would have to be strengthened, might be arranged to run over a portion of two workers' shifts, so as to cement the new work on to the old; and the connecting of the work of each shift with that of the shift that it followed could also be secured by arranging that the unit of labor should be a group of partners, consisting of one man from each shift, it being the duty of each man before commencing work to see his partner in the displaced shift and receive instructions from him.
Naturally, a shift arrangement could only be introduced gradually. Are the objections to shifts of such gravity as to counteract their immense economies? The fact that objections were decisive in the past is no proof that they would be today in England, or even in industrial Canada. Conditions have been revolutionized in the last fifty years. Improvements in artificial lighting and in intra-urban transportation alone have swept away a mass of the unfavorable conditions that used to be associated with night work. And two or three shifts of approximately seven hours each, or three or four shifts of approximately six hours each – I state a not immediate attainable ideal – are very different in their effects upon social life, exclusive of those associated with the shorter period of toil for each workman, from two shifts of some ten or eleven hours each. With the shorter shift in use, arrangements could be made without much difficulty for all workers to get most of their sleep in the night, if they so wished, and to enjoy most of their leisure in daylight. But it is not my intention in this address to make a practical proposal or argue points of detail. I merely present certain theoretic corollaries that have incidentally been derived from our analysis of conditions determining the length of the working day. In conclusion, I may quote Dr. Marshall's final judgment that were shift systems more extensively adopted "the arts of production would progress more rapidly; the national dividend would increase; working men would be able to earn higher wages without checking the growth of capital, or tempting it to migrate to countries where wages are lower: and all classes of society would reap benefit from the change."
Next
All advanced industrialism today feels the strain of an accumulation of forces tending to bring about a reduction of the working day and will continue to be. However, a firm limit is imposed on the reduction of hours by the steep interest and depreciation charges on machinery when it works only a fraction of the time for which interest must be paid. Buildings deteriorate in value at least as much when shut up as when they are occupied; machinery continues to wear out, and sometimes rapidly, when it is idle; and the reserve fund necessary because the market may contract at any time and because machinery may at any time be rendered obsolete, is independent of the length of the working day. Many inventions involve an extended use of capital per head. Interest and depreciation charges, on the one hand, discourage the use of some innovations that require heavier capital investment, and, on the other hand, prevent those applied from reducing hours so much as they otherwise would.
To what extent depreciation and interest charges discourage shortening of the hours of labor depends, of course, on the relation between wages and payments for capital in the expenses of a business, which varies by industry. A rough calculation, nevertheless, for a particular industry of the saving in hours that might be effected by the continuous running of plant may be relevant. In the industry for which I have obtained figures, interest and depreciation would be reckoned ordinarily at 10 percent on the capital, about half for each, while wages would be in the neighborhood of 12 percent. Now, it being assumed provisionally that the depreciation charge varies as the hours worked, that the rate of interest is a constant, that the equipment of the industry remains as before and labor tends neither to leave the industry nor to flood into it, and that other costs of production are not affected, we find that hours could be reduced from ten to eight without any loss of wages, were the continuous running of plant substituted for the ten hours' day.
Actually, of course, some of the gain would be taken in the form of higher wages. Further, it must be noticed that the assumptions made do not accurately correspond with fact, though they are satisfactory for the purposes of a first approximation. On the one hand they lead to an over-estimate of the advantages of continuous running, because twenty-four hours of work could not possibly be squeezed into a twenty-four hours' day, and because the cost of artificial light during night work is disregarded, as are also the costs connected with awkward points in organzation, with the sharing of responsibility for the proper treatment of machinery, and with the fact, universally experienced, that night-shifts are not so productive as day-shifts. On the other hand, they lead to an under-estimate of the advantages of continuous running, because the cost of depreciation, as we have seen, is not proportional to the daily hours of work, because the shorter hours would raise the efficiency of labor, and because the demand for capital would be reduced, as would also the demand for land for manufacturing purposes. The inevitable contraction of the demand for capital is a point to be emphasized. If working hours per day were raised from ten to twenty-four, then, the reaction on the efficiency of labor still being disregarded, the old output could be obtained with five-twelfths of the old capital; the consequence would be a fall in interest, an augmentation of the amount of the plant per head of the people working with it at one time, and, therefore, an increased output per head.
In view of its great economies, the shift system calls for very careful consideration. The magnitude of the advantages that the wage-earners might hope to derive from its more extensive application has been denied, on the ground both of theory and of experience of those businesses in which it has been tried. But theoretic objections of a fundamental nature will be found to reduce to false doctrine concerning the determination of wages; and it must be remembered that as the benefits accruing from the comparatively few cases in which the shift system is practiced are by competition spread over the whole community, the gain of any individual is cut down to a very small figure. It must not be supposed that the effect of its universal adoption would be equally negligible.
Without general recourse to shift systems I cannot see any immediate prospect of much additional leisure for the mass of the population. Shifts could be designed so that no one shift would be particularly disagreeable to work in, and, if all shifts did not offer equal advantages, the workers could be moved round, being assigned for so many weeks to each shift. The shifts for foremen, and the management generally, which would have to be strengthened, might be arranged to run over a portion of two workers' shifts, so as to cement the new work on to the old; and the connecting of the work of each shift with that of the shift that it followed could also be secured by arranging that the unit of labor should be a group of partners, consisting of one man from each shift, it being the duty of each man before commencing work to see his partner in the displaced shift and receive instructions from him.
Naturally, a shift arrangement could only be introduced gradually. Are the objections to shifts of such gravity as to counteract their immense economies? The fact that objections were decisive in the past is no proof that they would be today in England, or even in industrial Canada. Conditions have been revolutionized in the last fifty years. Improvements in artificial lighting and in intra-urban transportation alone have swept away a mass of the unfavorable conditions that used to be associated with night work. And two or three shifts of approximately seven hours each, or three or four shifts of approximately six hours each – I state a not immediate attainable ideal – are very different in their effects upon social life, exclusive of those associated with the shorter period of toil for each workman, from two shifts of some ten or eleven hours each. With the shorter shift in use, arrangements could be made without much difficulty for all workers to get most of their sleep in the night, if they so wished, and to enjoy most of their leisure in daylight. But it is not my intention in this address to make a practical proposal or argue points of detail. I merely present certain theoretic corollaries that have incidentally been derived from our analysis of conditions determining the length of the working day. In conclusion, I may quote Dr. Marshall's final judgment that were shift systems more extensively adopted "the arts of production would progress more rapidly; the national dividend would increase; working men would be able to earn higher wages without checking the growth of capital, or tempting it to migrate to countries where wages are lower: and all classes of society would reap benefit from the change."
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Thursday, August 13, 2009
Hours of Labour 10
by Sydney J. Chapman (translated and condensed by the Sandwichman)
It would seem, therefore, that at least two reasons can be derived from economic theory for state intervention in the matter of the hours of labor, if it is assumed that the state can discover what is best for the country. One is to correct the tendency of people engaged in industry to agree upon an amount of sacrifice to money-making, which means a large future loss, involving the next generation, for a small present gain; the other is to fortify, if needful, the resistance of workers to the disposition of some employers to secure a greater product at the expense of the workers' convenience. This conclusion would, however, be too hasty a deduction.
Economic matters are settled, not merely by the self-regarding forces that we have hitherto emphasized, but also by social conceptions, embodied in public opinion and class notions of what is right and proper that defy expert analysis and any accurate evaluation as influences. These social conceptions, which are not deliberately framed on a rationalistic basis, but proceed insensibly as it were from the needs of human life, are less intermixed with religious elements now than they used to be, but are none the less powerful. Resting on the seventh day is not at present a religious observance to the extent it was in the past, but it has not universally been found necessary to supplement the declining religious sanction with a legal sanction. How far progress that runs counter to tendencies determined solely by self-regarding forces may be left to the operation of these incalculable motives that sway every community can be settled only by careful observation. It is sufficient now to recognize their existence, and to point to the reductions of the hours of labor in recent years.
I do not propose to consider here the merits of legislation for establishing standards for the hours of labor, except to observe, first, that Government interference aimed at securing reasonable hours for adult males in all the diversified industries of a country would entail elaborate, elastic, and frequent legislation and would no doubt be accompanied by many grave errors; and secondly, that a prima facie case can be made out for the regulation of the hours even of adult males by authoritative boards or by statute, when labor is weakly combined and hours are evidently sweated hours, and evidence is forthcoming that they are detrimental to health or vigor. Nor do I propose to consider whether it might not be better to suffer for a time present ills in the hope that there would grow up in the community an adequate power of self-regulation, possibly accompanied by valuable social consequences that otherwise might never have been elicited. I am hopeful that public opinion, directed by economic and ethical enlightenment will in the future become an increasingly effective factor in progress, apart from its expression in law. Even to-day, in view of the dependence of producers on demand, neither employers nor trade unions can afford to brave for long public sentiment, though unorganized, when it is aroused. Public sentiment in the years ahead may be expected to respond more sensitively to incidents in its surroundings that offend against social conceptions of what is right and proper. The cases of children, young persons, and women, which bring in special considerations, must be ruled off from the subject matter of this address.
Next
It would seem, therefore, that at least two reasons can be derived from economic theory for state intervention in the matter of the hours of labor, if it is assumed that the state can discover what is best for the country. One is to correct the tendency of people engaged in industry to agree upon an amount of sacrifice to money-making, which means a large future loss, involving the next generation, for a small present gain; the other is to fortify, if needful, the resistance of workers to the disposition of some employers to secure a greater product at the expense of the workers' convenience. This conclusion would, however, be too hasty a deduction.
Economic matters are settled, not merely by the self-regarding forces that we have hitherto emphasized, but also by social conceptions, embodied in public opinion and class notions of what is right and proper that defy expert analysis and any accurate evaluation as influences. These social conceptions, which are not deliberately framed on a rationalistic basis, but proceed insensibly as it were from the needs of human life, are less intermixed with religious elements now than they used to be, but are none the less powerful. Resting on the seventh day is not at present a religious observance to the extent it was in the past, but it has not universally been found necessary to supplement the declining religious sanction with a legal sanction. How far progress that runs counter to tendencies determined solely by self-regarding forces may be left to the operation of these incalculable motives that sway every community can be settled only by careful observation. It is sufficient now to recognize their existence, and to point to the reductions of the hours of labor in recent years.
I do not propose to consider here the merits of legislation for establishing standards for the hours of labor, except to observe, first, that Government interference aimed at securing reasonable hours for adult males in all the diversified industries of a country would entail elaborate, elastic, and frequent legislation and would no doubt be accompanied by many grave errors; and secondly, that a prima facie case can be made out for the regulation of the hours even of adult males by authoritative boards or by statute, when labor is weakly combined and hours are evidently sweated hours, and evidence is forthcoming that they are detrimental to health or vigor. Nor do I propose to consider whether it might not be better to suffer for a time present ills in the hope that there would grow up in the community an adequate power of self-regulation, possibly accompanied by valuable social consequences that otherwise might never have been elicited. I am hopeful that public opinion, directed by economic and ethical enlightenment will in the future become an increasingly effective factor in progress, apart from its expression in law. Even to-day, in view of the dependence of producers on demand, neither employers nor trade unions can afford to brave for long public sentiment, though unorganized, when it is aroused. Public sentiment in the years ahead may be expected to respond more sensitively to incidents in its surroundings that offend against social conceptions of what is right and proper. The cases of children, young persons, and women, which bring in special considerations, must be ruled off from the subject matter of this address.
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Tuesday, August 11, 2009
Hours of Labour 9
by Sydney J. Chapman (translated and condensed by the Sandwichman)
I now would like to compare specifically the effect on wages with the effect on the working day of the mechanical action of pure competition. In the matter of wages, if workers were too weak to have much influence in settling their pay, competition between employers, were it keen and unchecked by combination, would at least secure to the workers as a wage, for a given working day, their marginal worth (within limits set by social friction) in view of their then state of efficiency. Thus in the circumstances supposed the worker would tend to get approximately the utmost possible – apart from the question of the reaction of wages on efficiency – in an active society based on free enterprise, for we may take it that in such a society the bidding of individuals against one another for labor would continue at least up to the known marginal worth of labor.
