When you start delving into the history of Luddism (as I have been doing), then you come across differences of opinion in economic circles on the influence that mechanisation may have on the economy. The argument is known as the so-called "Luddite Fallacy." Economists argue that technological progress will never lead to massive, long-term unemployment.
The reasoning goes more or less like this:
1. Labour-saving technology is introduced into the workplace, and some workers lose their jobs, however production also becomes more efficient.
2. More efficiency leads to lower prices for the goods and services produced, leaving consumers with more money to spend on other things.
3. Increased spending produces increased demand across nearly all industries--and that means more jobs.
4. Displaced workers then are rehired.
Apparently, that's what happened when agriculture was mechanised: food prices fell as efficiency increased, and consumers spent their extra money elsewhere, producing jobs in the manufacturing and service sectors.
The problem is - is this scenario (for that's all it is) robust enough to apply in all situations? I'm not convinced - and there are others who share my view.
Ho Colin, great timely topic. There is a very good article that explains all this problem but I need to send it as a PDF if you want to check it out. His name is Rofie Hueting and the article is called 'Three persistent myths in the environmental debate' Andrés
ReplyDeleteHi Colin
ReplyDeleteI agree with you. The "Anti-Luddite-Fallacy" hypothesis actually defines a model that has been truly valid for 200 years. The automation and technological progress has given us better living, shorter work, better products and no mass unemployment. But the history is no way a proof that the exponential improvement of computer science does not change the "constants" of the model. When the computer systems are smart enough to replace an average office worker, things are going to change.
There book of Martin Ford: "The Lights in the Tunnel" tells much more about the threat of the new global super economic crisis.
I just wrote about the same thing on my blog (but in Finnish :(
http://akvama-ajattelua.blogspot.com/2010/01/globaalin-talouden-superuhka.html
You may try to the google translation if you care.
There's a number of people discussing Martin Ford's book in various blogs at the moment. Ford works with computers in Silicon Valley, so should know his subject matter better than me. Worth checking out! ISBN 978-1448659814
ReplyDeleteC
The only way to support the notion that the Luddite Fallacy is actually fallacious is to adopt Henry George's answer to it which, of course, the neoclassical economists can't.
ReplyDeleteThe guillotining the neoclassical economists will commence shortly.
The problem with the 4-point reasoning above is that it sees humans as insatiable consumption machines while most people are more concerned about spending quality time with friends.
ReplyDeleteThere is a limit to how much time available for people to consume, not to mention will to consume.
There will always be jobs that cannot be replaced by machines but still we are going to see massive unemployment unless there are strict regulations on maximum work hours.