Slaves vs Machines

komodosp

From what I've heard (and what I can figure out for myself) slavery is bad for an economy - bad for everyone except the slave owners... People who want pay can't get jobs because slaves can do them for free or extremely cheaply, and no tax is generated, and obviously the slaves themselves are poor and have no spending power.

But how is this any difference from the modern idea of getting machines to do the work? Why isn't that just as bad for the economy?

Time Magazine

Machines aren't human. They don't have to be fed and treated with respect.

If a The Economist machine were to be invented that did the same job as I do, then I could go and produce something else. I could be a street musician, and suddenly more stuff is produced.

hatrickpatrick

That's what's so ridiculous about it. We have a hugely increased capacity for production, but because the machines which allow this also take people's work, you have fewer people with the money to by whatever the product is.

The natural response to ease of production and lack of demand should be a drop in prices, but this doesn't seem to be happening on anything like the scale it should be...

Time Magazine

hatrickpatrick wrote: »

That's what's so ridiculous about it. We have a hugely increased capacity for production, but because the machines which allow this also take people's work, you have fewer people with the money to by whatever the product is.

You're incorrect. When machines "take people's work", they don't just sit on their ass for the rest of their life. They get new jobs.

If you want evidence...



The increase in real GDP per capita can be caused by three things: (i) more hours worked; (ii) increased amount of capital gathered up over time; (iii) increased technology. Hours worked have fallen by at least a quarter since 1900. And it's not capital accumulation.

It's technology.

hatrickpatrick

hatrickpatrick wrote: »

That's what's so ridiculous about it. We have a hugely increased capacity for production, but because the machines which allow this also take people's work, you have fewer people with the money to by whatever the product is.

The natural response to ease of production and lack of demand should be a drop in prices, but this doesn't seem to be happening on anything like the scale it should be...

What you're speaking of is technological unemployment, Marx was a proponent of the theory, but it never really happened on the scale he envisaged. I'm sure there's a fair bit about on the web if do some searching.

On an aggregate level the increase in demand, due to increased efficiency will be larger enough to leave the aggregate production higher. It's certainly possible that some people are left worse off but redistributing the produce created by the machines would be a more effective policy than burning the machines.

Defining technology as everything that's not factor accumulation doesn't really say that much.

If you derive the basic solow model you'll see what 'The Economist' means.

Or, if you don't want to do that you can just read it at www.karlwhelan.com - Teaching - TCD - Solow

Time Magazine

Deleted User wrote: »

Defining technology as everything that's not factor accumulation doesn't really say that much.

Yeah, the TFP definition is too weak. However if you break it down to "productivity" and "technology" it's not all that much better. Any further and you get into definitional disagreements, though the point is essentially the same, unless you argue that output is increasing and TFP is increasing but that the effect of a sub-component of TFP is negative on output. Which is really, really stretching it.

Deleted User wrote: »

If you derive the basic solow model you'll see what 'The Economist' means.

Or, if you don't want to do that you can just read it at www.karlwhelan.com - Teaching - TCD - Solow

Something (nothing to do with moderator capabilities ) tells me illegalheadbutt may have read those notes before.

FridaysWell

Basic Economics = Machines push the cost of production down, efficency up.

Labour force becomes more skilled, as people will retrain/train/study into more skilled jobs that machines can't do e.g law

Specialist machinery = efficency through the roof

Flamed Diving

komodosp wrote: »

From what I've heard (and what I can figure out for myself) slavery is bad for an economy - bad for everyone except the slave owners... People who want pay can't get jobs because slaves can do them for free or extremely cheaply, and no tax is generated, and obviously the slaves themselves are poor and have no spending power.

But how is this any difference from the modern idea of getting machines to do the work? Why isn't that just as bad for the economy?

Contractors are better than slaves for the 'slave owner'. When you own a slave you must house them, feed them and they are expensive to purchase. They are likely to become sick, and this sickness can spread throughout the slave group. They are generally a demoralised group, hence their productivity would be quite low. Also, in the winter months, when no building/agricultural work can be done, it still costs you money to hold slaves. Furthermore, you must pay for guards to watch them.

