I won't speak for Gar but I'm definitely NOT "using the 'efficiency' to refer only to _private_ efficiency." I'm using the word efficiency to refer to a usage adopted by Stanley Jevons, who may indeed intend only private efficiency. My reference to Jevon's analysis is not a blanket endorsement of his usage. What I was pointing out, though, is that Jevons's energy demand rebound argument was explicitly based on the conventional employment demand rebound argument. That dependency remains no matter how one defines the word efficiency. With regard to two analogous applications of a principle, if the principle is true, it is true for both applications; if it is false, it is false for both. I was not concerned in this post with whether the principle is true or false.
But I would agree with Jim that the distinction between private and social utility is crucial with regard to the truth or fallacy of the principle. In fact, there is a further nuance in that distinction which I would suggest strengthens the case for the hypothetical demand rebound being more robust for energy than for employment. In the case of employment, the form of the "efficiency" generally sought and obtained by employers is more explicitly private -- to the extent that employers actively resist labor efficiency gains they can't capture -- while in the case of energy, efficiency gains have a more immediately diffuse social element. The greater the social diffusion of the benefit, the greater should be the rebound effect. On Fri, Mar 11, 2011 at 3:40 PM, Jim Devine <[email protected]> wrote: > 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 > -- Sandwichman
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