Thursday, April 05, 2007

More on the Division of Labour and the Quantity of Work

Following up on my post yesterday, “What a Shameful Error by the Bank of England on the new £20 note!” (4 April) about the £20 note and the Bank of England’s error in ascribing to ‘the great increase in the quantity of work’ as a virtue of the division of labour, today I came across Mike Munger of Duke University and EconTalk host Russ Roberts (at: http://www.econtalk.org/) talk about specialization, the role of technology in aiding specialization and how the division of labor creates wealth (a podcast – well worth listening to for an hour).

Nearer the end of their discussion, Mike Munger mentions some research he did that tracked how pin making factories in Britain first proliferated around 1776 (we know they were working similarly in France from Diderot’s 22-volume Encyclopaedia because this was an example Smith drew upon too), but by 1820 the total number of pin factories operating similar divisions of labour had reduced to 11 in Gloucester and 20 in Birmingham or 22 in total in England (he didn’t say if this geographical entity included Scotland).

By 1940 the total number of pin factories was 12 and twenty years later in 1960 it was down to 2. Yet output was now in the millions of pins per day and crucially, the total workforce engaged in the automated plants making pins was 1 per cent of the total estimated for the previous century.

Now that is some change and interesting too. The division of labour raises output per worker and, with continual technical progress in power driven machinery that economises on labour, the number employed shrinks to a fraction of those required when the division of labour gets under way. On this basis the error of the Bank of England £20 notes is compounded, because if there was an attempt to foist the lame excuse that they meant by making work that instead of one man making pins there was now ten; the history of pin making was quite the reverse. And the researchers at the Bank of England should know this history too.

The division of labour adds to productivity, not work. It expands the annual output of the ‘necessities, conveniences and amusements of life’, which is what Smith meant by wealth. It also tackles the age-hold Marxist obsession with ‘alienation’ (which was a more an imagined mental state of the intellectuals who didn’t work for a living than a reality).

Rising wealth means more leisure and an expansion of ‘outside work’ interests, including manual labour. Smith played up the decline in intellectual interests of factory work to support his policy for universal education of all young people in Book V, not having mentioned it in Book I with the division of labour. He was making a case to convince people far removed from life in a pin factory, seeking their sympathy to persuade them to agree to an education system in England, similar to the one that already existed (imperfectly, to be sure) in Scotland.

I hope we are all now clear on the division of labour as a source of productivity to increase wealth, lower costs per unit and deliver 'necessities, conveniences and amusements' of life to the consumers. It was not about 'increasing the quantity of work'.

7 Comments:

Blogger Tim Worstall said...

I've an email into the Bank of England notes department asking whether they realise they've done this.
It's going to be interesting to see the response, possibly some time next week.

9:47 am  
Blogger Gavin Kennedy said...

I look forward to their response. It really is a howler of the first magnitude. And Mervyn King being a distinguished professor of economics in his former job?

Thanks for posting.

4:39 pm  
Blogger nemo said...

I'm not sure that you can dismiss Marx's treatment of alienation so easily re: division of labour and technological advantage.

At the very least alienation theory attempts to deal with the spiritual aspect of human relationships and technology/division of labour (I anticipate that you will say that 'spiritual' matters are irrelevant to economics), as any nurse in the NHS will testify to.

In an acute hospital an ICU will function with high tech machinery and a sophisticated nurse group of highly trained technicians. Go across to the nearest psychiatric hospital and we find the quality of nursing to be low tech and more hands on (traditional nursing) with the patient. Would you countenance a form of the labour theory of value that could be spiritual? i.e; that the ratio of constant (high tech machinery) to variable (low tech, manual nursing) 'capital' means that the spiritual 'surplus' accruing to the individual nurse in terms of division of labour and job satisfaction can be located somewhere in the area of low tech, 'variable' labour? And that alienation therefore is not just something marxist intellectuals would agonize over?

6:28 am  
Blogger Mungowitz said...

Glad to read this bit; my attempts at numbers are documented, and some references, at this site...

On alienation, from the good nemo: Bosh, thrice bosh! Marx was propounding a theory of value, and he was first and foremost a materialist. His theory of value is simply untenable, incoherent.

But, to take nemo's side for a moment, on the larger point: human contact and connection is important, psychologically. And quite likely physiologically. The quality of life may change, much as depicted by Charlie Chaplin in "Modern Times" (1936). We may well find ourselves cut off, disassociated, and connected only by impersonal transactions.

That is post-modernist weltschmerz, though. Marx made NO such claims, and the "softer side of Marx" that post-modernists who know nothing of economics try to develop is a fantasy. Marx thought value was stolen by capital, and that's wrong. Increasing capital in the prodution process improves wages.

Does working in a factory with lots of huge machines turn us into brutes? Smith worried about this also, quite explicitly in Bk I, Chapter VIII, "Of the Wages of Labor." Marx thought so.

But Marx did not foresee the use of increased capital to increase productivity, and WAGES. Sure, perhaps the fellow who works putting bolt #451 into a Jaguar chassis, chassis after chassis, is bored. But he has a nice flat, and can take his wife and kids out for a nice meal. And his kids go to fine schools.

In the U.S., at least the current complaint of those who misunderstand trade and exchange is that we are LOSING too many factory jobs, the same ones that the Marxists used to call dehumanizing.

Sorry for this long rant. My point is really just that nemo makes a decent point, BUT IT IS NOT MARX's POINT, and it is a mistake to credit Marx with it. Technology changes our lives, and we have to deal with that.

