The Wall Street Journal article was approximately 2,500 words long so I wrote:
(ROUGHLY) THE SAME NUMBER OF WORDS ABOUT A "SAME AMOUNT OF WORK" By Tom Walker On August 8, 2002 a strangely familar article appeared in the Wall Street Journal. Headlined "Europe's Prized Leisure Life Becomes Economic Obstacle", by Christopher Rhoads, it purported to assess the failure of the European experiment of working fewer hours. Rhoads sprinkled a few anodyne remarks from economists through his article dealing with what is a complex and important policy issue. "You have to work to grow," pronounced Michael Burda, professor of labor economics at Humboldt University. "We have fewer job opportunities distributed across people who work less," was the incisive summary offered by Andrea Ichino, professor of economics at the European University Institute in Florence, Italy. For balance, Rhoads quoted Juan Dolado, professor of economics at University Carlos III in Madrid, "Usually, when people get richer, they work less." Other than that, the article consisted of a variety of anecdotes, loosely connected facts, sweeping generalizations and unsupported but definitively stated conclusions. Intriguingly, several of the most Euro-skeptical anecdotes had nothing directly to do with the hours of work but pertained to union strength and the generosity of unemployment benefits. One might surmise that the real point of the article was about how so-called labor market rigidities -- the code phrase for union protection and social programs worthy of the name -- were stifling economic growth in Europe. That is a point, by the way, that is not supported by cross-country economic comparisons. But the recurring theme of the article was that the crux of Europe's difficulties lay in the Europeans' culture of working fewer hours. The nub of the argument appeared in a pair of paragraphs located about midway through the article: "Enter the shorter working week. Unions argued that reduced hours would spur job growth by spreading the same amount of work among more people. Most economists dismissed the theory, but some argued it could force Europeans to become more efficient, squeezing more work into less time. "Neither turned out to be true. Unemployment stayed high and productivity -- the measure of the amount of output achieved by one worker in an hour -- still lags behind the U.S. and fell further behind in the last few years, according to the OECD." The second paragraph demonstrates only the truism that you can prove anything with statistics that have been carefully selected to support your point -- especially if you leave out the actual figures and present only your self-serving interpretation of them. Rhoads' first paragraph, however, calls for closer scrutiny. It seems to report on some ethereal debate between unions and economists in which the unions argue for a "theory" that most economists then dismiss. It so happens that reports of such a debate have been greatly exaggerated. The debate between unions and economists about "spreading the same amount of work" has never occurred. But reports in the press have persisted for at least 131 years. THE STRANGE CAREER OF A TELLTALE PHRASE The earliest reported sighting of this mythical debate appeared in the Quarterly Review in 1871, where the alleged union theory was described as a "Unionist reading of the Wage-fund theory" that the unions sought to put into action through "the enforcement of all sorts of arbitrary restrictions on the combined workmen with the avowed object of securing that the work to be done shall be divided among as many (Unionist) hands as possible." Some twenty years later, in 1891, David F. Schloss gave a name to the elusive theory, "the theory of the Lump of Labour... In accordance with this theory it is held that there is a certain fixed amount of work to be done, and that it is best in the interests of the workmen that each shall take care not to do too much work, in order that thus the Lump of Labour may be spread out thin over the whole body of work-people." It wasn't until ten years later, that the imaginary debate became a standard feature of the popular press. In 1901 a series of reports appeared in the London Times under the running title of "The Crisis in British Industry." The dispatches from an unnamed correspondent claimed to document abuses by unions that were undermining British competitiveness. The lead article in the series revealed the sinister motive underlying this presumed union scheme for "spreading the same amount of work among more people": "It was hoped to "absorb" all the unemployed in course of time, not by the laudable and much-to-be-desired means of increasing the volume of trade, and hence, also, the amount of work to be done, but simply by obtaining employment for a larger number of persons on such work as there was already. The motive of this aspiration, however, was not one of philanthropy pure and simple. When all the unemployed had been absorbed the workers would have the employers entirely at their mercy, and would be able