Observe, however, that the existence of such bidding may imply that new businesses are being established, or that old-established employers are anxious to make considerable extensions because old-established employers, knowing that similar workmen must be paid the same, might avoid a course of action that resulted in a gain less than the loss involved in the elevation of wages. It is doubtful whether employers would as a rule assume that if they did take steps leading to an advance in wages others would do so, for, not unnaturally, employers are commonly indisposed to disturb rates of wages except for strong reasons. Even if employers were endowed with a powerful telescopic faculty, they would not necessarily invest in paying wages in excess of the workers' present marginal productivity (for the purpose of enhancing their future physical and mental vigor) because of the danger that some workers would find employment elsewhere, thus transferring to rival employers the returns from the long-sighted investments made in them.
Other things being equal, of course, the higher the efficiency of labor the greater is the gain, not only of the workman, but also of the employer. Now, as regards the working day, we have already seen that uncombined employers might keep it longer than would be desirable from their point of view, for the same reasons for which they might keep wages lower than would be desirable from their point of view. These reasons are, I repeat again, short-sightedness, or fear of incurring an expense the fruits of which other employers might reap. In this respect competition between employers is equally defective in its bearing on wages and in its bearing on the length of the working day. But, from the perspective of the quality of life of the workers, it has an additional defect in its bearings on the length of the working day; for although competition between employers in an competitive economy would bring about the length of working day that the workers would choose at the wages making it possible, the choice of the workers is apt to be distorted by a limited awareness of the positive effect of shorter hours on productivity and hence wages.
Next
I now would like to compare specifically the effect on wages with the effect on the working day of the mechanical action of pure competition. In the matter of wages, if workers were too weak to have much influence in settling their pay, competition between employers, were it keen and unchecked by combination, would at least secure to the workers as a wage, for a given working day, their marginal worth (within limits set by social friction) in view of their then state of efficiency. Thus in the circumstances supposed the worker would tend to get approximately the utmost possible – apart from the question of the reaction of wages on efficiency – in an active society based on free enterprise, for we may take it that in such a society the bidding of individuals against one another for labor would continue at least up to the known marginal worth of labor.
Observe, however, that the existence of such bidding may imply that new businesses are being established, or that old-established employers are anxious to make considerable extensions because old-established employers, knowing that similar workmen must be paid the same, might avoid a course of action that resulted in a gain less than the loss involved in the elevation of wages. It is doubtful whether employers would as a rule assume that if they did take steps leading to an advance in wages others would do so, for, not unnaturally, employers are commonly indisposed to disturb rates of wages except for strong reasons. Even if employers were endowed with a powerful telescopic faculty, they would not necessarily invest in paying wages in excess of the workers' present marginal productivity (for the purpose of enhancing their future physical and mental vigor) because of the danger that some workers would find employment elsewhere, thus transferring to rival employers the returns from the long-sighted investments made in them.
Other things being equal, of course, the higher the efficiency of labor the greater is the gain, not only of the workman, but also of the employer. Now, as regards the working day, we have already seen that uncombined employers might keep it longer than would be desirable from their point of view, for the same reasons for which they might keep wages lower than would be desirable from their point of view. These reasons are, I repeat again, short-sightedness, or fear of incurring an expense the fruits of which other employers might reap. In this respect competition between employers is equally defective in its bearing on wages and in its bearing on the length of the working day. But, from the perspective of the quality of life of the workers, it has an additional defect in its bearings on the length of the working day; for although competition between employers in an competitive economy would bring about the length of working day that the workers would choose at the wages making it possible, the choice of the workers is apt to be distorted by a limited awareness of the positive effect of shorter hours on productivity and hence wages.
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Sunday, August 9, 2009
Hours of Labour 8
by Sydney J. Chapman (translated and condensed by the Sandwichman)
We are assuming throughout, it must be remembered, that the wage will always be the worker's marginal worth – that is, what would be lost if he were dismissed – and that he knows it. Actually, of course, there is frequently an appreciable discrepancy between the marginal worth of labor and its wage, and the usual connection between them has not been commonly understood by the wage-earning classes. It would seem from the records of labor movements as if the worker's fear – based as much on ignorance as on distrust – lest the longer day should mean no more pay, though the weekly product would be greater, has protected him against the injurious consequences of short-sightedness; but I am inclined to think that the dominant force in these labor movements has consisted in ideals of life, formed half instinctively, which are unconnected with views, fallacious or otherwise, concerning the mechanics of distribution. Bad arguments have been used to justify good ends. To these ideals of life I shall refer again.
Actually, the actions of both employers and employed, in so far as they are governed by self-regarding motives, will compromise between immediate impulses and long-sighted calculations. Long-period results that are not very remote will usually be factored in, and employers as well as workers may aim at them, because the former may think the length of time a worker usually stays with one firm sufficient to justify a slight present sacrifice made with the object of securing improvement in the worker's efficiency.
The above analysis explains not only disagreements between employers and workers as regards the normal working day, but also the friction that is constantly generated in the matter of "overtime." Without the admission of overtime, heavy losses might be experienced by an industry in view of the inelasticity of its production and fluctuations in the market in which it sold; but, on the other hand, overtime once admitted sometimes tends to be worked out of proportion to the special need for it, and workers are apt to suspect that it is being used unfairly to extend the normal day.
Next
We are assuming throughout, it must be remembered, that the wage will always be the worker's marginal worth – that is, what would be lost if he were dismissed – and that he knows it. Actually, of course, there is frequently an appreciable discrepancy between the marginal worth of labor and its wage, and the usual connection between them has not been commonly understood by the wage-earning classes. It would seem from the records of labor movements as if the worker's fear – based as much on ignorance as on distrust – lest the longer day should mean no more pay, though the weekly product would be greater, has protected him against the injurious consequences of short-sightedness; but I am inclined to think that the dominant force in these labor movements has consisted in ideals of life, formed half instinctively, which are unconnected with views, fallacious or otherwise, concerning the mechanics of distribution. Bad arguments have been used to justify good ends. To these ideals of life I shall refer again.
Actually, the actions of both employers and employed, in so far as they are governed by self-regarding motives, will compromise between immediate impulses and long-sighted calculations. Long-period results that are not very remote will usually be factored in, and employers as well as workers may aim at them, because the former may think the length of time a worker usually stays with one firm sufficient to justify a slight present sacrifice made with the object of securing improvement in the worker's efficiency.
The above analysis explains not only disagreements between employers and workers as regards the normal working day, but also the friction that is constantly generated in the matter of "overtime." Without the admission of overtime, heavy losses might be experienced by an industry in view of the inelasticity of its production and fluctuations in the market in which it sold; but, on the other hand, overtime once admitted sometimes tends to be worked out of proportion to the special need for it, and workers are apt to suspect that it is being used unfairly to extend the normal day.
Next
Friday, August 7, 2009
Hours of Labour 7
by Sydney J. Chapman (translated and condensed by the Sandwichman)
[technical footnote] The argument in the more technical parts of this address, concerned with the determination of the length of the working day, may be conveniently summarized with the aid of the following figure[s]. In order to avoid the complexities arising from the redistribution of labour between the industries of a country, suppose that only one industry exists. Measure units of time in the working day along OX, and units of money along OY.
Consider first the unbroken lines which represent the influences governing employers. The curve P expresses the long-period variations with the length of the working day of the marginal value of a fixed quantity of labour: the opinion that these can be represented by a curve has been defended in the body of this address. If On hours are worked, this daily value of labour and the wage will ultimately be Onda; if Ob hours are worked, this value and wage rises to Oba; if Oe hours are worked, it falls to Oba - bef.
The meaning of the curve P will now be plain. The curve is supposed to rise in the first instance because increasing the daily hours of labour would at first raise the level of efficiency, and if it did not, the larger wage would. But P must begin to fall at some point, and eventually cross OX, as is demonstrated in the body of the address. Actually, of course, P could not start at OY, because a man when engaged for only a fraction of his time daily could not live on the proceeds of his work, but it has been so drawn in the figures to enable us to picture the value and wage of labour by the area between the curve P and the co-ordinates.
The curve ck represents the immediate variations of the marginal value of a fixed quantity of labour with the length of the working day on the assumption that the normal working day has been Ob. Hence the value of the normal product of the last minute of the working day Ob is bg. Ex hypothesi Obgc must equal Oba. If the working day is lengthened to Oe the product will at first be augmented by bekg, but finally by a gradual decline it will sink to Oba-bef.
The influences guiding the operatives are expressed in the dotted lines, the meaning of which must now be explained. Draw any vertical line dl to the left of b. Then dn is the addition made in the long run to the money income of the operative when the Onth increment of time is added to the working day. Let dm be the long-period value to the operative, when his income is Onda, of the leisure destroyed by the addition of the Onth increment of time to the working day. The curve I is the locus of the point m. Evidently, starting at a, it will lie throughout its length below P, increasingly departing from P (because leisure is subject to the law of diminishing utility and the value of leisure rises with income), and cut OX to the left of b.
Apart from the satisfaction or dissatisfaction of working, therefore, the far-sighted operative who took into account the value of leisure would choose a normal day Oi, which is less than Ob (the choice of far-sighted employers in combination). When the normal day is Oi the marginal value of leisure to an operative with a wage Oiha would be ih, which equals the long-period marginal earnings attributable to the Oith increment of time in the working day.
Now, let L indicate the long-period values to the operative of the effects of different lengths of working day on the absolute satisfaction or dissatisfaction involved in the labour itself, L being otherwise interpreted, when units of money are measured along OY' as well as along OY, and the parts of the curve below OX indicate the prices which would be paid to escape the dissatisfaction involved in working, and the parts above OX the money value of the satisfaction involved in working. As some of the time devoted to production will probably be pleasant to the operative when the length of the working day is most favourable to his enjoyment of work, we may assume that L need not lie throughout its length below OX. Then the working day which perfectly wise operatives would choose would be On, the point n being such that nm = nl, the attainment of which equation is the condition under which the operative's satisfaction is maximised. If, as is theoretically conceivable but practically impossible, L lay further above OX for the abscissa Ob than I lay below it, the length of day most advantageous to the operative would be greater than Ob.
If normal hours are On, the operative who lives for the day and is aware that more work, measured by results, means proportionately more pay, will obviously desire hours longer than On for the following reasons. The product attributable to the Onth increment of working time is greater than dn, since dn represents the gain resulting from the Onth. less the loss occasioned by the reduction which will ultimately take place in the productivity of the operative's earlier hours in consequence of the addition of the Onth increment of time to the working day. For similar reasons the short-period or immediate value of leisure might be less than dm. Again, the money measure of the disutility of the Onth increment of working time is less than nl, because nl measures the results from the fact that the Onth increment of working time diminishes capacity in earlier hours to enjoy labour or sustain fatigue.
It is evident, therefore, that a balance of gain accrues to the operative from the work of the Onth unit of time, when everything, including wages is taken into account, but the effect of the work on the Onth unit of time on the gain associated with the rest of the working day ignored; and, further, that the balance of gain attributable to the Onth hours will not disappear, though it may contract if the working day be slightly extended. Hence we must conclude that operatives who are not alive to the reactions of long hours on efficiency and capacity to enjoy life and work will tend to choose a longer working day than is wise from their point of view. However, to repeat, they will not approve such long hours as employers who are equally blind to future reactions, because the latter, if purely self-interested, make no allowance for the disutility of labour to the operative or the utility to him of leisure.
