Gar Lipow wrote: > ... I just took it for granted that the argument efficiency never cost jobs > is false. ...
(1) I think that both Tom and Gar are using the word "efficiency" to refer only to _private_ efficiency (which usually means nothing but profitability). That is the popular usage, even among NC economists (who should know better). But what's "efficient" for the individual capitalist is not efficient from a broader perspective. Increased private efficiency means lower cost of production (to the capitalist) of a specific amount of output. But there's also the external cost to the environment (emissions) and the external cost imposed on workers if their laid off. Both of these may rise as private costs fall. (2) Whether or not the second cost is relevant depends on how much the quantity of output demanded rises. Use the productivity of labor-power hired (q = output/hours hired) as a measure of private efficiency. If the quantity of a product demanded and purchased (Q) rises more than the productivity of labor-power hired (q) does, then the number of units of labor-power hired (LP) rises. (By definition the rate of growth of LP demanded = the rate of growth of Q demanded minus the rate of growth of q.) (3) In theory, at least, rising labor productivity causes prices to fall, which boosts the quantity demanded. This may or may not raise the demand for labor-power. It depends on the price elasticity of demand for the product and how much prices fall with rising labor productivity. If an asterisk implies "rate of growth," the definition above is LP* = Q* - q*. Assume that price (P) fall in step with the rise of labor productivity (P* = -q*). Let the (absolute value of the) price elasticity of the demand be E, so that Q* = -E P*. Thus, Q* = +E q*. Combining this with the definition means that the growth of employment LP* = (E-1)q*. On the aggregate level, demand is clearly inelastic (E < 1, because there's little shifting of demand between substitute products), so the price effect on the quantity of the product demanded should not be large. Thus, the quantity of labor-power demanded should fall with the rise of labor-power productivity (LP* < 0 since E < 1), all else constant. Of course, normally "all else" isn't constant: there are countervailing forces that may cause employment to rise. This would include the growth in aggregate demand due to an economic "recovery." In terms of the definition above, the boom would have to proceed faster than labor productivity, with a very minor adjustment due to price effects. For an individual product, rising labor productivity would lead to lower prices, so that people would switch over to that product, so that employment might rise (if the elasticity of the demand for the product is high enough, i.e., if E > 1). But that would correspond to a fall in the amount demanded of other products, so that employment of labor-power in those other sectors would fall. This suggests that the aggregate story is the relevant one: price effects that increase employment are minimal if not nonexistent. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
