Lump of labour fallacy
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The lump of labour fallacy is a fallacy which occurs when an argument relies on the belief that something is fixed in quantity, when really that quantity changes. Another way to say this is that it treats a variable as if it were constant, when it's not. It may also be called the fallacy of labour scarcity, or the zero-sum fallacy, from its ties to the zero-sum game.
As a fallacy, it often takes the form of a false premise. In rhetoric it is usually a hidden premise, which makes the conclusion a non sequitur. That means that this fallacy is usually either a subtype of a false premise fallacy, a non-sequitur fallacy, or both.
In division of resources, this may occur when a resource is assumed to be fixed even though the division of it reduces its content. A simple example might be dividing a cake – a small cake could not be distributed to 10,000 people, because the cuts necessary would destroy the cake.
In modern times, economists often use the term in other contexts – often to highlight errors of reasoning when ceteris paribus assumptions are counterfactual.
An often cited example of a lump of labour fallacy is in economics, where one might assume that redistributing income to one person must mean taking it away from someone else. While this is modestly persuasive, economic activities can increase or reduce the amount of wealth in the world, making the economic 'game' non-zero-sum. The consequence is that we might be able to take $100 of your money, use it to economically create $1,000 of value in the world, and return $200 of value back to you--in that case, nobody loses anything.
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Origins
The term originated to rebut the idea that reducing the hour of the work day would in turn reduce unemployment. The argument being rebutted would be:
- The amount of hours of labor per day that will be demanded by the market will be constant.
- Suppose we reduce the hours any single person can work in a day.
- Then the current employment will produce fewer hours of labor.
- The difference between the constant in (1) and the fewer hours in (3) must be made up by more employment.
- So the strategy in (2) would increase employment rates.
The lump of labor rebuttal asserts that (1) is false. People may simply keep their present workers, or work them harder for the same time. There is naturally an administrative cost to hiring more people, so why should we expect the cost to be static?
Application to employment regulations
This economic argument is commonly invoked against attempts to alleviate unemployment by restricting working hours. Such attempts sometimes assume that there is a fixed amount of work to be done, and that by reducing the amount that those are already employed are allowed to work, the remaining amount will then accrue to the unemployed. This policy was adopted by the governments of Herbert Hoover in the United States and Lionel Jospin in France (though by various exemptions to the law were granted by later right-wing governments in that latter country). Some economists contend that such proposals are likely to be ineffective, alleging that there are usually substantial administration costs associated with employing more workers, such as recruitment, training, and management, that would increase average cost per unit of output that would reduce production, and ultimately lower employment.
Critiques of the application
In 2000, Tom Walker published a critique and historical review of the "lump-of-labour fallacy" claim that argued that the claim itself is incoherent, inconsistent and ultimately spurious. According to Walker, the assertion that policies to reduce working time are based on a belief in a "fixed amount of work" is a straw man argument. Walker identified in the literature at least three conflicting explanations of how advocates of reduced working time supposedly commit the fallacy and stated that the only thing the explanations have in common is their failure to identify an authoritative source for the fallacy claim.
Walker then traced the origin of the phrase and its application to working time policies to two different late 19th century authors, one of whom, D.F. Schloss, in 1892 disavowed any connection between his fallacy of "the Theory of the Lump of Labour" and the issue of the length of the working day. The other, John Rae, was an advocate of the eight-hour day but argued that job creation was not one of its benefits. Rae's 1894 argument about advocates basing their expectations of job creation on a fixed amount of work was carefully refuted by Charles Beardsley in 1895.
External links
- Paul Krugman essay on the Lump of Labour Fallacy
- The Economist Glossary: Lump of Labour fallacy
- Zero sum fallacy in stock trading
- Tom Walker's critique and historical review of the "Lump-of-Labour fallacy" claim