In the event of progress in methods of production the new position of P would be such that the area enclosed between it and the co-ordinate axes would be increased. P in its new position might cut OX at b, but in all probability the new intersection with OX would be to the left of b. It is not likely to fall to the right of b, since improvements in the mechanical aids of labour seldom mean that work is rendered less exhausting.
Even if the new curve P passed through b, the new position of I would practically mean its intersection with OX to the left of i because of the enhanced value of leisure. Further L, though it might rise higher than before, would probably descend sooner and at least as steeply. It is to be observed in addition that but for interest, rent and heavy depreciation charges, industrial progress would bring about movements of P involving more considerable augmentation of the area contained between P and the co-ordinate
axes.
Improved education, apart from its effect on efficiency, would bring about a subsidence of the curve I, so that in its new position it would cut OX to the left of i. The effect wrought by progress on short-period forces need not be worked out in detail. The general conclusion is manifest that progress may be expected to be accompanied by a progressive curtailment of the working day.
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[technical footnote] The argument in the more technical parts of this address, concerned with the determination of the length of the working day, may be conveniently summarized with the aid of the following figure[s]. In order to avoid the complexities arising from the redistribution of labour between the industries of a country, suppose that only one industry exists. Measure units of time in the working day along OX, and units of money along OY.
Consider first the unbroken lines which represent the influences governing employers. The curve P expresses the long-period variations with the length of the working day of the marginal value of a fixed quantity of labour: the opinion that these can be represented by a curve has been defended in the body of this address. If On hours are worked, this daily value of labour and the wage will ultimately be Onda; if Ob hours are worked, this value and wage rises to Oba; if Oe hours are worked, it falls to Oba - bef.
The meaning of the curve P will now be plain. The curve is supposed to rise in the first instance because increasing the daily hours of labour would at first raise the level of efficiency, and if it did not, the larger wage would. But P must begin to fall at some point, and eventually cross OX, as is demonstrated in the body of the address. Actually, of course, P could not start at OY, because a man when engaged for only a fraction of his time daily could not live on the proceeds of his work, but it has been so drawn in the figures to enable us to picture the value and wage of labour by the area between the curve P and the co-ordinates.
The curve ck represents the immediate variations of the marginal value of a fixed quantity of labour with the length of the working day on the assumption that the normal working day has been Ob. Hence the value of the normal product of the last minute of the working day Ob is bg. Ex hypothesi Obgc must equal Oba. If the working day is lengthened to Oe the product will at first be augmented by bekg, but finally by a gradual decline it will sink to Oba-bef.
The influences guiding the operatives are expressed in the dotted lines, the meaning of which must now be explained. Draw any vertical line dl to the left of b. Then dn is the addition made in the long run to the money income of the operative when the Onth increment of time is added to the working day. Let dm be the long-period value to the operative, when his income is Onda, of the leisure destroyed by the addition of the Onth increment of time to the working day. The curve I is the locus of the point m. Evidently, starting at a, it will lie throughout its length below P, increasingly departing from P (because leisure is subject to the law of diminishing utility and the value of leisure rises with income), and cut OX to the left of b.
Apart from the satisfaction or dissatisfaction of working, therefore, the far-sighted operative who took into account the value of leisure would choose a normal day Oi, which is less than Ob (the choice of far-sighted employers in combination). When the normal day is Oi the marginal value of leisure to an operative with a wage Oiha would be ih, which equals the long-period marginal earnings attributable to the Oith increment of time in the working day.
Now, let L indicate the long-period values to the operative of the effects of different lengths of working day on the absolute satisfaction or dissatisfaction involved in the labour itself, L being otherwise interpreted, when units of money are measured along OY' as well as along OY, and the parts of the curve below OX indicate the prices which would be paid to escape the dissatisfaction involved in working, and the parts above OX the money value of the satisfaction involved in working. As some of the time devoted to production will probably be pleasant to the operative when the length of the working day is most favourable to his enjoyment of work, we may assume that L need not lie throughout its length below OX. Then the working day which perfectly wise operatives would choose would be On, the point n being such that nm = nl, the attainment of which equation is the condition under which the operative's satisfaction is maximised. If, as is theoretically conceivable but practically impossible, L lay further above OX for the abscissa Ob than I lay below it, the length of day most advantageous to the operative would be greater than Ob.
If normal hours are On, the operative who lives for the day and is aware that more work, measured by results, means proportionately more pay, will obviously desire hours longer than On for the following reasons. The product attributable to the Onth increment of working time is greater than dn, since dn represents the gain resulting from the Onth. less the loss occasioned by the reduction which will ultimately take place in the productivity of the operative's earlier hours in consequence of the addition of the Onth increment of time to the working day. For similar reasons the short-period or immediate value of leisure might be less than dm. Again, the money measure of the disutility of the Onth increment of working time is less than nl, because nl measures the results from the fact that the Onth increment of working time diminishes capacity in earlier hours to enjoy labour or sustain fatigue.
It is evident, therefore, that a balance of gain accrues to the operative from the work of the Onth unit of time, when everything, including wages is taken into account, but the effect of the work on the Onth unit of time on the gain associated with the rest of the working day ignored; and, further, that the balance of gain attributable to the Onth hours will not disappear, though it may contract if the working day be slightly extended. Hence we must conclude that operatives who are not alive to the reactions of long hours on efficiency and capacity to enjoy life and work will tend to choose a longer working day than is wise from their point of view. However, to repeat, they will not approve such long hours as employers who are equally blind to future reactions, because the latter, if purely self-interested, make no allowance for the disutility of labour to the operative or the utility to him of leisure.
In the event of progress in methods of production the new position of P would be such that the area enclosed between it and the co-ordinate axes would be increased. P in its new position might cut OX at b, but in all probability the new intersection with OX would be to the left of b. It is not likely to fall to the right of b, since improvements in the mechanical aids of labour seldom mean that work is rendered less exhausting.
Even if the new curve P passed through b, the new position of I would practically mean its intersection with OX to the left of i because of the enhanced value of leisure. Further L, though it might rise higher than before, would probably descend sooner and at least as steeply. It is to be observed in addition that but for interest, rent and heavy depreciation charges, industrial progress would bring about movements of P involving more considerable augmentation of the area contained between P and the co-ordinate
axes.
Improved education, apart from its effect on efficiency, would bring about a subsidence of the curve I, so that in its new position it would cut OX to the left of i. The effect wrought by progress on short-period forces need not be worked out in detail. The general conclusion is manifest that progress may be expected to be accompanied by a progressive curtailment of the working day.
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Wednesday, August 5, 2009
Hours of Labour 6
by Sydney J. Chapman (translated and condensed by the Sandwichman)
I now pass on to analyze the determinants of the worker's choice in the matter of the hours of labor, assuming that his wage equals his marginal worth and that he knows it, and supposing in the first place that he is endowed with perfect foresight. Two things affect him that do not appeal to the self-interest of the employer, namely, the direct value of his (the worker's) leisure and the balance or dissatisfaction that his work yields of itself. By "satisfaction" or "utility" I merely intend a conventional objective representation of the subjective fact of preference, behind which the economist qua economist cannot penetrate. I say this in order to evade the charge so frequently made against economics that it implies the acceptance of Utilitarianism, psychological or ethical. Picking up again the main thread of our discourse, we observe that, apart from the two considerations mentioned above, namely, the value of leisure and the satisfaction got directly from the activity of labor, the worker's real income is maximized when his money income is maximized. Hence apart from these two considerations the choice, as regards the length of the working day, of perfectly far-seeing workers would be the choice of far-seeing employers were the latter combined.
Now take the value of leisure into account. If the worker derived greater utility from an increment of leisure than from the increment of wage sacrificed by transferring an increment of time from production to consumption, he would gain from a shortening of the working day regardless of the given length of the day, other things being equal. Referring to our earlier numerical example, we see that from the long-sighted point of view the productivity of the last fraction of the nine hours' day is zero, while its value as leisure must be greater than zero. Hence, the worker would choose to work less than nine hours a day, it being understood, remember, that he is paid his marginal worth and knows what that will be for different daily periods of work. Leisure consists in rival satisfaction – yielding occupations, active or passive, which are rendered possible by wages. There is consequently a close connection between this and the other determinant of the worker's choice, namely, the positive or negative utility associated with labor itself.
It may be assumed that in the long run, after the working day has exceeded a certain length, any further addition to it diminishes the satisfaction directly derived from working or adds to the balance of dissatisfaction. If a balance of dissatisfaction were associated in the long run with the efforts of the last minute in the working day that the worker would otherwise choose, as would ordinarily be the case, he would elect, other things being equal, to work an even shorter day, the duration of which would be determined at the point at which the gains and losses came to equivalence when everything was taken into account, that is to say, at the point at which his satisfaction was maximized. If the last minute of working still yielded satisfaction in the long run when the hours were nine (referring to the case supposed), which is so highly improbable as to be a negligible case, the worker would prefer to devote more than nine hours of his day to production were this satisfaction of working greater than the value associated in the long run with the last minute of leisure left when nine hours a day were given to business.
So far, in considering the workers' interests we have fixed our eyes on a remote perspective. We next focus our attention upon immediate tendencies and suppose them not to be counteracted by forces arising out of a regard for ultimate results. In these circumstances the worker would be inclined to select a longer working day than would be continuously the most advantageous to him, because be would be blind to the reaction of the longer hours on efficiency and consequently on earnings and the capacity to take pleasure in work. Many people lower the general level of their earnings in the future – and spoil their enjoyment of work and leisure in the future – by making as much as they can in the present. However, even in these circumstances, workers would not approve such long hours as employers who were short-sighted, because the latter would make no allowance for the disutility of labor to the worker or the utility to him of leisure.
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I now pass on to analyze the determinants of the worker's choice in the matter of the hours of labor, assuming that his wage equals his marginal worth and that he knows it, and supposing in the first place that he is endowed with perfect foresight. Two things affect him that do not appeal to the self-interest of the employer, namely, the direct value of his (the worker's) leisure and the balance or dissatisfaction that his work yields of itself. By "satisfaction" or "utility" I merely intend a conventional objective representation of the subjective fact of preference, behind which the economist qua economist cannot penetrate. I say this in order to evade the charge so frequently made against economics that it implies the acceptance of Utilitarianism, psychological or ethical. Picking up again the main thread of our discourse, we observe that, apart from the two considerations mentioned above, namely, the value of leisure and the satisfaction got directly from the activity of labor, the worker's real income is maximized when his money income is maximized. Hence apart from these two considerations the choice, as regards the length of the working day, of perfectly far-seeing workers would be the choice of far-seeing employers were the latter combined.
Now take the value of leisure into account. If the worker derived greater utility from an increment of leisure than from the increment of wage sacrificed by transferring an increment of time from production to consumption, he would gain from a shortening of the working day regardless of the given length of the day, other things being equal. Referring to our earlier numerical example, we see that from the long-sighted point of view the productivity of the last fraction of the nine hours' day is zero, while its value as leisure must be greater than zero. Hence, the worker would choose to work less than nine hours a day, it being understood, remember, that he is paid his marginal worth and knows what that will be for different daily periods of work. Leisure consists in rival satisfaction – yielding occupations, active or passive, which are rendered possible by wages. There is consequently a close connection between this and the other determinant of the worker's choice, namely, the positive or negative utility associated with labor itself.
It may be assumed that in the long run, after the working day has exceeded a certain length, any further addition to it diminishes the satisfaction directly derived from working or adds to the balance of dissatisfaction. If a balance of dissatisfaction were associated in the long run with the efforts of the last minute in the working day that the worker would otherwise choose, as would ordinarily be the case, he would elect, other things being equal, to work an even shorter day, the duration of which would be determined at the point at which the gains and losses came to equivalence when everything was taken into account, that is to say, at the point at which his satisfaction was maximized. If the last minute of working still yielded satisfaction in the long run when the hours were nine (referring to the case supposed), which is so highly improbable as to be a negligible case, the worker would prefer to devote more than nine hours of his day to production were this satisfaction of working greater than the value associated in the long run with the last minute of leisure left when nine hours a day were given to business.
