Eighteenth Century Economics: Turgot, Beccaria and Smith and Their Contemporaries

By Peter Groenewegen | Go to book overview

7

Employment and machinery

Two classical debates on the effects of automation

The introduction of labour-saving devices, especially on a massive scale, in an important productive sector, has generally produced a dilemma for the policy-maker. On the one hand, there are the important benefits in the form of reduced costs and prices, and, for a trading nation, the not unimportant consideration of increasing the competitiveness of exports. On the other hand, there is the social cost of structural unemployment, which becomes of even greater importance when the society is already operating at a less than full employment level. Furthermore, structural unemployment, due to lack of labour mobility in the full sense of the word, has always been painful to the workers involved and has generally led to considerable labour unrest. 1 It is therefore not surprising that this question was discussed at length by some of the best economists of the eighteenth and nineteenth centuries.

The purpose of this paper is to investigate two of these debates on the machinery question in order to study the solutions offered to this problem by the classics. Since the problem of ‘automation’ is still present today, probably on an even larger scale than was experienced in the previous two centuries, a study of these solutions is of considerable interest in that the analysis of two intellectual controversies of the past may still yield some practical results.

The first of these debates, conducted in the second half of the eighteenth century, arose from an adverse comment on the social consequences of machinery in the influential book, l’Esprit des Lois, by the distinguished French lawyer and sociologist, Montesquieu. His view was attacked by various economists on both sides of the Channel who argued that the benefits of labour-saving inventions outweighed their costs. 2 This last proposition entered English classical economics through Adam Smith’s Wealth of Nations, where it was clearly stated that the introduction of machinery was always useful. 3 As a result of Smith’s undoubted authority, this proposition gained general acceptance during the next fifty years, despite the fact that part of this period saw large structural unemployment in England. 4

Smith’s opinion on the machinery question was not seriously challenged until the publication in 1817 of John Barton’s Condition of the Labouring Classes of Society. This pamphlet demonstrated that the introduction of machinery could lead to large-scale unemployment, consequently a fall in wages, and that

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