Is Stiglitz Guilty of the Lump Sum of Labor Fallacy?

    This seems to be one pretty clear admonition of his recent Vanity Fair piece that Sumner was criticising yesterday. Nick Rowe in particular criticizes Stiglitz for committing the Lump Sum of Labor Fallacy.

    http://diaryofarepublicanhater.blogspot.com/2011/12/nick-rowe-again-checks-in-about.html

    As it turns out though, the LSLF itself has some skeptics. Actually as it turns out its very eytmology is open to question. Actually one commentator on the question yesterday, Sandwichman who commented both at Nick Rowe's blog and mine has written about this fallacy himself.

    Criticism of this fallacy has actually been used to reject various calls for a shorter work week for labor. This is chronicled at this website called quite aptly "Shorter WorkWeek.com."

    http://www.shorterworkweek.com/lumpoflabor.html

     Here, the lump sum of labor fallacy is spoken of as the alleged fallacy.
   
    "Proponents of the “lump-of-labor fallacy” imply that the stupid factory workers who want to reduce work time believe “there is a fixed amount of work to be done in the world.” This is a straw-man argument. I have never heard it made except by shorter-workweek critics. "

     "Economic historians instead trace the “lump-of-labor fallacy” back to an 1892 publication by a certain D.F. Schloss who was discussing workers’ attitudes toward piece work. In the first decades of the 20th Century, the National Association of Manufacturers adapted this concept to its fight against the eight-hour day. Economists such as Samuelson unthinkingly picked up arguments from that discussion. The “lump-of-labor fallacy” was just public-relations rhetoric in service to a now discredited cause."

    "Paul Samuelson and other such critics seem to confuse working people’s understanding of reality with analytical techniques. The idea that increased labor productivity puts pressure on employment is demonstrably true. This follows mathematically from the formula which the Bureau of Labor uses to calculate productivity: Output equals productivity times employment times average hours. If productivity increases while output and average hours stay the same, then employment necessarily drops."

    Indeed, Sanwichman, takes things even further in his historical etymology of the idea:

    "A few years ago, I set out on a quest to find the locus classicus of the peculiarly named "lump-of-labour fallacy." As some of you may recall, I eventually tracked down an 1891 article by David Frederick Schloss in which he referred to "that noteworthy fallacy to which I desire to direct attention under the name of 'the theory of the Lump of Labour.'" I further traced the critique of the central notion of that theory, "that there is a certain fixed amount of work to be done" to an 1871 article by John Wilson, "Economic Fallacies and Labour Utopias," in which he berated the "Unionist reading of the Wage-fund theory" for its enforcement of restrictions "with the avowed object of securing that the work to be done shall be divided among as many (Unionist) hands as possible."

    "The other day, I was looking at a pamphlet that has been on my bookshelves for 30 years and that I have probably read 4 or 5 times, Karl Marx's 1865 "Wages, Price and Profit" and there, staring at me from the first sentence of the first section were the words, "Citizen Weston's argument rested, in fact, upon two premises: firstly, that the amount of national production is a fixed thing, a constant quantity or magnitude, as the mathematicians would say; secondly, that the amount of real wages, that is to say, of wages as measured by the quantity of the commodities they can buy, is a fixed amount, a constant magnitude."

     "Even less ambiguous was this sentence on page 14: "If our friend Weston's fixed idea of a fixed amount of wages, a fixed amount of production, a fixed degree of the productive power of labour, a fixed and permanent will of the capitalists, and all his other fixedness and finality were correct, Professor Senior's woeful forebodings would have been right, and Robert Owen, who already in 1816 proclaimed a general limitation of the working day the first preparatory step to the emancipation of the working class and actually in the teeth of the general prejudice inaugurated it on his own hook in his cotton factory at New Lanark, would have been wrong."

    "So, yes, the critique of the lump-of- labour fallacy is indeed a critique of a trade unionist reading of the old wages-fund theory. It is, however, a critique of a merely trade unionist position on wages. Paul Samuelson, The Economist, The Wall Street Journal, Bruce Bartlett, Jennifer Hunt, Paul Krugman, Richard Layard, etc., etc., have all along been teaching Marxism without knowing it! But, aside from inverting the conclusion regarding limiting the hours of work, they left out the best part: "Instead of the conservative motto, 'A fair day's wage for a fair day's work!' they ought to inscribe on their banner the revolutionary watchword, 'Abolition of the wages system!'"

    "Postscript: in searching for a link to one of the Economist's articles on the lump of labour fallacy, I came across this entry in Economist.com's "Economics A-Z." Superficially, it would appear to confirm my identification of D.F. Schloss as the source for the lump of labour fallacy. Except that I am sure that it is my research that the Economist has appropriated and, in their method of doing so, trivialized. Of course, they've only passed on the identity of Schloss without going into what he actually said and how, according to Schloss himself in the 1891 article, his remarks had nothing to do with the question of the length of the working day. I feel both flattered and bitter."

     So there you go. The fallacy was initially used to show the by Marx as indication of the validity of the drive to a shorter working day. In more recent times it has been used against it. However if it is true that

    "The idea that increased labor productivity puts pressure on employment is demonstrably true. This follows mathematically from the formula which the Bureau of Labor uses to calculate productivity: Output equals productivity times employment times average hours. If productivity increases while output and average hours stay the same, then employment necessarily drops."

      Then the reproach of Stiglitz for employing this fallacy is itself fallacious.