Alternatively, you can pay contractors a lump fee for a job. If they get sick? Not your problem. How they are housed and fed? Not your problem. Given that they are free men with a paid salary, they should be more productive. In the winter months, you simply don't hire them, meaning zero cost at a time of zero income. Finally, no guards are required to prevent escape.

This is why academic historians have moved away from the weighting that slavery once was afforded in building the Roman Empire, Pyramids, etc.

silverharp

Flamed Diving wrote: »

This is why academic historians have moved away from the weighting that slavery once was afforded in building the Roman Empire, Pyramids, etc.

Interesting, do you have more information on this. If you take a more modern example like agriculture in the Southern States in the 18thC/19thC , was slavery "necessary" to make the model work or did it hold back development?

Flamed Diving

silverharp wrote: »

Interesting, do you have more information on this. If you take a more modern example like agriculture in the Southern States in the 18thC/19thC , was slavery "necessary" to make the model work or did it hold back development?

It was in a book I was reading about the historical relationship between history and technology, and this book is at my parents at the other side of the country, unfortunately. But I'm sure there must be plenty of literature online.

On your example of the Soutern States, it would depend on the nature of the cotton industry, and the geography. If the slaves were required all year around, then maybe it made sense to use them over farm labourers. However, I don't believe this to be the case. I read a (fictional, but based on authors childhood) book about the cotton industry in the 1950s and it was very much a seasonal industry, with labour provided by migrant workers from Mexico, who worked for a day-wage. Given the willingness of these workers to travel, one could argue that they were surely more productive than slaves (lest another Mexican take their job). In addition, they didn't need armed guards and slave-drivers, but perhaps needed a few supervisors. I'm writing as I think here, but yes, I believe my analysis above would apply to the Southern States case. Slavery is a very inefficient means of production, when you think about it.

thorbarry

Machines are great, but you just don't get the personal touch you get with slaves

Flamed Diving

Here is a paper (or more):

http://www.jstor.org/pss/1827270

http://www.jstor.org/pss/1802518

Ostrom

Deleted User wrote: »

If you derive the basic solow model you'll see what 'The Economist' means.

Or, if you don't want to do that you can just read it at www.karlwhelan.com - Teaching - TCD - Solow

How are the variables Capital input and Labor input measured?

Flamed Diving

efla wrote: »

How are the variables Capital input and Labor input measured?

As an abstract example consider an economy whose total output (GDP) grows at 3% per year. Over the same period it's capital stock grows at 6% per year and it's labor force by 1%. The contribution of the growth rate of capital to output is equal to that growth rate weighted by the share of capital in total output and the contribution of labor is given by the growth rate of labor weighted by labor's share in income. If capital's share in output is 1/3, then labor's share is 2/3 (assuming these are the only two factors of production). This means that the portion of growth in output which is due to changes in factors is .06*(1/3)+.01*(2/3)=.027 or 2.7%. This means that there is still .03% of the growth in output that cannot be accounted for. This remainder is the increase in the productivity of factors that happened over the period, or the measure of technological progress during this time.

http://en.wikipedia.org/wiki/Growth_accounting

Anonymous1987

FridaysWell wrote: »

Basic Economics = Machines push the cost of production down, efficency up.

Labour force becomes more skilled, as people will retrain/train/study into more skilled jobs that machines can't do e.g law

Specialist machinery = efficency through the roof

To expand on this point I would say that machines/technology enhance labour productivity rather than replace it. Look at advanced economies today the percentage of GDP derived from manfacturing is falling whereas services is increasing.

Anonymous1987

Anonymous1987 wrote: »

To expand on this point I would say that machines/technology enhance labour productivity rather than replace it. Look at advanced economies today the percentage of GDP derived from manfacturing is falling whereas services is increasing.

Its late, I'm tired and I'm still focusing on one derivation but I'm guessing that your point is also a result of some basic trade theory? Ie, if we all progressed at the same rate everywhere thne it would be interesting to see those figures because it would not then be 'cheaper' to outsource production.