>Since this is - rightly - an obsession of yours, I'm wondering: in
>the hoax version, who or what fixes the fixed supply of labor? How
>can you fix anything in a highly dynamic system?
You could say it's my "passion," Doug. I wish I could reply to your question with a clear answer but I can only do so with a story. However to compensate for the convoluted tale I will present in lieu of a straight-forward answer, at the end of this account I will sweeten the pot, making it even more lucrative for the kindly soul who validates what has often been proclaimed as one of the most incontrovertible of economic doctrines.
The first obstacle to answering the question is that there are several hoax versions, not one -- "innumerable," I might have said. _Lord_ Richard Layard himself presents two entirely different versions. Paul Samuelson's is another. Raymond Bye, a textbook author from the 1920s & 30s a fourth. The London Times 1901 expose of The Crisis in British Industry offers a fifth. Etc., etc., etc.
In short, the practice has been to utter a couple of well-worn catch phrases about a "widespread fallacy" and a "belief in a fixed amount of work to be done" and then ad lib whatever explanation pops into one's gut. It's as if the short answer question perennially appears on midterms and students get credit as long as they mention the word "fallacy" and the phrase "fixed amount of work". And that probably just about sums it up. But I continue...
A plausible explanation for the historical evolution of the complaint is that the fixed amount started out as the "wages-fund doctrine" of vulgar classical political economy. The wage-fund doctrine was used to explain why it would be harmful to workers in the aggregate to pay any particular group of workers a higher wage. This was a good thing because it enabled employers to explain that they paid low wages for the workers' own good. But then, sometime around the middle of the 19th century, workers figured out how to turn the argument around and they used it, at times, to press their demands for higher wages. So the wages-fund doctrine suddenly became a bad thing, or to state it in philosophical language, a "fallacy." It was indeed a fallacy but nobody minded much when employers and their apologists committed it. And it wasn't yet about hours of work or work sharing. In those days, Nassau Senior's dictum about the entire profit of enterprise coming in the 12th hour still held sway.
Although pinpointing origins is precarious, I suspect it was Karl Marx in "Wages, Price and Profit" (1865) who set the fashion for lampooning fixity when he lambasted both the employers' and labour's (in the persons of Nassau Senior and "Citizen" Weston, respectively) "fixed idea about a fixed amount of wages, a fixed amount of production, a fixed degree of the productive power of labour, a fixed and permanent will of the capitalists, and all his other fixedness and finality..."
Apologists are, however, nothing if not adaptable. They were quick to simply pick up the accusation and fling it back at the accuser without worrying about evidence, consistency or logical coherence... the justice and poetry of the rebuttal could more handilly be establshed through repetition (a lesson never lost on public relations).
My research suggests that it was John Rae, in 1894, who first used the "fixed amount of work" fallacy complaint to dismiss the notion that an eight-hour day might reduce unemployment. The context of his argument, though, was that the reduction in working time would be compensated by an increase in productivity unless workers deliberately withheld output. His argument was that the same number of workers could produce as much or more output in fewer hours as they had previously thus, unless workers restricted their output, there would be no need to hire new workers to take up the unused hours. On the other hand, if workers did restrict their output during their reduced hours, that would represent a rise in the cost of labour and would result in a fall in the demand for labour. The following year, Charles Beardsley demonstrated that Rae's critique was only true 'ceteris paribus'.
It is difficult to state Rae's bungle without sounding like sarcasm. But here's what it comes down to, Rae was saying, in effect, that "if we assume that _everything else_ is fixed, then reducing the hours of work will only increase employment if we also assume that the amount of work to be done is fixed." Well, duh. But first of all, why do we have to make the first set of assumptions? Because it was convenient for Rae to do so. And second, if we do make those extreme static assumptions that everything else is fixed, why the hell should we then assume that the amount of work to be done is, alone, dynamic? It's almost a classic case of "assume we have a can opener" only this time employed to disdain the ignorant rabble's implied assumption that we have a can.. The mind boggles, which perhaps explains why subsequent critics of the lump of labour fallacy have relied instead on ad libbing.
Just to make matters murkier, I have to clarify that Rae didn't actually use the phrase "lump of labour". It was David F. Schloss who appears to have been he who named the fallacy of the "theory of the lump of labour" in a published article in 1891. The problem is that Schloss was talking about piece rates and not about the effects on employment of reducing the hours of work. Can anyone say "pastiche"?
As I promised at the beginning, the time has come to throw a few more bones in the soup. It would be such a shame in a contest about a fixed amount of work to offer only a fixed amount of prize money -- a "lump" sum for the labour, as it were. So I propose to dynamicize the prize. Here's what I'll do: I will match pledges for additional prize money up to a total of $2,500 (Canadian) in addition to the $5,000 I have already pledged. That is to say the grand prize total would be $10,000 (Canadian), if I receive pledges for $2,500 (my original $5,000 + $2,500 in pledges + $2,500 in matching funds). Now if people want to pledge more than an additional $2,500, that's fine with me but I won't continue to match those excess pledges.
Now, no one should assume that this is a sure thing and make a pledge without careful consideration. I spent months researching this and subsequent years confirming my findings. So I'm confident. Hell, I'm swaggering. And I am sincere about this prize offer because, frankly, I don't expect to have to pay. But I'm not perfect.
For example, I have never been able to trace a text of Citizen Weston's address that Marx criticized nor to discover if he responded to Marx's critique. For all I know, perhaps decades before John Rae, old Citizen Weston replied to Marx and in the process authored the original critique of the l-o-l fallacy and maybe Weston's long-lost critique was valid, consistent, coherent and authentic.
(And just maybe he typed it out using a proportional font).
Tom Walker (604) 255-4812