So far, in considering the workers' interests we have fixed our eyes on a remote perspective. We next focus our attention upon immediate tendencies and suppose them not to be counteracted by forces arising out of a regard for ultimate results. In these circumstances the worker would be inclined to select a longer working day than would be continuously the most advantageous to him, because be would be blind to the reaction of the longer hours on efficiency and consequently on earnings and the capacity to take pleasure in work. Many people lower the general level of their earnings in the future – and spoil their enjoyment of work and leisure in the future – by making as much as they can in the present. However, even in these circumstances, workers would not approve such long hours as employers who were short-sighted, because the latter would make no allowance for the disutility of labor to the worker or the utility to him of leisure.
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Monday, August 3, 2009
Hours of Labour 5
by Sydney J. Chapman (translated and condensed by the Sandwichman)
Next, suppose that an agreement between employers, tacit or overt, is impossible, and that each employer will make what arrangements he can when he can. What hours, then, will competition among employers tend to bring about, when humanitarian considerations and any resistance from the workers are ruled out?
Suppose the efficiency of labor at the time is that associated with a customary working day of ten hours. The product of the last fraction of the tenth hour could not be zero, for if it were ten hours would not be worked. The ultimate effect of extending the working day beyond nine hours is loss, not because the product of the last fraction of the ninth hour is zero, but because the product of the last fraction of the ninth hour just equals the ultimate reduction of the product of the other hours occasioned by the lengthening of the working day.
Hence, on the assumption that employers are perfectly far-sighted but that agreement between them as to working hours is lacking, the disposition on the part of each employer to reduce hours to nine would be weakened if each employer could not depend upon keeping workers after he had brought them to the level of efficiency associated with the nine hours' day. The reforming employer would run the risk of paying the whole cost of the labor value created by shorter hours and getting little in return; other employers might secure and exhaust the new labor value, and no permanent good would be effected. Nor would there be any more guarantee in the conditions supposed that the nine hours' day would be retained, if instituted, for an employer could always snatch a temporary advantage by extending hours and paying slightly higher weekly wages. This is a general proof that, on the assumption made as regards the intelligence and foresight of employers and in the absence of agreement between them, the hours resulting in the maximum product would not necessarily establish themselves, no force on the side of the working people being supposed operative.
Next
Next, suppose that an agreement between employers, tacit or overt, is impossible, and that each employer will make what arrangements he can when he can. What hours, then, will competition among employers tend to bring about, when humanitarian considerations and any resistance from the workers are ruled out?
Suppose the efficiency of labor at the time is that associated with a customary working day of ten hours. The product of the last fraction of the tenth hour could not be zero, for if it were ten hours would not be worked. The ultimate effect of extending the working day beyond nine hours is loss, not because the product of the last fraction of the ninth hour is zero, but because the product of the last fraction of the ninth hour just equals the ultimate reduction of the product of the other hours occasioned by the lengthening of the working day.
Hence, on the assumption that employers are perfectly far-sighted but that agreement between them as to working hours is lacking, the disposition on the part of each employer to reduce hours to nine would be weakened if each employer could not depend upon keeping workers after he had brought them to the level of efficiency associated with the nine hours' day. The reforming employer would run the risk of paying the whole cost of the labor value created by shorter hours and getting little in return; other employers might secure and exhaust the new labor value, and no permanent good would be effected. Nor would there be any more guarantee in the conditions supposed that the nine hours' day would be retained, if instituted, for an employer could always snatch a temporary advantage by extending hours and paying slightly higher weekly wages. This is a general proof that, on the assumption made as regards the intelligence and foresight of employers and in the absence of agreement between them, the hours resulting in the maximum product would not necessarily establish themselves, no force on the side of the working people being supposed operative.
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Saturday, August 1, 2009
Hours of Labour 4
by Sydney J. Chapman (translated and condensed by the Sandwichman)
The eight-hour day has come to be regarded by some social reformers as the ideal of the future. The doctrine that the workman should normally work eight hours a day has been advanced with as high a degree of certainty as, say, the doctrine that the workman should normally sleep some definite number of hours a day. But the problem of the length of the working day is of a different nature from that of the problem of the time that should be devoted to sleep. The hours that should be given to sleep depend mainly on physiological conditions (though these physiological conditions are also affected by economic and psychological conditions). But the hours it is wise to assign to labor depend on the attitude of the workman to leisure and work, resulting as much from non-physiological as from physiological influences.
It is my purpose to show that the non-physiological value of leisure, as well as its physiological value, must rise with progress, and that therefore, in all probability, the hours that should normally be worked per day will become steadily less. The ideal working day of the future cannot be eight hours, for it must be essentially a progressive ideal. As a community advances, agitation for shorter hours will be constantly breaking out anew. If this is a correct reading of progress, it is important that we should understand fully the forces at work at each re-settlement of the length of the working day, those on the employing side as well as those expressed in the claims of the workers. I propose now, in consequence, to disentangle the impulses and their relations, into which the question of the determination of the working day at any one time may be resolved.
The matter being complex, it is necessary to proceed by successive steps of abstraction. In the first instance, therefore, I intend to indicate the length of working day workers and employers would respectively seek if they recognized their own interests and were endowed with complete foreknowledge of the effects of different hours of labor upon their interests. I will assume – as I may legitimately for most employment in large-scale production – that the workman tends to get as his wage his marginal worth, that is to say, the value that would be lost by his dismissal. We may assume, further, that the marginal worth of the workman for any given length of working day becomes, in the long run, a stationary amount.
If the efficiency of labor rose continuously in consequence of a reduction of hours it would obviously approximate to some limit, and if it fell continuously in consequence of an extension of the hours of labor it would also approach a limit. After some time the differences between these limits and the actual efficiency of labor could be taken as negligible.
For the sake of simplicity, I will for now suppose that one kind of labor only is employed. It is clear, then, that it is possible on these assumptions to indicate what in the long run (i.e., when all the reactions as regards, for instance, the efficiency of labor and provision and arrangement of other agents have taken place) the marginal daily worth of labor will be for different lengths of working day, it being understood that the number of shifts worked remains the same. If the number of shifts were increased the value of the labor would rise, as will be fully explained later.
Let us suppose that the following table represents, at a given time, the value of labor of a given kind per week, in relation to the length of the working day:
The fall in the value of labor after the working day exceeds nine hours is due to the fact that diminished weekly productivity more than counteracts the direct effect of the extension of the daily time for work. The diminished weekly productivity may be due to impaired vitality – physical, mental, or moral – or to some extent to irregularity, where that is possible, as in the case of colliers. The damage to productivity may be inflicted directly by excessive work, or it may be indirectly consequent upon it, the prime cause being found in the use of stimulants or recourse to unhealthy excitement in periods of leisure, reactions that are only to be expected when the day's work is very exhausting or very dull. The use of leisure affects, of course, mental vitality, culture, and character, and it will therefore be generally observable that labor which has had its hours reduced will be capable after a time – when the use of leisure has been improved and the improvement has produced its effects – of managing satisfactorily more complicated machinery, and will be generally more responsible and trustworthy, and therefore less in need of continuous watching and directing.
If employers are endowed with the foresight presupposed, and if their operating hours need not increase concurrently with a lengthening of the working day, it is in that case supposed to their interest collectively to come to an agreement not to employ labor more than nine hours a day, and to their interest individually not to employ labor for shorter hours than nine a day. The second conclusion follows from the fact that the weekly product would be augmented by a greater amount than is multiplied by the number of workers were the hours of labor increased, say from eight to nine, because labor, as every other agent employed in production, is paid not its aggregate but its marginal worth to the business in which it is employed. This proposition may be made more self-evident by the following example. Were labor rendered 25 percent more productive all round, the product and real wages would each be raised approximately 25 percent, other things being equal; but as the product must be greater than aggregate wages the addition made to the former by the longer hours must be greater than the addition made to aggregate wages.
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The eight-hour day has come to be regarded by some social reformers as the ideal of the future. The doctrine that the workman should normally work eight hours a day has been advanced with as high a degree of certainty as, say, the doctrine that the workman should normally sleep some definite number of hours a day. But the problem of the length of the working day is of a different nature from that of the problem of the time that should be devoted to sleep. The hours that should be given to sleep depend mainly on physiological conditions (though these physiological conditions are also affected by economic and psychological conditions). But the hours it is wise to assign to labor depend on the attitude of the workman to leisure and work, resulting as much from non-physiological as from physiological influences.
It is my purpose to show that the non-physiological value of leisure, as well as its physiological value, must rise with progress, and that therefore, in all probability, the hours that should normally be worked per day will become steadily less. The ideal working day of the future cannot be eight hours, for it must be essentially a progressive ideal. As a community advances, agitation for shorter hours will be constantly breaking out anew. If this is a correct reading of progress, it is important that we should understand fully the forces at work at each re-settlement of the length of the working day, those on the employing side as well as those expressed in the claims of the workers. I propose now, in consequence, to disentangle the impulses and their relations, into which the question of the determination of the working day at any one time may be resolved.
The matter being complex, it is necessary to proceed by successive steps of abstraction. In the first instance, therefore, I intend to indicate the length of working day workers and employers would respectively seek if they recognized their own interests and were endowed with complete foreknowledge of the effects of different hours of labor upon their interests. I will assume – as I may legitimately for most employment in large-scale production – that the workman tends to get as his wage his marginal worth, that is to say, the value that would be lost by his dismissal. We may assume, further, that the marginal worth of the workman for any given length of working day becomes, in the long run, a stationary amount.
If the efficiency of labor rose continuously in consequence of a reduction of hours it would obviously approximate to some limit, and if it fell continuously in consequence of an extension of the hours of labor it would also approach a limit. After some time the differences between these limits and the actual efficiency of labor could be taken as negligible.
For the sake of simplicity, I will for now suppose that one kind of labor only is employed. It is clear, then, that it is possible on these assumptions to indicate what in the long run (i.e., when all the reactions as regards, for instance, the efficiency of labor and provision and arrangement of other agents have taken place) the marginal daily worth of labor will be for different lengths of working day, it being understood that the number of shifts worked remains the same. If the number of shifts were increased the value of the labor would rise, as will be fully explained later.
Let us suppose that the following table represents, at a given time, the value of labor of a given kind per week, in relation to the length of the working day:
The fall in the value of labor after the working day exceeds nine hours is due to the fact that diminished weekly productivity more than counteracts the direct effect of the extension of the daily time for work. The diminished weekly productivity may be due to impaired vitality – physical, mental, or moral – or to some extent to irregularity, where that is possible, as in the case of colliers. The damage to productivity may be inflicted directly by excessive work, or it may be indirectly consequent upon it, the prime cause being found in the use of stimulants or recourse to unhealthy excitement in periods of leisure, reactions that are only to be expected when the day's work is very exhausting or very dull. The use of leisure affects, of course, mental vitality, culture, and character, and it will therefore be generally observable that labor which has had its hours reduced will be capable after a time – when the use of leisure has been improved and the improvement has produced its effects – of managing satisfactorily more complicated machinery, and will be generally more responsible and trustworthy, and therefore less in need of continuous watching and directing. If employers are endowed with the foresight presupposed, and if their operating hours need not increase concurrently with a lengthening of the working day, it is in that case supposed to their interest collectively to come to an agreement not to employ labor more than nine hours a day, and to their interest individually not to employ labor for shorter hours than nine a day. The second conclusion follows from the fact that the weekly product would be augmented by a greater amount than is multiplied by the number of workers were the hours of labor increased, say from eight to nine, because labor, as every other agent employed in production, is paid not its aggregate but its marginal worth to the business in which it is employed. This proposition may be made more self-evident by the following example. Were labor rendered 25 percent more productive all round, the product and real wages would each be raised approximately 25 percent, other things being equal; but as the product must be greater than aggregate wages the addition made to the former by the longer hours must be greater than the addition made to aggregate wages.
