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Further Thoughts on the Use of Machines

Further Thoughts on the Use of Machines

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Published by Sandwichman
1. the cutthroat knife, a fuel's paradox and fantastical credit

Marx, that wily trickster, shanghaied Bill Sikes, the unkempt, scowling, growling, murderous, dog-abusing Dickens villain from Oliver Twist, and contrived for him the following mock-ingenuous plea to an imaginary jury: …no doubt the throat of this traveling salesman has been cut. But that is not my fault; it is the fault of the knife! Must we, for such a temporary inconvenience, abolish the use of the
1. the cutthroat knife, a fuel's paradox and fantastical credit

Marx, that wily trickster, shanghaied Bill Sikes, the unkempt, scowling, growling, murderous, dog-abusing Dickens villain from Oliver Twist, and contrived for him the following mock-ingenuous plea to an imaginary jury: …no doubt the throat of this traveling salesman has been cut. But that is not my fault; it is the fault of the knife! Must we, for such a temporary inconvenience, abolish the use of the

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Published by: Sandwichman on Apr 08, 2012
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Further Thoughts on the Use of Machines
1. the cutthroat knife, a fuel's paradox and fantastical credit 
Marx, that wily trickster, shanghaied Bill Sikes, the unkempt, scowling, growling,murderous, dog-abusing Dickens villain from
Oliver Twist 
, and contrived for him thefollowing mock-ingenuous plea to an imaginary jury:
…no doubt the throat of this traveling salesman has been cut. But that is not my
fault; it is the fault of the knife! Must we, for such a temporary inconvenience,abolish the use of the knife? Only consider! Where would agriculture and trade bewithout the knife? Is it not as beneficial in surgery as it is in anatomy? And inaddition a willing help at the festive table? If you abolish the knife
 — 
you hurl usback into the depths of barbarism.The occasion for the ruffian's cameo appearance was a section in
 Das Kapital
dealing withwhat Marx labeled "the theory of compensation as regards the workpeople displaced bymachinery"
 – 
a topic that had been dear to the hearts of political economists since at leastthe anti-machinery riots of 1779 and which remains an article of faith among contemporaryeconomists in spite of Herr Marx's sarcasm. As University of California economicsprofessor, Carl Walsh explained, "there is little debate among economists about the long-run effect of productivity on employment. [...] In the long run, faster productivity growthshould translate into an increase in the overall demand for labor in the economy."That "there is little debate" may itself be debatable. But what debate there is has a peculiarconfiguration. An odd twist was added by Stanley Jevons in 1865 when he requisitionedthe said theory of compensation to answer a question about the supply and demand forcoal. In
The Coal Question,
Jevons exclaimed, "
 It is wholly a confusion of ideas to supposethat the economical use of fuel is equivalent to a diminished consumption. The verycontrary is the truth
[emphasis in original].
"
He went on to explain:As a rule, new modes of economy will lead to an increase of consumptionaccording to a principle recognised in many parallel instances. The economy of 
 
2labour effected by the introduction of new machinery throws labourers out of employment for the moment. But such is the increased demand for the cheapenedproducts, that eventually the sphere of employment is greatly widened. Often thevery labourers whose labour is saved find their more efficient labour moredemanded than before.The difference between the well-trodden compensation theory and the paradox outlined byJevons is that the former is seen as a blessing by its proponents, while the latter issupposed to be a curse. As is their wont, optimistic economists are inclined to seek outevidence supporting the first proposition or discounting the second, while pessimists do theopposite. Confirmation bias ensures that the search for such evidence often succeeds, thuscontroversy persists. But is the
 post hoc
increased demand necessarily
 propter hoc
thecheapened price? It is
if we assume
the expansion of trade beyond some current,artificially-fixed barriers, as did Dorning Rasbotham in his 1780 response to the 1779machinery riots in Lancashire:There is not a precise limited
quantity
of labour,
beyond 
which there is no demand.Trade is not hemmed in by
great walls
, beyond which it cannot go. By bringing ourgoods
cheaper 
and
better 
to market, we open
new markets
, we get
new customers
,we encrease the quantity of labour necessary to supply these, and thus we areencouraged to push on, in hope of 
still new
advantages.
 A cheap market will alwaysbe full of customers.
Rasbotham envisioned opening
new markets
and getting
new customers
while Jevons didnot specify where the increase in consumption and increased demand would come from.This latter raises the possibility of an increased demand coming from existing customers inexisting markets. Actually, the two situations are not all that different. After all, what is"the expansion of trade," other than the expansion of the
means
for trading? The key toincreased demand, either from new markets or from the increased consumption of existingcustomers is purchasing power.
 
3Cheap prices may indeed increase the demand for a product but, as Charles D'Avenantpointed out in 1699, increased demand doesn't always translate into larger total revenuefrom sale of that product. A bumper crop in wheat, for example, may lead to a fall inrevenue for farmers and a poor harvest may result in an increase. Furthermore, increaseddemand for commodities is not the same as increased demand for labor. So cheapness of the products is not a sufficient cause for a compensation effect or "rebound," especiallywhen it is assumed that "the introduction of new machinery throws labourers out of employment for the moment." Even if their distress is only temporary,
 for the moment 
 those unemployed workers have diminished means for purchasing a portion of theexpanded quantity of consumer goods that machinery makes possible.In a closed system, the loss of income by the displaced workers would lead to a decrease indemand, not an increase, regardless of the cheapness of products. This decrease of income
 – 
and consequently of demand
 – 
would not be made up by the incomes of newly employedworkers constructing the machines. If it did, then the end products would not be cheaperand we would be back in the same predicament of insufficient means for purchasing theexpanded production. The increased demand thus can only come from outside the closedcircuit of employment and income. But from where?The answer to that riddle is yet another riddle: credit. D'Avenant described credit as"fantastical":Of all Beings that have Existence only in the Minds of Men, nothing is morefantastical and nice than Credit; 'tis never to be forc'd; it hangs upon Opinion; itdepends upon our Passion of Hope and Fear; it comes many times unsought for,and often goes away without Reason; and when once lost, is hardly to be quiterecover'd.But, take heart! This fantastical being resolves the other two paradoxes
 – 
of labor displacedby machinery and the economy of fuel, respectively
 – 
and sets the stage for a grandresolution of the triple paradox, all tied up in a neat bundle!

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