to command such wages and such terms as they might think fit." It later was revealed that Edwin A. Pratt was the author of the series, although a fellow named William Collison took credit for having "provided the information." Mr. Collison, who billed himself as "The Apostle of Free Labour" in the title of his autobiography , was publicist for a labor-contracting agency that supplied scab labor and strikebreaking thugs. In 1905, the National Association of Manufacturers of the U.S.A. sponsored Mr. Collison on a speaking tour of the U.S. David M. Parry, the virulently anti-union President of the N.A.M. wrote a dystopian novel published in 1906 that borrowed generously from Pratt/Collison's "amount of work to be done" theme. In the novel's historical recap scene, a dissident doctor from the lost civilization of Atlantis explains to the sojourning hero, John Walker, how the Federation of Labor had sown the seeds of the place's degradation: "The leaders of the Federation said that there was a certain amount of work to be done in Atlantis, and that the competition among the workers for the chance to do this work made it possible for the employers to reduce wages. 'Now,' said they, 'all that needs to be done is to get rid of this competition. Let us shorten the hours and let no man perform any greater share of this labor than he can possibly avoid, and then we shall have a condition in which the competition will be transferred to the employers -- a condition in which the employers will bid against each other to secure men to perform the necessary work of the nation. This will result in the enrichment of the masses instead of the few, as is now the case.'" There begins to appear a suspicious similarity of phrasing throughout these examples, which are by no means the only ones -- a certain amount of work to be done... the amount of work to be done... a certain fixed amount of work to be done... the work to be done... the same amount of work. Is it also coincidence that the alleged theory is invariably attributed to "unions" but never to a specific source? The early examples may have been merely repeating a clichéd middle class complaint against unions. But the London Times series and its obvious appeal to violently anti-union leadership of the N.A.M. marked a change from cliché to set piece. Between 1902 and 1913 -- when a congressional investigation brought the activities of this so-called "invisible government" to light -- whenever N.A.M. leaders could spare precious moments from their literary pursuits, they worked overtime bribing public officials, extorting newspaper publishers, intimidating opponents, buying academic mouthpieces, infiltrating and sabotaging unions and breaking strikes. In its 1917 History, Encyclopedia and Reference Book, the American Federation of Labor called the episode "deception, corruption, and perfidy that has never before been equaled in the United States for scope of operation, audacity of conception, and inhumanity of purpose." The purpose of the N.A.M. propaganda campaign was to portray their activity as a public-spirited campaign against the "lump of labor" theory and output restricting practice of the labor unions. The real goal, as articulated by Parry at the Association's 1903 convention was no less than "pulling up, root and branch, the un-American institution of trades unionism." Parry was only slightly more circumspect when he described the role he envisioned for the free press in his avowed enterprise of crushing the unions, "The newspapers finding that they have the moral support of a strong employers' association, can, I think, be depended upon to take a more positive stand against the outrageous practices of unionism than it is wise for them to do without such support." What this meant in practice, according to a contemporary account was that local affiliates of the N.A.M.'s civic-action front group, the Citizens Industrial Association of America, were expected to see to it that "pressure is brought to bear upon the local newspapers through its advertising members." WAITER! THERE'S SOME LOOSE TEETH IN MY GRAPE-NUTS! Three years later, Parry's successor as president of the N.A.M., cereal magnate Charles W. Post, looked back proudly at the organization's accomplishments, "two years ago the press and pulpit were delivering platitudes about the oppression of the workingman. Now this has all changed ... The people have been aroused and are now acting. It has been the duty of this Association to place the facts before the people by various forms of publicity in the work of moulding public opinion to a point of active self-defense." It may help to know that Mr. Post made his fortune by adopting the methods of 19th century patent medicine sales for the promotion of packaged foods. Post advertised 'Grape-Nuts' and 'Postum' as cure-alls for everything from consumption, appendicitis and malaria to 'Loose Teeth Made Sound by Eating Grape Nuts.' It may also help to know that Post was notorious for spending what for the time were extravagant sums of money on advertising