MACHINES AND UNEMPLOYMENT

Do Machines Cause Unemployment?

The belief that machines cause unemployment has been around for a long time. On the prairies, it usually bubbles quietly below the surface amidst the small talk about jobs or falling commodity prices.

At first glance, the idea seems believable. People are constantly inventing new machines and technology which either increase a worker's productivity, or replace the worker entirely. One piece of today's farm equipment can easily do the work that required ten men a century ago. The casual observer can easily draw the conclusion that machines cause unemployment.

But when examined closely, the myth leads to preposterous conclusions, as explained by economist Henry Hazlett in his work entitled, "Economics in One Easy Lesson". Following, are excerpts from Hazlett's observations.

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Adam Smith, a Scottish economist who lived in the 1700's, tells of a pin maker who, in the early days before technology, could only manufacture one pin a day. With the use of machinery however, he could manufacture over 4,000 pins a day. This means that with the advent of technology, thousands of pin makers were put out of work, meaning that the employment rate for pin makers was over 95%.

This was the infancy of the industrial revolution. In the stocking industry, new stocking frames were destroyed by the workers who had previously carried out this task by hand. Houses were burned, the inventors of the new technology were threatened, many of them fleeing for their lives. Civil order was not restored until the army was brought out and the leading rioters were either sent to jail or hanged.

As far as the rioters were concerned, they were thinking only of their own immediate and long term future. They believed that the machine age was permanently replacing workers, but in reality they were mistaken. It is true that thousands of stocking makers were initially displaced by the machine age and the introduction of technology. However, by the end of the 19th century, the stocking industry was employing at least one hundred men for every man it employed at the beginning of the century.

In 1760, it's estimated that there were 5,200 cotton spinners in England, using spinning wheels, and 2,700 weavers. In all, there were 7,900 people employed and making a living in the production of cotton textiles. The introduction of the cotton spinning machine was vigorously opposed on the grounds that it would take away the livelihood of these workers. In fact, the opposition to the machine was so strong that it had to be put down by force. Yet in 1787, twenty-seven years after the invention appeared, a parliamentary inquiry showed the number of persons actually engaged in the spinning and weaving of cotton had risen from 7,900 to 320,000, an increase of 4,400%.

The reality was that because of the declining price of cotton goods, consumption skyrocketed. Citizens and consumers who previously would never have bought cotton, or bought as much, were now able to purchase large quantities of it as a result of the price decline and the enhanced quality.