Gene Coyle wrote: > It is widely believed -- and written about by economists, even -- > that technology advances cost jobs. > > Leontief believed. Rifkin and many others have written about it.
I don't have much respect for Rifkin, but what did Leontief say? > But most economists insist that "more jobs are created than destroyed." > > But are jobs really keeping up? Is the weak market for labor -- > indicated by falling or level real wages -- evidence that jobs are > being destroyed by "productivity" or "technological advances" faster > than they are created? Are lower wages for most evidence of a weak > labor market, despite the long term increase in numbers of jobs? Simple arithmetic (used by the Harrod-Domar model of growth) says that the demand for labor-power (employment) grows with the growth of real aggregate demand but is hurt by the growth of labor productivity (output per unit of labor-power). If demand rises faster than labor productivity, then employment rises. But it may not rise as fast as the available labor force (the supply of labor-power). This story is an "all else equal" one. It ignores changes in wages. As Marx pointed out (and has been verified by Blanchflower & Oswald's "wage curve") if unemployment rises, real wages fall. In Marx's theory, this has two effects: (1) all else equal, it raises the rate of profit, which encourages faster accumulation of capital, raising the growth of LP demand. For Marx, one option is that this creates a cycle, because the increase in LP demand again creates a rise in real wages. Richard Goodwin produced a useful model of this process. (2) again all else equal, in an often-ignored theory, the fall of wages would induce some capitalists to revert to older technologies (or to delay implementation of new ones), so that labor productivity growth is reduced a bit. This theory ignores other constraints. For example, the rate of growth of the demand for LP that's needed to keep the unemployment rate constant (at some "full employment level") could be too fast for maintaining environmental health. Of course, there are other limits, but I don't have the time or the caffeine supply needed to discuss them with any seriousness. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