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Thursday, July 30, 2009
Hours of Labour 3
by Sydney J. Chapman (translated and condensed by the Sandwichman)
So far I have dwelt on two aspects bearing upon the hours of labor: first, the effect of industrial development in intensifying the work performed during the working day and thereby increasing the output; second, the subjective effect of the increasing strain associated with such advance. I have now to add another influence: the enhancement of the value of leisure that must accompany a rise in wages, improved education, and social progress generally. The amount of the real wage yielded by a given money wage necessarily varies with the time left to spend it; and, further, the value of leisure is a function of the goods that can be enjoyed in the period of leisure. The acute worker would aim at so distributing his time between work and recreation that the gain resulting from a little more leisure would equal the loss consequent upon the implied diminution of wages. Hence, when the volume of goods per capita annually supplied to labor increase, an attempt would almost certainly be made by the workers to buy more leisure, even if the satisfaction derived from leisure were unaffected, which it would not be, because the satisfaction derived from leisure must rise when each hour of leisure is enriched by greater possessions. As regards the effect of education, it is sufficient to point out that the value of leisure is a function of appreciative power and that this is developed by education. On the other hand, the higher appreciative power might also enhance the satisfaction got out of the work itself, and this effect could offset the effect on the value of leisure, or even more than counteract it. Ambitions would be further awakened, but the ambitious worker would probably demand, as a rule, more time for study. I think it unquestionable that, on the whole, educational advance causes a curtailment of hours.
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So far I have dwelt on two aspects bearing upon the hours of labor: first, the effect of industrial development in intensifying the work performed during the working day and thereby increasing the output; second, the subjective effect of the increasing strain associated with such advance. I have now to add another influence: the enhancement of the value of leisure that must accompany a rise in wages, improved education, and social progress generally. The amount of the real wage yielded by a given money wage necessarily varies with the time left to spend it; and, further, the value of leisure is a function of the goods that can be enjoyed in the period of leisure. The acute worker would aim at so distributing his time between work and recreation that the gain resulting from a little more leisure would equal the loss consequent upon the implied diminution of wages. Hence, when the volume of goods per capita annually supplied to labor increase, an attempt would almost certainly be made by the workers to buy more leisure, even if the satisfaction derived from leisure were unaffected, which it would not be, because the satisfaction derived from leisure must rise when each hour of leisure is enriched by greater possessions. As regards the effect of education, it is sufficient to point out that the value of leisure is a function of appreciative power and that this is developed by education. On the other hand, the higher appreciative power might also enhance the satisfaction got out of the work itself, and this effect could offset the effect on the value of leisure, or even more than counteract it. Ambitions would be further awakened, but the ambitious worker would probably demand, as a rule, more time for study. I think it unquestionable that, on the whole, educational advance causes a curtailment of hours.
But unfortunately human nature improves slowly, and in nothing more slowly than in the hard task of learning to use leisure well. In every age, in every nation, and in every rank of society, those who have known how to work well have been far more numerous than those who have known how to use leisure well. But on the other hand it is only through freedom to use leisure as they will that people can learn to use leisure well; and no class of manual workers who are devoid of leisure can have much self-respect and become full citizens. Some time free from the fatigue of work that tires without educating is a necessary condition of a high standard of life. – Marshall, Principles of Economics, 5th ed., pp. 719-20.Social progress creates new claims on leisure by complicating life and rendering formerly vague feelings of social obligation more definite and insistent.
Generally it can be said that the more complex the social organism becomes, the more its constituent individuals must devote time, apart from work and business, to the family and recreation, to education and general affairs, the more necessary is a general social arrangement concerning the distribution of time between the several purposes which it has to serve. – Schmoller, Grundrisse der allgemeinen Volkswirthschaftslehre, p. 741.
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Tuesday, July 28, 2009
Hours of Labour 2
by Sydney J. Chapman (translated and condensed by the Sandwichman)
The road of economic advance proceeds by specialization. Just as there has been specialization in tools and in division of labor, so has there been a specialization of labor during working hours and of leisure and social intercourse in non-working hours. Specialization on the one side implies the elimination of waste, whether of means or of time and it has therefore meant to the laborer the partial or occasionally complete elimination of the leisure that used to be interspersed within working hours. In a modern workshop, noise, the necessity of discipline, or of a continuously absorbed state of the attention, frequently reduce the possibilities of conversation to the barest limits. Humanity has no doubt been relieved of the heaviest burden of toil by inventions relating to the mechanism of production, but their application has been accompanied on the whole by the closer concentration of some kind of effort in time. The intensification of labor in a more confined sphere of activity may, as Professor Münsterberg argues, exercise more fully the higher human faculties and thereby bring with it a deeper interest, but it will almost certainly prove more exhausting, even apart from the elimination of change, leisure, and social intercourse. Decade-by-decade, with the speeding up of machinery, we can expect to find more nervous strain accompanying the process of production. That industrial functioning has become a severer tax on the energy of the workman is fully borne out by the evidence of numerous reports on industrial conditions.
Although it is not the only possible explanation, the increasing nervous strain of industrial work would account sufficiently for the curious circumstance that there is apparently no finality about any solution of the ever-recurring problem of the normal working day. The workman whose day has been reduced soon demands even shorter hours. Pessimists infer from this that the establishment of shorter hours leads the community down a slippery slope descending from competition, striving, achievement and progress toward economic stagnation. They deplore the indolence and apathy of the present generation. But an examination of the effects that work-time reduction has on output suggests the pessimists are wrong.
A mass of material for a study of this question exists in official and other reports in more than one advanced industrial country. Beginning with the writings of Robert Owen and Daniel le Grand, both of whom stressed moral and social elements, an investigator would find an almost unbroken sequence of evidence. Mr. John Rae collected a volume of facts in 1894, and these may now be supplemented by the experiences of yet another half generation. Limitations of space forbid that I should quote examples, but I may at least roughly generalize from the recorded facts. I have found no instance in which an abbreviation of hours has resulted in a proportionate curtailment of output. There is every reason to suppose that the production in the shorter hours has seldom fallen short by any very appreciable amount of the production in the longer hours. In some cases, the product, or the value of the product, has actually been augmented after a short interval. In a few cases, the reaction of the shorter hours on the output per week has been instantaneously noticeable and the new level of production has surpassed the old before mechanical methods could be improved. Further, for some industries – for instance, for the Lancashire cotton industry – we have preserved for us the results of a string of observations reaching back about three-quarters of a century. It would appear from them that the beneficial effects wrought upon output by the shortening of hours were substantially repeated, though of course in different degrees, at each successive reduction of the working day.
Next
The road of economic advance proceeds by specialization. Just as there has been specialization in tools and in division of labor, so has there been a specialization of labor during working hours and of leisure and social intercourse in non-working hours. Specialization on the one side implies the elimination of waste, whether of means or of time and it has therefore meant to the laborer the partial or occasionally complete elimination of the leisure that used to be interspersed within working hours. In a modern workshop, noise, the necessity of discipline, or of a continuously absorbed state of the attention, frequently reduce the possibilities of conversation to the barest limits. Humanity has no doubt been relieved of the heaviest burden of toil by inventions relating to the mechanism of production, but their application has been accompanied on the whole by the closer concentration of some kind of effort in time. The intensification of labor in a more confined sphere of activity may, as Professor Münsterberg argues, exercise more fully the higher human faculties and thereby bring with it a deeper interest, but it will almost certainly prove more exhausting, even apart from the elimination of change, leisure, and social intercourse. Decade-by-decade, with the speeding up of machinery, we can expect to find more nervous strain accompanying the process of production. That industrial functioning has become a severer tax on the energy of the workman is fully borne out by the evidence of numerous reports on industrial conditions.
Although it is not the only possible explanation, the increasing nervous strain of industrial work would account sufficiently for the curious circumstance that there is apparently no finality about any solution of the ever-recurring problem of the normal working day. The workman whose day has been reduced soon demands even shorter hours. Pessimists infer from this that the establishment of shorter hours leads the community down a slippery slope descending from competition, striving, achievement and progress toward economic stagnation. They deplore the indolence and apathy of the present generation. But an examination of the effects that work-time reduction has on output suggests the pessimists are wrong.
A mass of material for a study of this question exists in official and other reports in more than one advanced industrial country. Beginning with the writings of Robert Owen and Daniel le Grand, both of whom stressed moral and social elements, an investigator would find an almost unbroken sequence of evidence. Mr. John Rae collected a volume of facts in 1894, and these may now be supplemented by the experiences of yet another half generation. Limitations of space forbid that I should quote examples, but I may at least roughly generalize from the recorded facts. I have found no instance in which an abbreviation of hours has resulted in a proportionate curtailment of output. There is every reason to suppose that the production in the shorter hours has seldom fallen short by any very appreciable amount of the production in the longer hours. In some cases, the product, or the value of the product, has actually been augmented after a short interval. In a few cases, the reaction of the shorter hours on the output per week has been instantaneously noticeable and the new level of production has surpassed the old before mechanical methods could be improved. Further, for some industries – for instance, for the Lancashire cotton industry – we have preserved for us the results of a string of observations reaching back about three-quarters of a century. It would appear from them that the beneficial effects wrought upon output by the shortening of hours were substantially repeated, though of course in different degrees, at each successive reduction of the working day.
Next
Sunday, July 26, 2009
Hours of Labour I
by Sydney J. Chapman, (translated and condensed by the Sandwichman)
Among the most insistent problems to be found in industrial societies are those concerning wages, conditions of work and living, and the hours of labor. The problem of the hours of labor has, perhaps, not received as much practical consideration as the others. Expressed in another way, our topic is the value of leisure, the bearing of industrial development upon it, and its effectiveness in shaping economic arrangements. The demands continually made for shorter hours and a normal day; the widely supported claim that the State should intervene; and the fact that some Governments have intervened, even to the length of regulating the hours of adult male labor, are additional grounds for trusting that this topic will be of more than academic interest.
Why doesn't the question of leisure assume prominence until modern industrialism has supplanted a simpler economy? Why is much less heard of it among agricultural than among industrial communities? In the hand industries of the past, the hours of labor were excessively long in comparison with modern industrial standards. Among the peasantry and pioneering farmers, work never wholly ceases in waking hours, except for short breaks for meals, throughout much of the year. Yet little complaint would seem to have reached us from either source. The explanation may lie partially in the fact that new grievances emerged with the spread of the wages system – the problem of the working day does not present itself in quite the same light to wage earners and to the self-employed. Furthermore, these grievances are rendered more articulate by group production and the concentration of people from one economic class lends cohesion and volume to the demand for reform. The hardships suffered by a scattered population, occasioning discontents, which, however, stop short of provoking outbreak, seldom succeed in attracting public notice. People acting in isolation are naturally timid. But this is not the sole explanation. The character of much of the world's work has changed and so have the demands made upon leisure.
Industrial work on the whole has certainly become more regular and continuous throughout the year. Analysis would seem to show that work per unit of time gets more severe, in a sense, as communities advance, though a strong case could be made for the view that economic progress fosters work that is generally more satisfying and conducive to human development. Mechanical improvements frequently bring with them a new monotony of work. However, higher wages may offset that new monotony of work by offering broader opportunities for living. Mechanical improvement proceeds by "specializing out" mechanical tasks, the performance of which by hand must be a dreary occupation. But each step in the march of invention seems to create, by its incompleteness, tasks involving a new and more intensified monotony despite the fact that it may result in less tedium per unit of output. Any work whose pace is set by a machine and kept absolutely steady must be wearisome. We may usefully compare mechanical improvements with discoveries relating to the re-use of by-products. The latter always recover from waste something of value to the community, but they generally leave a residue more concentrated than that with which they began.