And, the real main chance is the core of our host's post: the idea that work, or jobs, are being "lost" is incorrect, absurdly so. We are "losing" jobs to increased productivity. This was the point of my little humor piece on EconLib, here.

7:07 pm  
Blogger Gavin Kennedy said...

Thank you Nemo for your comments.

Consider that I made an aside about ‘alienation’, en passant, in a post about the division of labour, but I am happy to widen the discussion. When Smith spoke in Book I (i.3 of Wealth Of Nations) about the division of labour in the pin factory, he was illustrating a process where the work tasks became more specialised in the first part of the chapter and then went on to report on the division of labour inter-sectorally in the manufacture of a common labourer’s woollen coat. When he introduced his version (Book V:i.f.50: p 782) of what became known as ‘alienation’ in the Marxist canon, Marx considered alienation was something associated not so much with the minute tasks in a process, but primarily in the separation of workers from the products of their labours in some way related to the exploitation of labour within a labour theory of value under capitalist relationships. Workers were ‘alienated’ in their work roles from ‘their’ product.

In industrialisation (which Smith did not anticipate – nor did anybody else) the division of labour, added to technology and power-driven machinery (water, then steam, later electricity) raised productivity to unforeseen levels, which raised the real wages of workers to historically unparalleled heights from falling unit prices. This, in my view, so to speak, ‘re-united’ workers with the products of their labours, increased their leisure time and widened their interests (literacy, independent organisations, sporting events – e.g., football in Britain - hobbies, vacation travel, hygienic homes, daily mobility, and so on). That Marx did not foresee this (which unlike Smith who did not foresee it either, but didn’t make what turned out to be wild, even awesome, predictions), Marx predicted catastrophe (‘the coming collapse of capitalism’) and denied the possibility of opulence we see all round us in the most capitalist of countries. ‘Immiseration’ never happened, except if you include the least capitalist developing – and non-developing – countries, a tenuous argument against markets and capitalism to say the most for it.

Marxist intellectuals criticise ‘alienation’, less in the form that Marx formulated the idea, as an alienation from the product of labour power (the ‘congealed labour embodied in the product’) and more from the meaningless zombie state of the worker. The detachment of intellectuals from actual manual work is something I observed from many debates and discussions over the years with people who have never worked in a factory, except in student vacations, where they know they are en route to a different life post-graduation. They have not thought of how work is understood by ordinary workers who face a life time of such work.

When manual – or production line – work is all there is. Most workers create life outside work as their focus (managers often create life inside their work, reflecting their ambitions) and this is seen in the ‘clubs’, societies, organisations, roles, and interests outside work that are common to labourers. I used to do an hour’s lecture on this aspect of labourers’ lives for managers to show they are not dealing with ‘zombies’, dulled into stupidity by repetitive work or narrow work roles. Many labouring ‘zombies’ are accomplished in their hobbies and interests, some in senior offices, or practising to a proficiency standard nobody at work expects of them in their work roles.

Hence, my somewhat sarcastic remarks about the Marxist intellectuals in my post, whom I have met, and those expressions of their feelings of ‘alienation’ from the ‘plight’ of labourers, which they project onto workers, who neither share their concerns nor seek their sympathies. That is all.

5:12 pm  
Blogger Gavin Kennedy said...

Thanks for posting Mungowitz

I agree that there is a difference between Adam Smith’s critique of possible effects of an intense division of labour in a manufacturing process and Karl Marx’s critique, which had to do with his labour theory of value (and the assorted mumbo jumbo of what I call ‘verbalism’, which is a similar method to Karl Polanyi’s ‘theory’ in his ‘The Great Transformation’).

I am sceptical of the ‘Marxist intellectuals’ I have heard who talk about the ‘disassociated’, experiences, etc., which they conclude from distant observation of short-term boring jobs they might have done as students, or as visitors, from which they recoil. Of course human contact is important (and Smith shows why in ‘Moral Sentiments’).

Observation is not the same as experiencing it when you are one of the labourers in personal, not impersonal, contact with selected fellow employees within a larger production process.

The humour and camaraderie of close colleagues (not all of them with whom you interact with, of course) is as rich in a factory production process as in any segment of society. The distinction between academic friends in a university community and those towards whom you hold in varying degrees of hostility and indifference, is not much different from the neighbouring or nearby guy bolting on ‘bolt #451’ on an assembly line and neither are his relationships with people around him. I am sure you know what I mean in your own institution and experience.

The power of markets (commercial and moral) is precisely that they integrate the disparate disconnections among thousands (millions?) of people who do not know, and cannot know, more than a few people intimately but upon whom they are absolutely dependent in inter-locking chains of connecting relationships that nobody controls, nor need control. Your podcast makes this very point most clearly (I thought it was a great performance from both of you, by the way).

I think Nemo’s comment was most interesting and I hope I do not come across of dismissing him as having nothing useful to say. His post created a conversation with him of the kind that Smith highlighted as a very real human act. Our relationships with strangers are attempts at persuasion. We are all ‘merchants’ was the way Smith put it (Moral Sentiments) and this expresses our global humanity.

The outcome of the ever deepening division of labour is not all negative. Higher productivity in labour is also measured in rising real incomes, which includes investment in education which is the appropriate antidote to his version of ‘alienation’ (Smith’s point in Book V). It is also a good quantitative indicator of the rising quality of labour, which Nemo was also worried about today.

10:06 pm  
Blogger ER-RECORDS said...

what do you guys think :is technology that advances the productivity, the skills of the worker and saves us time or This economic growth is due to the increasing division of labor ? as Smith indacates

10:30 pm  

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