1965 TheShapeofAutomationforMenandMa
- (Simon, 1965) ⇒ Herbert A. Simon. (1965). “The Shape of Automation for Men and Management." Harper and Row.
Subject Headings: Comparative Advantage, Labor Market, Mass Technological Unemployment.
Notes
- It suggests that in a well-functioning market economy, labor gains from labor-saving and capital-saving technologies - as long as the labor supply curve is less elastic than the capital supply curve.
Cited By
2014
- (Freeman, 2014) ⇒ Richard B. Freeman. (2014). “Who Owns the Robots Rules the World.” In: IZA World of Labor Journal, May.
- QUOTE: Employment, however, is just one side of the labor market calculus. What happens to wages is also important to well-being. If robots take the good jobs at high pay and humans get the low-pay leftovers, the living standards of persons dependent on labor income will fall. In such a scenario, Luddite fears would appear more realistic than assurances that comparative advantage guarantees work for all in a well-functioning economy.
But economics has a response to this danger. Herbert Simon’s 1965 analysis of technological change showed that, in a well-functioning market economy, labor gains from labor-saving and capital-saving technologies — as long as the labor supply curve is less elastic than the capital supply curve [6]. In a full-employment economy, any technological advance raises the pay for the input, with inelastic supply relative to the input with elastic supply. By treating capital as elastic and labor as inelastic, Simon essentially put Malthus upside down.
The historical facts fit Simon’s model.
On the price side, the real return to capital has been roughly constant in the long run, which implies an infinitely elastic supply curve, while real wages have trended upward. On the quantity side, the stock of physical capital and the stock of knowledge capital have increased massively relative to labor. The world population has grown but birth rates have plummeted as societies have become richer, suggesting that population growth will continue to fall far short of the growth of knowledge and capital. But Simon treated labor as homogeneous, and ignored the distribution of ownership of robots and related machines that is central to analyzing the impact of robots / mechanization on society.
- QUOTE: Employment, however, is just one side of the labor market calculus. What happens to wages is also important to well-being. If robots take the good jobs at high pay and humans get the low-pay leftovers, the living standards of persons dependent on labor income will fall. In such a scenario, Luddite fears would appear more realistic than assurances that comparative advantage guarantees work for all in a well-functioning economy.
Quotes
Computers and automation have captured man's imagination. That is to say, like the psychiatrist's ink blot, they serve the imagination as symbols for all that is mysterious, potential, portentous. For when man is faced with ambiguity, with complex shadows he barely understands, he rejects that ambiguity and read meaning into those shadows. And when he lacks the knowledge and the technical means to find the real meaning of the shadows, he reads into them the meanings in his own heart and mind. …
References
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| Author | volume | Date Value | title | type | journal | titleUrl | doi | note | year | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1965 TheShapeofAutomationforMenandMa | Herbert A. Simon (1916-2001) | The Shape of Automation for Men and Management | 1965 |