Next
Among the most insistent problems to be found in industrial societies are those concerning wages, conditions of work and living, and the hours of labor. The problem of the hours of labor has, perhaps, not received as much practical consideration as the others. Expressed in another way, our topic is the value of leisure, the bearing of industrial development upon it, and its effectiveness in shaping economic arrangements. The demands continually made for shorter hours and a normal day; the widely supported claim that the State should intervene; and the fact that some Governments have intervened, even to the length of regulating the hours of adult male labor, are additional grounds for trusting that this topic will be of more than academic interest.
Why doesn't the question of leisure assume prominence until modern industrialism has supplanted a simpler economy? Why is much less heard of it among agricultural than among industrial communities? In the hand industries of the past, the hours of labor were excessively long in comparison with modern industrial standards. Among the peasantry and pioneering farmers, work never wholly ceases in waking hours, except for short breaks for meals, throughout much of the year. Yet little complaint would seem to have reached us from either source. The explanation may lie partially in the fact that new grievances emerged with the spread of the wages system – the problem of the working day does not present itself in quite the same light to wage earners and to the self-employed. Furthermore, these grievances are rendered more articulate by group production and the concentration of people from one economic class lends cohesion and volume to the demand for reform. The hardships suffered by a scattered population, occasioning discontents, which, however, stop short of provoking outbreak, seldom succeed in attracting public notice. People acting in isolation are naturally timid. But this is not the sole explanation. The character of much of the world's work has changed and so have the demands made upon leisure.
Industrial work on the whole has certainly become more regular and continuous throughout the year. Analysis would seem to show that work per unit of time gets more severe, in a sense, as communities advance, though a strong case could be made for the view that economic progress fosters work that is generally more satisfying and conducive to human development. Mechanical improvements frequently bring with them a new monotony of work. However, higher wages may offset that new monotony of work by offering broader opportunities for living. Mechanical improvement proceeds by "specializing out" mechanical tasks, the performance of which by hand must be a dreary occupation. But each step in the march of invention seems to create, by its incompleteness, tasks involving a new and more intensified monotony despite the fact that it may result in less tedium per unit of output. Any work whose pace is set by a machine and kept absolutely steady must be wearisome. We may usefully compare mechanical improvements with discoveries relating to the re-use of by-products. The latter always recover from waste something of value to the community, but they generally leave a residue more concentrated than that with which they began.
Next
Wednesday, November 19, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (13)
Conclusion
In his article on the canonical labour-supply model Derobert (2001) mentioned Chapman's theory in connection with Hicks's description of it as "the classical statement of the theory of 'hours' in a free market." Derobert dismissed Chapman's theory as "excessively complicated" and as "more of an amalgam than a synthesis" (p. 204). He also described it as lying "somewhere between Jevons's analysis and the canonical model" (p. 204). Chapman's theory lies between Jevons and the current canonical model only in a narrow chronological sense. Although Chapman's analysis did indeed develop Jevons's earlier discussion of the hours of labour, it bears little resemblance to the income-leisure choice model. Instead, it incorporates the opportunity-cost concept without at the same time abandoning the idea that work provides intrinsic satisfactions and dissatisfactions.
Perhaps Chapman's theory could indeed be considered "excessively complicated" in the non-pejorative sense that life itself is too complicated to describe in a mathematical model. The income-leisure choice model simply ignores Chapman's theory, it doesn't refute, refine, simplify, adapt or transcend it. In its ignorance of Chapman's theory, it tacitly assumes proportionality between hours worked and output produced. In the bargain, mainstream analysis implies an identity between market goods purchased and economic welfare. Leisure time disappears – even as a commodity. The hypothetical purchase of leisure time leaves behind no receipts to be reckoned in the calculation of national income. Thus Barone's book-keeping artifice involves writing entries in disappearing ink – a practice that might elsewhere be reckoned as fraudulent.
Sydney Chapman's theory of the hours of labour was both insightful and authoritative. It was widely accepted by eminent English economists of its day. It buttressed the novel conclusions that the ideal hours of work for maximizing social welfare would be shorter than those for maximizing profits and that the hours of work set in a competitive market may be too long even from the standpoint of maximizing output. Yet that acknowledged authoritative theory was displaced by what? A simplifying assumption? A semantic device? A book-keeping artifice? An absent-minded lapse of theory? In place of an established theory has sprung up a mathematical model of income-leisure choice in which the face of actual work is unrecognizable. With the centennial of its original presentation fast approaching, it is fitting that economists should re-examine what opportunities have been sacrificed and what – if anything – has been gained by this remarkable instance of theoretical substitution.
Bibliography
In his article on the canonical labour-supply model Derobert (2001) mentioned Chapman's theory in connection with Hicks's description of it as "the classical statement of the theory of 'hours' in a free market." Derobert dismissed Chapman's theory as "excessively complicated" and as "more of an amalgam than a synthesis" (p. 204). He also described it as lying "somewhere between Jevons's analysis and the canonical model" (p. 204). Chapman's theory lies between Jevons and the current canonical model only in a narrow chronological sense. Although Chapman's analysis did indeed develop Jevons's earlier discussion of the hours of labour, it bears little resemblance to the income-leisure choice model. Instead, it incorporates the opportunity-cost concept without at the same time abandoning the idea that work provides intrinsic satisfactions and dissatisfactions.
Perhaps Chapman's theory could indeed be considered "excessively complicated" in the non-pejorative sense that life itself is too complicated to describe in a mathematical model. The income-leisure choice model simply ignores Chapman's theory, it doesn't refute, refine, simplify, adapt or transcend it. In its ignorance of Chapman's theory, it tacitly assumes proportionality between hours worked and output produced. In the bargain, mainstream analysis implies an identity between market goods purchased and economic welfare. Leisure time disappears – even as a commodity. The hypothetical purchase of leisure time leaves behind no receipts to be reckoned in the calculation of national income. Thus Barone's book-keeping artifice involves writing entries in disappearing ink – a practice that might elsewhere be reckoned as fraudulent.
Sydney Chapman's theory of the hours of labour was both insightful and authoritative. It was widely accepted by eminent English economists of its day. It buttressed the novel conclusions that the ideal hours of work for maximizing social welfare would be shorter than those for maximizing profits and that the hours of work set in a competitive market may be too long even from the standpoint of maximizing output. Yet that acknowledged authoritative theory was displaced by what? A simplifying assumption? A semantic device? A book-keeping artifice? An absent-minded lapse of theory? In place of an established theory has sprung up a mathematical model of income-leisure choice in which the face of actual work is unrecognizable. With the centennial of its original presentation fast approaching, it is fitting that economists should re-examine what opportunities have been sacrificed and what – if anything – has been gained by this remarkable instance of theoretical substitution.
Bibliography
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.)
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (bibliography)
References
Altman, M. (2001) 'A behavioral model of labor supply: casting some light into the black box of income-leisure choice', Journal of Socio-Economics, vol. 33, pp. 199-219.
Barone, E. (1908/1935) 'The ministry of production in the collectivist state', in (F.A. Hayek, ed.), Collectivist Economic Planning, pp. 245-290.
Bergson, A. 'A reformulation of certain aspects of welfare economics', Quarterly Journal of Economics, vol. 52, pp. 310-334.
Bohm-Bawerk, E. von. 1894 'One word more on the ultimate standard of value', Economic Journal, vol. 4, pp. 719-724.
Chapman, S. J. (1909) 'Hours of labour', Economic Journal, vol. 19, pp. 353-373.
Derobert, L. (2001) 'On the genesis of canonical labor supply model', Journal of the History of Economic Thought, vol. 23, pp. 197-215.
Edgeworth, F.Y. (1894) 'One word more on the ultimate standard of value', Economic Journal, vol. 4, pp. 724-725.
Farzin, Y. H. and Akao, K.-I. (2006) 'Non-pecuniary work incentive and labor supply', Note di Lavoro 21, Milan: The Fondazione Eni Enrico Mattei
Green, D. I. (1894) 'Opportunity cost and pain cost', Quarterly Journal of Economics, vol. (8?), pp. 218–229
Hicks, J.R. (1932/1963) The Theory of Wages, London: Macmillan.
Hicks, J.R. (1939/1946) Value and Capital, London: Oxford University Press.
Hicks, J.R. and Allen, R.G.D. (1934) 'A reconsideration of the theory of value (part 1)', Economica, vol. 1, pp. 52–76.
Jennings, A. (2004) 'Dead metaphors and living wages: on the role of measurement and logic in economic debates', In (D.P. Champlin and J.T. Knoedle, eds.), The Institutionalist Tradition in Labor Economics, Armonk, N.Y.: M.E. Sharpe, pp. 131-145.
Lewis, H. G. (1957) 'Hours of work and hours of leisure', in Proceedings of the Ninth Annual Meeting, Madison: Industrial Relations Research Association, pp. 195-206.
Marshall, A. (1961) Principles of Economics, 9th edition, London: Macmillan for the Royal Economic Society.
Nyland, C. (1989) Reduced Worktime and the Management of Production, Cambridge: Cambridge University Press.
Pagano, U. (1985) Work and Welfare in Economic Theory, New York and Oxford: Basil Blackwell.
Pencavel, J. (1986)'Labor Supply of Men: A Survey', in (O. Ashenfelter and R. Layard, eds.), Handbook of Labor Economics, Amsterdam: North Holland. pp. 3-102
Philp, B., Slater, G. and Harvie, D. (2005) 'Preferences, Power, and the Determination of Working Hours', Journal of Economic Issues, vol. 39, pp. 75-90.
Pigou, A.C., (1920) The Economics of Welfare, London: Macmillan.
Robbins, L. (1929) 'The economic effects of variations of hours of labour', Economic Journal, vol. 39, pp 25-40.
Robbins, L. (1930) 'On the elasticity of demand for income in terms of effort', Economica, No. 29 (Jun., 1930), pp. 123-129
Robbins, L. (1930) 'The conception of stationary equilibrium', Economic Journal, vol. 40, pp. 194-214.
Scitovsky, T. (1992) The Joyless Economy: The Psychology of Human Satisfaction, New York and Oxford: Oxford University Press.
Scitovsky, T.(1951) Welfare and Competition, Chicago: R.D. Irwin.
Spencer, D. A. (2003) 'The labor-less labour supply model in the era before Philip
Wicksteed', Journal of the History of Economic Thought, vol. 25, pp. 505-513.
Spencer, D. A. (2004) 'From pain cost to opportunity cost: the eclipse of the quality of work as a factor in economic theory', History of Political Economy, vol. 36, pp. 387-400.
Tribe, K. (2004) 'Sydney Chapman', Oxford Dictionary of National Biography, Oxford University Press.
Walras, L. (1954) Elements of Pure Economics: or, the Theory of Social Wealth, translated by William Jaffe, Homewood, Illinois: Richard D. Irwin.
Altman, M. (2001) 'A behavioral model of labor supply: casting some light into the black box of income-leisure choice', Journal of Socio-Economics, vol. 33, pp. 199-219.
Barone, E. (1908/1935) 'The ministry of production in the collectivist state', in (F.A. Hayek, ed.), Collectivist Economic Planning, pp. 245-290.
Bergson, A. 'A reformulation of certain aspects of welfare economics', Quarterly Journal of Economics, vol. 52, pp. 310-334.
Bohm-Bawerk, E. von. 1894 'One word more on the ultimate standard of value', Economic Journal, vol. 4, pp. 719-724.
Chapman, S. J. (1909) 'Hours of labour', Economic Journal, vol. 19, pp. 353-373.
Derobert, L. (2001) 'On the genesis of canonical labor supply model', Journal of the History of Economic Thought, vol. 23, pp. 197-215.
Edgeworth, F.Y. (1894) 'One word more on the ultimate standard of value', Economic Journal, vol. 4, pp. 724-725.