and for using the leverage of this spending to keep the press from criticizing his fraudulent claims. In 1907, Post launched a campaign of intimidation and slander against the publisher of Collier's Magazine in response to an editorial that denounced as "lying, and potentially deadly lying" the advertising claims of the Postum Cereal Company that Grape-Nuts could cure appendicitis. Collier's sued Post for libel and was awarded $50,000 damages, at the time the largest sum ever been awarded in a libel case in New York County "and possibly the United States." THE LUMP OF LABOR GOES TO COLLEGE Although the National Association of Manufacturers had to tone down its stridency after the 1913 congressional investigation into its corrupt activities, the lump of labor charge against unions drifted into the pages of introductory economics textbooks. From 1924, Raymond Bye's widely used textbook introduced first-year economics students to the supposed fallacy. In the late 1930s, Harry Millis and Royal Montgomery co-authored a labor economics textbook that summed up an otherwise well-considered discussion of the health, productivity and social benefits of reduced work time by dismissing the unions' real motive for wanting a shorter work week as based on the infamous lump of labor fallacy. Say what? Reduced work time is good for all these reasons. O.K. The unions say they want it for all the right reasons. O.K. But we know the real reason they want it is for that other reason. Therefore they shouldn't get it. Huh? After the war, the first edition of Paul Samuelson's Economics, published in 1948, warned against the lump of labor fallacy, as did the 16th edition by Samuelson and Nordhaus published in 1998. "Whenever unemployment is high, people often think that the solution lies in spreading existing work more evenly among the labor force." When asked to verify the source of this supposed belief, the Nobel Prize winning textbook author could be no more specific than to reckon that, "the 'lump of labor' fallacy that my textbook wrote about was widespread during the Great Depression 1929-1935 and is still encountered in today's France." It is probably only a coincidence that Samuelson's publisher and the publisher of Millis and Montgomery was McGraw-Hill, a key participant - both technically and as a member of the association - in the National Association of Manufacturers' public relations efforts to counter the policies of the Roosevelt New Deal. So it turns out the "theory" about spreading a fixed amount of work is not an argument put forward by any bona fide advocate for shorter work time but a fabrication concocted by the opponents of shorter work time. But if the case against shorter work time is as strong as these critics pretend, why would it be necessary for them to misrepresent the case in favour? Could it be that the case against shorter work time is no more substantive than Post's bogus claims that eating grape nuts would fix loose teeth or cure appendicitis? That is what the economic theory of the hours of labor would suggest and what more than a century of empirical study has confirmed. S.J. Chapman, the orthodox Cambridge economist who produced the authoritative statement of the theory of hours of labor in a free market, scoffed at the notion of workers believing in a lump of labor theory. Even if they did, he remarked, it would protect them from making the worse error of overworking themselves and thus depreciating the value of their labor. Around the time that Parry and Post were rallying the anti-union troops to defend against the depredations of the eight-hour day, the 1902 final report of a major congressional industrial commission concluded: "On the side of the working population there can be no question respecting the desirability of fewer hours, from every standpoint. They gain not only in health, but also in intelligence, morality, temperance, and preparation for citizenship... A reduction of hours is the most substantial and permanent gain which labor can secure... Having once secured the shorter working day, the question of wages can be adjusted from time to time according to the stress of the market." And while the Wall Street Journal conjures up phantom unionists arguing in favour of spreading the same amount of work, an actual European trade union economist, Gerhard Bosch maintains that working time reductions are "not just a question of 'whether' but also of 'how'." Surveying the empirical research, Bosch notes that, "...most studies conclude that working-time reductions have positive employment effects of between 25 and 70% of the arithmetically possible effect. Only a few studies find zero or even negative effects. Thus the employment effects of working-time reductions are better than their reputation would suggest." The moral of this phoney tale about spreading "the same amount of work" is: if you want to weaken unions and dismantle social programs, then the lump of labor fallacy is your battle cry. If you like low wages, you'll love long hours. Tom Walker 604 254 0470
