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Labor Market Dynamics, Defending the Rate Buster

Politics / Employment Jun 23, 2010 - 11:54 AM GMT



Best Financial Markets Analysis ArticleWalter Block writes: The scene is familiar from hundreds of movies featuring labor themes: the young eager worker comes to the factory for the first time, determined to be a productive worker. In his enthusiasm, he happily produces more than the other workers who have been at the factory many years, and who are tired, stooped, and arthritic. He is a "rate buster."

Not unnaturally, antipathy springs up between our eager young worker and his senior colleagues. After all, they are cast in a slothful role. In contrast to his youthful exuberance, their production levels look meager indeed.

As the young worker continues his accelerated work output, he becomes more and more alienated from the other workers. He becomes haughty. The older workers, for their part, try to treat him with compassion. But when he remains resistant, they subject him to a silent treatment and commit him to a worker's purgatory.

As the film continues, there occurs a climactic moment when the youthful rate buster comes to his senses. This comes about in any number of ways, all dramatic. Perhaps he sees a sick old woman, an ex–factory worker, or a worker who has been injured in the factory. If the movie in question is avant-garde, the conversion can be sparked through the good offices of a cat grousing around in an overturned garbage can. Whatever the method, the young man does come to see the error of his ways.

Then, in the last dramatic scene, which usually ends with all the workers — reformed rate buster included — walking off arm-in-arm, a kindly old worker-philosopher takes over center stage. He gives the young worker a five-minute course in labor history, from ancient Roman times down to the present, showing the constant perfidy of the "bosses," and proving beyond question that the only hope of the workers lies in "solidarity."

There has always been, he explains, a class struggle between the workers and the capitalists, with the workers continually struggling for decent wages and working conditions. The bosses are portrayed as always trying to pay the workers less than they deserve, pushing them as far as they can until they drop from exhaustion. Any worker who cooperates with the bosses in their unceasing, merciless, and ruthless efforts to "speed up" the workers, and to force them to increase their productivity levels, is an enemy of the working class. With this summation by the worker-philosopher, the movie ends.

This view of labor economics contains a tangle of fallacies that is interwoven with each part resting in complex ways on other parts. However, there is one core fallacy.

The core fallacy is the assumption that there is only so much work to be done in the world. Sometimes called the "lump of labor" fallacy, this economic view holds that the peoples of the world only require a limited amount of labor in their behalf. When this amount is surpassed, there will be no more work to be done, and hence there will be no more jobs for the workers.

"The core fallacy is the assumption that there is only so much work to be done in the world."For those who hold this view, limiting the productivity of the eager young workers is of overriding importance. For if these workers work too hard, they will ruin things for everyone. By "hogging up" the limited amount of existing work, they leave too little for everyone else. It is as if the amount of work that can be done resembles a pie of a fixed size. If some people take more than their share, everyone else will suffer with less.

If this economic view of the world were correct, there would indeed be some justification for the theory espoused by the labor-philosopher of the movie. There would be some justification for insisting that the younger and more active worker not take away more than his share of the "pie." However, adherence to this theory has proved to be inefficient and uneconomic, with tragic results.

This false view is based upon the assumption that people's desires — for creature comforts, leisure, and intellectual and aesthetic achievements — have a sharp upward boundary that can be reached in a finite amount of time; and that when it is reached, production must cease. Nothing could be further from the truth.

To assume that human desires can be fully and finally satisfied is to assume that we can reach a point at which human perfection — material, intellectual, and aesthetic — has been fully realized. Paradise? Perhaps. If it were somehow achieved, then certainly there would be no "unemployment" problem — for who would need a job?

There is as much work to be done as there are unfulfilled desires. Since human desires are, for all practical purposes, limitless, the amount of work to be done is also limitless. Therefore, no matter how much work the eager young man completes, he cannot possibly exhaust or even make an appreciable dent in the amount of work to be done.

If the eager worker does not "take work away from others" (because there is a limitless amount of work to be done), what effect does he have? The effect of working harder and more efficiently is to increase production. By his energy and efficiency, he increases the size of the pie — the pie that will then be shared among all those who took part in its production.

The rate buster should also be considered from another vantage point. Consider the plight of a family shipwrecked on a tropical island.

"To assume that human desires can be fully and finally satisfied is to assume that we can reach a point at which human perfection — material, intellectual, and aesthetic — has been fully realized."When the Swiss Family Robinson seeks refuge on an island, their store of belongings consists only of what was salvaged from the ship. The meager supply of capital goods plus their own laboring ability will determine whether or not they survive.

If we strip away all the novelistic superficialities, the Swiss Family Robinson's economic situation is that of facing an unending list of desires, while the means at their disposal for the satisfaction of these desires are extremely limited.

If we suppose that all the members of the family set to work with the material resources at their disposal, we would find that they can satisfy only some of their desires.

What would be the effect of "rate busting" in their situation? Suppose one of the children suddenly becomes a rate buster and is able to produce twice as much per day as the other members of the family. Will this young punk be the ruination of the family, "take work away" from the other family members, and wreak havoc upon the mini-society they have created?

It is obvious that the Swiss Family Robinson rate buster will not bring ruination upon his family. On the contrary, the rate buster will be seen as the hero he is, since there is no danger that his increased productivity would cause the family to run out of work. We have seen that for practical and even philosophical reasons, the wants and desires of the family are limitless. The family would hardly be in trouble even if several members were rate busters.

If the rate-busting family member can produce ten extra units of clothing, it may become possible for other members of the family to be relieved of their clothing manufacturing chores. New jobs will be assigned to them. There will be a sorting out period during which it is decided which jobs should be undertaken.

But clearly, the end result will be greater satisfaction for the family. In a modern, complex economy the results would be identical, though the process more complicated. The sorting out period, for example, may take some time. The point remains, however, that because of rate busting, society as a whole will move toward greater and greater satisfaction and prosperity.

Another aspect of rate busting is the creation of new items. Thomas Edison, Isaac Newton, Wolfgang Mozart, J.S. Bach, Henry Ford, Jonas Salk, Albert Einstein, plus innumerable others, were the rate busters of their day, not of quantity, but of quality. Each "busted" through what was considered by their society to be a "normal" rate and type of productivity. Yet each of these rate busters contributed incalculably to our civilization.

"Because of rate busting, society as a whole will move toward greater and greater satisfaction and prosperity."In addition to understanding rate busting from the point of view of quantity and innovation, rate busting should also be considered in terms of the new lives on this earth that it makes possible. The amount of human life that the earth can support is related to the level of productivity human beings achieve. If there are fewer rate busters, the number of lives this earth can support will be severely limited. If however, the number of rate busters increases significantly in each respective field, the earth will then be able to support an ever-expanding population.

The conclusion then is that not only are rate busters responsible for satisfying more of our desires than a slower, less efficient rate of production, they are also responsible for preserving the very lives of all those who would have to die were it not for the rate busters enlarging the scope of human satisfactions. They provide the means with which the increasing global birth rate can be supported.

[Excerpted from Defending the Undefendable. An MP3 audio file of this article, read by Jeff Riggenbach, is available for download.]

Walter Block is Harold E. Wirth Eminent Scholar, Endowed Chair of Economics Loyola University, senior fellow of the Mises Institute, and regular columnist for Send him mail. See Walter Block's article archives.

© 2010 Copyright Ludwig von Mises - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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