Farzin, Y. H. and Akao, K.-I. (2006) 'Non-pecuniary work incentive and labor supply', Note di Lavoro 21, Milan: The Fondazione Eni Enrico Mattei
Green, D. I. (1894) 'Opportunity cost and pain cost', Quarterly Journal of Economics, vol. (8?), pp. 218–229
Hicks, J.R. (1932/1963) The Theory of Wages, London: Macmillan.
Hicks, J.R. (1939/1946) Value and Capital, London: Oxford University Press.
Hicks, J.R. and Allen, R.G.D. (1934) 'A reconsideration of the theory of value (part 1)', Economica, vol. 1, pp. 52–76.
Jennings, A. (2004) 'Dead metaphors and living wages: on the role of measurement and logic in economic debates', In (D.P. Champlin and J.T. Knoedle, eds.), The Institutionalist Tradition in Labor Economics, Armonk, N.Y.: M.E. Sharpe, pp. 131-145.
Lewis, H. G. (1957) 'Hours of work and hours of leisure', in Proceedings of the Ninth Annual Meeting, Madison: Industrial Relations Research Association, pp. 195-206.
Marshall, A. (1961) Principles of Economics, 9th edition, London: Macmillan for the Royal Economic Society.
Nyland, C. (1989) Reduced Worktime and the Management of Production, Cambridge: Cambridge University Press.
Pagano, U. (1985) Work and Welfare in Economic Theory, New York and Oxford: Basil Blackwell.
Pencavel, J. (1986)'Labor Supply of Men: A Survey', in (O. Ashenfelter and R. Layard, eds.), Handbook of Labor Economics, Amsterdam: North Holland. pp. 3-102
Philp, B., Slater, G. and Harvie, D. (2005) 'Preferences, Power, and the Determination of Working Hours', Journal of Economic Issues, vol. 39, pp. 75-90.
Pigou, A.C., (1920) The Economics of Welfare, London: Macmillan.
Robbins, L. (1929) 'The economic effects of variations of hours of labour', Economic Journal, vol. 39, pp 25-40.
Robbins, L. (1930) 'On the elasticity of demand for income in terms of effort', Economica, No. 29 (Jun., 1930), pp. 123-129
Robbins, L. (1930) 'The conception of stationary equilibrium', Economic Journal, vol. 40, pp. 194-214.
Scitovsky, T. (1992) The Joyless Economy: The Psychology of Human Satisfaction, New York and Oxford: Oxford University Press.
Scitovsky, T.(1951) Welfare and Competition, Chicago: R.D. Irwin.
Spencer, D. A. (2003) 'The labor-less labour supply model in the era before Philip
Wicksteed', Journal of the History of Economic Thought, vol. 25, pp. 505-513.
Spencer, D. A. (2004) 'From pain cost to opportunity cost: the eclipse of the quality of work as a factor in economic theory', History of Political Economy, vol. 36, pp. 387-400.
Tribe, K. (2004) 'Sydney Chapman', Oxford Dictionary of National Biography, Oxford University Press.
Walras, L. (1954) Elements of Pure Economics: or, the Theory of Social Wealth, translated by William Jaffe, Homewood, Illinois: Richard D. Irwin.
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.)
Tuesday, November 18, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (12)
The days are gone…, Part III
The canonical labour-supply model, based on the analysis of income-leisure choice, differs from both Walras and Hicks in establishing the constraint of 24 hours as the sum of the hours of leisure and of labour. In very general terms, the formula for such a calculation was stated by David I. Green (1893). Green argued that "the laborer stops work at a certain hour, not simply because he is tired, but because he wants some opportunity for pleasure and recreation" (p. 222) and further, that "the economic opportunities which a man sacrifices by pursuing a certain course of action are more capable of objective measurement. These sacrifices of opportunity are what constitutes the principal part of the costs of production which determine normal exchange values" (p. 223).
Although Green made explicit a trade-off of limited hours between labour and leisure, he didn't take the obvious next step of dividing the day into 24 hours to be apportioned between the two activities, nor did he specify an hourly wage. Enrico Barone (1908/1935) did, however:
Barone's "simple book-keeping artifice" constituted a second, not entirely congruent, version of opportunity-cost doctrine. The first version, as articulated by Green, was vague enough about time to defeat the pain-cost argument as an explanation of prices. Barone's version was precise enough about the division of the 24 hours in a day to be incorporated into mathematical formulae. Such precision came only at the (unexamined) cost of resurrecting what Robbins called the 'naïve' assumption that "the connection between hours and output is one of direct variation."
Abram Bergson (1939) adopted Barone's framework as a basis for his "Reformulation of certain aspects of welfare economics." Although it may have seemed a matter of indifference to Barone whether to count the receipts of labour as eight hours or as twenty-four hours minus sixteen hours of leisure, the book-keeping artifice was essential to the flourishing of the indifference-curve analysis, unhampered by the essentially unquantifiable spectres of worker fatigue, unrest or even intrinsic enjoyment of work. The founding myth of the new orthodox approach thus passed unannounced into the canon. Chapman's theory was rendered expendable not by an explicit simplification but by the quiet revival of a naïve and anachronistic assumption about the connection between hours and output.
Chapman theory appears to have covered both the opportunity-cost and pain-cost bases. In a technical footnote, he drew two dotted-line curves to describe the effects of the length of the working day on the worker (see appendix). The first curve, labelled I, clearly indicates an opportunity-cost analysis of the value "of the leisure destroyed by the addition of [an] increment of time" (p. 364). The second curve, labelled L, retains the notion of absolute satisfaction or dissatisfaction involved in working. There doesn't seem to be a suggestion that this curve L directly determines the cost or value of labour, only that it affects the welfare of the worker. To paraphrase Chapman, what curve L addressed was not "the quantity of external wealth produced" but rather the "balance between internal and external wealth" (p. 373).
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The canonical labour-supply model, based on the analysis of income-leisure choice, differs from both Walras and Hicks in establishing the constraint of 24 hours as the sum of the hours of leisure and of labour. In very general terms, the formula for such a calculation was stated by David I. Green (1893). Green argued that "the laborer stops work at a certain hour, not simply because he is tired, but because he wants some opportunity for pleasure and recreation" (p. 222) and further, that "the economic opportunities which a man sacrifices by pursuing a certain course of action are more capable of objective measurement. These sacrifices of opportunity are what constitutes the principal part of the costs of production which determine normal exchange values" (p. 223).
Although Green made explicit a trade-off of limited hours between labour and leisure, he didn't take the obvious next step of dividing the day into 24 hours to be apportioned between the two activities, nor did he specify an hourly wage. Enrico Barone (1908/1935) did, however:
It is convenient to suppose – it is a simple book-keeping artifice, so to speak – that each individual sells the services of all his capital and re-purchases afterwards the part he consumes directly. For example, A, for eight hours of work of a particular kind which he supplies, receives a certain remuneration at an hourly rate. It is a matter of indifference whether we enter A's receipts as the proceeds of eight hours' labour, or as the proceeds of twenty-four hours' labour less expenditure of sixteen hours consumed by leisure. (pp. 248-249).
Barone's "simple book-keeping artifice" constituted a second, not entirely congruent, version of opportunity-cost doctrine. The first version, as articulated by Green, was vague enough about time to defeat the pain-cost argument as an explanation of prices. Barone's version was precise enough about the division of the 24 hours in a day to be incorporated into mathematical formulae. Such precision came only at the (unexamined) cost of resurrecting what Robbins called the 'naïve' assumption that "the connection between hours and output is one of direct variation."
Abram Bergson (1939) adopted Barone's framework as a basis for his "Reformulation of certain aspects of welfare economics." Although it may have seemed a matter of indifference to Barone whether to count the receipts of labour as eight hours or as twenty-four hours minus sixteen hours of leisure, the book-keeping artifice was essential to the flourishing of the indifference-curve analysis, unhampered by the essentially unquantifiable spectres of worker fatigue, unrest or even intrinsic enjoyment of work. The founding myth of the new orthodox approach thus passed unannounced into the canon. Chapman's theory was rendered expendable not by an explicit simplification but by the quiet revival of a naïve and anachronistic assumption about the connection between hours and output.
Chapman theory appears to have covered both the opportunity-cost and pain-cost bases. In a technical footnote, he drew two dotted-line curves to describe the effects of the length of the working day on the worker (see appendix). The first curve, labelled I, clearly indicates an opportunity-cost analysis of the value "of the leisure destroyed by the addition of [an] increment of time" (p. 364). The second curve, labelled L, retains the notion of absolute satisfaction or dissatisfaction involved in working. There doesn't seem to be a suggestion that this curve L directly determines the cost or value of labour, only that it affects the welfare of the worker. To paraphrase Chapman, what curve L addressed was not "the quantity of external wealth produced" but rather the "balance between internal and external wealth" (p. 373).
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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.)
Monday, November 17, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (11)
The days are gone…, Part II
In Value and Capital, Hicks's treatment of work and leisure is laconic. It appears virtually as an aside in his discussion of the difference between the consumer's demand, if it is assumed to be fixed in terms of money, and what happens if the consumer is also a seller with a fixed stock of some commodity, who might hold back some of that commodity for his own consumption depending on the market price. "Thus a fall in wages," Hicks wrote,
The salient detail to note about Hicks's 'wage-earner' is that he is being paid by piece-rates, not on an hourly wage. That is to say, his income presumably varies in proportion to his output, not as a function of the number of hours he spends on the job or the number of hours of leisure he sacrifices to do so. The possibility that he may "work less hard" could thus mean either that he would exert less effort or that he would reduce the amount of time he worked. Or it could mean some combination of the two.
The dichotomy of working harder or less hard also introduces a certain ambiguity into exactly what is being traded-off, particularly if the wage-earner's hours at work remained unchanged. In the latter case, working less hard could be interpreted as a way of making work time more enjoyable (or less painful) and thus would be a backdoor re-introduction of the rejected pain-cost theory of value.
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In Value and Capital, Hicks's treatment of work and leisure is laconic. It appears virtually as an aside in his discussion of the difference between the consumer's demand, if it is assumed to be fixed in terms of money, and what happens if the consumer is also a seller with a fixed stock of some commodity, who might hold back some of that commodity for his own consumption depending on the market price. "Thus a fall in wages," Hicks wrote,
may sometimes make the wage-earner work less hard, sometimes harder; for on the one hand, reduced piece-rates make the effort needed for a marginal unit of output seem less worth while, or would so, if income were unchanged; but on the other, his income is reduced, and the urge to work harder in order to make up for the loss in income may counterbalance the first tendency (p. 36).
The salient detail to note about Hicks's 'wage-earner' is that he is being paid by piece-rates, not on an hourly wage. That is to say, his income presumably varies in proportion to his output, not as a function of the number of hours he spends on the job or the number of hours of leisure he sacrifices to do so. The possibility that he may "work less hard" could thus mean either that he would exert less effort or that he would reduce the amount of time he worked. Or it could mean some combination of the two.
The dichotomy of working harder or less hard also introduces a certain ambiguity into exactly what is being traded-off, particularly if the wage-earner's hours at work remained unchanged. In the latter case, working less hard could be interpreted as a way of making work time more enjoyable (or less painful) and thus would be a backdoor re-introduction of the rejected pain-cost theory of value.
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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.)
Friday, November 14, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (10)
The days are gone…, Part I
Further questions concerning the coherence of the Walrasian leisure device, beyond those identified by Pagano, are raised by examining the context in which Walras first introduced it and the form it took in the John Hicks's influential Value and Capital (1939), which is cited by both Pencavel and Scitovsky (although disputed by Derobert) as the source of the now orthodox model. Walras introduced the argument in Elements of a Pure Economics as part of his definition of the role of the "services of persons" (i.e., labour) in his theory of production. There, Walras discusses "the pleasure enjoyed by the idler" as constituting the income of "those who do nothing but travel and seek amusement"(p. 214). Walras's use here of the word "income" is metaphorical. No money changes hands. The rewards enjoyed by Walras's idler are what normally would be considered intrinsic whereas income refers to an extrinsic reward. Thus Walras's usage of the term 'income' is not just metaphorical but more precisely ironic.
There is no indication in his treatment that Walras intended such pleasure of the idler to also include the after-hours (non-monetary) "income" of someone who was a worker for the other 8 or 10 hours a day. On the contrary, Walras explained that "the idler who has wasted today will waste tomorrow; the blacksmith who has just finished this day's work will finish many more..." (p. 215) Doing nothing for Walras thus would appear to be the specialized occupation – the vocation, so to speak – of the idler, not something the blacksmith or the lawyer does in the hours after he or she has finished the day's work.
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Further questions concerning the coherence of the Walrasian leisure device, beyond those identified by Pagano, are raised by examining the context in which Walras first introduced it and the form it took in the John Hicks's influential Value and Capital (1939), which is cited by both Pencavel and Scitovsky (although disputed by Derobert) as the source of the now orthodox model. Walras introduced the argument in Elements of a Pure Economics as part of his definition of the role of the "services of persons" (i.e., labour) in his theory of production. There, Walras discusses "the pleasure enjoyed by the idler" as constituting the income of "those who do nothing but travel and seek amusement"(p. 214). Walras's use here of the word "income" is metaphorical. No money changes hands. The rewards enjoyed by Walras's idler are what normally would be considered intrinsic whereas income refers to an extrinsic reward. Thus Walras's usage of the term 'income' is not just metaphorical but more precisely ironic.
There is no indication in his treatment that Walras intended such pleasure of the idler to also include the after-hours (non-monetary) "income" of someone who was a worker for the other 8 or 10 hours a day. On the contrary, Walras explained that "the idler who has wasted today will waste tomorrow; the blacksmith who has just finished this day's work will finish many more..." (p. 215) Doing nothing for Walras thus would appear to be the specialized occupation – the vocation, so to speak – of the idler, not something the blacksmith or the lawyer does in the hours after he or she has finished the day's work.
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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.)
Thursday, November 13, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (9)
The eclipse of work in neoclassical economics. Part III
In tracing the emergence and triumph within economic theory of the income-leisure trade-off model, Ugo Pagano (1986) gave an account of a compromise between English and Austrian marginalist circles about what could be regarded as the "ultimate standard of value": pain cost or opportunity cost. The English side of the debate, argued by F. Y. Edgeworth (1894), featured Jevons's calculus of pleasure and pain whereby, after a certain point, increased units of work time produced an increasing amount of pain or disutility while additional goods purchased with the income from those extra hours supplied diminishing increments of utility. At some point the increase in disutility from work matches the increment in utility from additional income and the worker will choose to stop working. The Austrian perspective, argued by Eugen von Böhm-Bawerk (1894), regarded cost as being wholly constituted by the sacrifice one had to make, given scarce resources, to be able to consume any particular bundle of goods. One had to allocate one's scarce resources between wants that were, in principle, unlimited. The Austrians considered the hours of work to be institutionally fixed by custom or law and thus any hypothetical pain or disutility of work was, for them, not a factor in the individual's utility calculus.
Eventually, a compromise between these two positions was achieved by adopting what Pagano referred to as a "leisure semantic device". This device originated in the work of Leon Walras (1954) and bridged the differences between English and Austrian approaches by finding a way of including work and leisure in the opportunity-cost equation. It did so by defining the "disutility of work" to consist solely in the fact that the worker had to sacrifice leisure time in order to obtain income. According to Pagano, the adoption of the device underlies modern economic theory's "almost complete ignorance of the difference between human labour and the other resources" (93).
According to this leisure device, labour can be divided into two parts, the first part of which is self-consumed as leisure. The second part is sold and used in the production of goods for other people. Pagano notes two advantages of the leisure device for treating labour: first, it enables the treatment of labour in the same way as other consumption goods and thus greatly simplifies the analysis. Second, because the amount of time available to each individual for working is constrained (there are only 24 hours in a day), the system does take into account – or at least seems to take into account – the fact that labour expended in production affects the welfare of individuals. The more time the individual works to obtain income, the less leisure time he or she is left with.
Despite those advantages, Pagano viewed that leisure device as very misleading because it assumes that workers are only affected by the total amount of labour time expended and not by the way in which that time is allocated to the performance of different tasks.
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In tracing the emergence and triumph within economic theory of the income-leisure trade-off model, Ugo Pagano (1986) gave an account of a compromise between English and Austrian marginalist circles about what could be regarded as the "ultimate standard of value": pain cost or opportunity cost. The English side of the debate, argued by F. Y. Edgeworth (1894), featured Jevons's calculus of pleasure and pain whereby, after a certain point, increased units of work time produced an increasing amount of pain or disutility while additional goods purchased with the income from those extra hours supplied diminishing increments of utility. At some point the increase in disutility from work matches the increment in utility from additional income and the worker will choose to stop working. The Austrian perspective, argued by Eugen von Böhm-Bawerk (1894), regarded cost as being wholly constituted by the sacrifice one had to make, given scarce resources, to be able to consume any particular bundle of goods. One had to allocate one's scarce resources between wants that were, in principle, unlimited. The Austrians considered the hours of work to be institutionally fixed by custom or law and thus any hypothetical pain or disutility of work was, for them, not a factor in the individual's utility calculus.
Eventually, a compromise between these two positions was achieved by adopting what Pagano referred to as a "leisure semantic device". This device originated in the work of Leon Walras (1954) and bridged the differences between English and Austrian approaches by finding a way of including work and leisure in the opportunity-cost equation. It did so by defining the "disutility of work" to consist solely in the fact that the worker had to sacrifice leisure time in order to obtain income. According to Pagano, the adoption of the device underlies modern economic theory's "almost complete ignorance of the difference between human labour and the other resources" (93).
According to this leisure device, labour can be divided into two parts, the first part of which is self-consumed as leisure. The second part is sold and used in the production of goods for other people. Pagano notes two advantages of the leisure device for treating labour: first, it enables the treatment of labour in the same way as other consumption goods and thus greatly simplifies the analysis. Second, because the amount of time available to each individual for working is constrained (there are only 24 hours in a day), the system does take into account – or at least seems to take into account – the fact that labour expended in production affects the welfare of individuals. The more time the individual works to obtain income, the less leisure time he or she is left with.
Despite those advantages, Pagano viewed that leisure device as very misleading because it assumes that workers are only affected by the total amount of labour time expended and not by the way in which that time is allocated to the performance of different tasks.
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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.)
Wednesday, November 12, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (8)
The eclipse of work in neoclassical economics. Part II
Pencavel (1986) concluded that, considering the consistency with which empirical research produces values that violate the model's predictions, "the scientific procedure is surely to regard the theory as it has been formulated and applied to date as having been refuted by the evidence" (p.95). Other criticisms point out that the income-leisure choice model "cannot provide any substantive analytical predictions on the course of labor supply by an individual or a group" (Altman, 2001, 199) and takes no account of the non-pecuniary benefits of working (Farzin and Akao, 2006).
Derobert (2001) questioned the pedigree of the model, noting the paradoxical disappearance of labour, documenting bibliographical anomalies in the model's transmission and finding that the model's formal consecration by Tibor Scitovsky (1952) was accompanied by a warning about its pitfalls – specifically, that regarding leisure as a commodity may lead us to mistakenly assume there is a "conflict between the efficient specialization among workers and the efficient distribution of leisure" (p. 107). "It is much safer," Scitovsky went on to explain,
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Pencavel (1986) concluded that, considering the consistency with which empirical research produces values that violate the model's predictions, "the scientific procedure is surely to regard the theory as it has been formulated and applied to date as having been refuted by the evidence" (p.95). Other criticisms point out that the income-leisure choice model "cannot provide any substantive analytical predictions on the course of labor supply by an individual or a group" (Altman, 2001, 199) and takes no account of the non-pecuniary benefits of working (Farzin and Akao, 2006).
Derobert (2001) questioned the pedigree of the model, noting the paradoxical disappearance of labour, documenting bibliographical anomalies in the model's transmission and finding that the model's formal consecration by Tibor Scitovsky (1952) was accompanied by a warning about its pitfalls – specifically, that regarding leisure as a commodity may lead us to mistakenly assume there is a "conflict between the efficient specialization among workers and the efficient distribution of leisure" (p. 107). "It is much safer," Scitovsky went on to explain,
as well as more natural, to look at the face of the medal and concentrate our attention on work and the burden it involves, rather than on freedom from work and the satisfaction this yields. We can, if we like, think of work as a negative commodity, of its burden as a disutility or negative satisfaction, and of the earnings received for work as a negative price... (p. 107).Scitovsky's 'safer' and 'more natural' approach, however, would require abandoning the opportunity-cost value theory at the foundation of the income-leisure choice model, without which the model itself would cease to have any meaning.
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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.)
Tuesday, November 11, 2008
Missing: the strange disappearance of S. J. Chapman’s theory of the hours of labour (7)
The eclipse of work in neoclassical economics, Part I
The approach to the analysis of individual labour supply that replaced Chapman's theory took no notice of the effects of technological change on fatigue or on the subjective experience of the worker. It treated labour itself as a residual of the individual's consumption preferences. According to the new orthodoxy of income-leisure choice, leisure is assumed to be a normal good. Work is something featureless that takes place in the weeds behind the billboard of consumption and disposable time. Because this commodity-leisure itself lacks any definitive quality other than not being work, work is reduced to the hollow double negative of 'not not-working'. There is no pain in this hollowed-out work, neither is there joy.
A chorus of criticism surrounds the income-leisure choice model. Spencer (2003, 2004) objected that the model ignores the qualitative dimension of both work and leisure, a dimension that was specifically addressed in the approaches of Jevons and Marshall. Philp, Slater and Harvie (2005) disputed the epistemological coherence of the model's microfoundations, concluding that, "the indifference curves which underpin labour-leisure preferences are themselves founded on axioms which have been shown to be problematic elsewhere in neoclassical economics" (p. 80). Jennings (2004) analyzed the dead metaphors that signify measurement in the labour supply model, pointing out that measurement already requires a metaphor but that unmeasurable homogenous units of labour are a metaphor for a metaphor – a catachresis (literally "wrong use"). She cited Barthes's criticism of such speech forms as foundational for mythologies that "falsely universalize by removing the historical referents of signifiers" (p. 137) and noted his warning about the disingenuous "depoliticization" inherent in such speech.
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The approach to the analysis of individual labour supply that replaced Chapman's theory took no notice of the effects of technological change on fatigue or on the subjective experience of the worker. It treated labour itself as a residual of the individual's consumption preferences. According to the new orthodoxy of income-leisure choice, leisure is assumed to be a normal good. Work is something featureless that takes place in the weeds behind the billboard of consumption and disposable time. Because this commodity-leisure itself lacks any definitive quality other than not being work, work is reduced to the hollow double negative of 'not not-working'. There is no pain in this hollowed-out work, neither is there joy.
A chorus of criticism surrounds the income-leisure choice model. Spencer (2003, 2004) objected that the model ignores the qualitative dimension of both work and leisure, a dimension that was specifically addressed in the approaches of Jevons and Marshall. Philp, Slater and Harvie (2005) disputed the epistemological coherence of the model's microfoundations, concluding that, "the indifference curves which underpin labour-leisure preferences are themselves founded on axioms which have been shown to be problematic elsewhere in neoclassical economics" (p. 80). Jennings (2004) analyzed the dead metaphors that signify measurement in the labour supply model, pointing out that measurement already requires a metaphor but that unmeasurable homogenous units of labour are a metaphor for a metaphor – a catachresis (literally "wrong use"). She cited Barthes's criticism of such speech forms as foundational for mythologies that "falsely universalize by removing the historical referents of signifiers" (p. 137) and noted his warning about the disingenuous "depoliticization" inherent in such speech.
Next.
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.)
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