A Reply
Seligman, Ben B.
One supposes that when raw nerves are exposed there will be some sort of reaction. All too often such reactions are like the flailing of arms by a patient in a dentist's chair. Mr. Simon...
...The context, however, is quite different from Simon's euphoria: my argument makes it clear that under conditions of rapid technological change not everyone included under the rubric "labor" enjoys increasing real wage rates...
...There is a fair accumulation of empirical data, totally ignored by Simon, to suggest just such "constancy...
...Simon's memory seems to have been short-circuited by his fascination with algebra...
...What Mr...
...If Mr...
...I have no "objections" to the new technology of which Mr...
...but within a single economy such as ours, no such impediments exist...
...What happens to the marvelous proposition that labor gets all the gravy, now that interest rates are moving upward...
...The consequence is that, from the standpoint of a distribution theory, labor's long-run share may tend to be constant, rather than increasing...
...Well, it is clear that labor generally suffers when the economy operates at less than full capacity, but one cannot detect that from Simon's distribution model...
...And all too often the failure to solve one means a failure to solve another...
...I commend to Mr...
...Technological change does have some connection with the patent fact that Negroes have the roughest time getting and keeping jobs and it does have some connection with the kind of education our society proposes to offer to coming generations...
...Persuasive support for my position may be derived from the later chapters in Simon's book, as well as from some of his other writings, in which he describes himself as a tech nological radical...
...As for my alleged misunderstanding of comparative advantage, I would re fer Mr...
...As for the specific points raised in my piece, the agricultural productivity argument may be explicit in Daniel Bell's view, but it seems to me quite implicit in Mr...
...He would no doubt say that this is not part of the argument, or that he is really talking about something else—such as securing full employment regardless of the "level of productivity...
...Simon includes in his book a parable of the horse and the tractor...
...Simon wishes to relegate these matters to the day we attain Utopia that is his privilege...
...Simon's desire to avoid certain facts of life permits him to rank the problems of our society in an extraor dinarily orderly fashion, somewhat like the display of tinned food in a super market...
...My point is that a high rate of productivity growth, such as has been experienced in recent years, requires an even more rapid expansion in output to insure full employment...
...Carter attempts to gauge the effect of technology by comparing input-output tables for the United States for 1947 and 1958...
...Liberals may then behave like consumers in an economics textbook by selecting whatever problem person ally brings them the greatest marginal utility...
...As for the Automation Commission to which Simon appeals, it was indeed composed of distinguished figures, but that did not insure a sensible report...
...Simon behaves like the patient...
...It is small consolation to a worker to be told that when society no longer needs his drill press skills, he can wait a couple of generations to become a floorwalker in a department store...
...Most "liberals" do persist in raising the issues of monopoly, mass transportation, corruption, advertising, poverty and mental illness, together with those of the Bomb, Vietnam, and Negro inequality because all of them afflict society today...
...Simon does not want to concede is that the same effects can be visited upon certain types of workers, as indeed they already have for coal miners, large numbers of packing-house workers, and those with minimal skills...
...Now, says Simon, I misstate his use of the notion of comparative advantage...
...It is quite true that "any level of employment is compatible with any level of productivity": I say as much in the very first equation which tries to clarify some of Bell's propositions...
...As a statement about the latter, it is utterly irrelevant...
...He characterizes them "as if" propositions: yet the conditions toward which they point have existed in the recent past...
...Robert Heilbroner, in a review of Mr...
...Simon thinks to be a low priority frequently exhibits urgency because it has a close relationship to some other matter at the top of his ladder of priorities...
...He obviously is too busy building the future to worry about consequences...
...His main complaint, however, is with my set of alternative equations, which in fact he does not disprove...
...I'm half resigned to the frightful prospect of men with orderly minds running our society and telling us what we ought to do, while at the same time feeding us enough tranquilizers to make us retch...
...Simon is such an enthusiastic prophet...
...Simon's volume in the New York Review of Books also detected grave deficiencies in his algebraic formulations...
...But then one is obligated in a discussion of technology to say something about the level of employment or one hasn't said very much...
...Simon's attention an article in the April, 1966, Scientific American by Anne Carter on "The Economics of Technological Change...
...The latter has been noted by quite a number of economists, among them Sidney Weintraub of the University of Pennsylvania...
...The distributive effect of the Simon model is predicated on absolute stability in the rate of interest...
...Moreover, we don't know what the extensive new reports of the Commission have to say, since, as of this writing, the 41 documents have not yet been published...
...His data command enough attention to suggest that Simon by no means has the last word...
...If I do, I suppose so does Bell, since I initially responded to the latter's interpretation of Simon, which I find on rereading was not so terribly awry...
...Further, there is no necessary connection between productivity and gains in output, as was so clearly demonstrated in the Eisenhower years, when output did not move fast enough to provide full employment...
...I have reasons to see more in our history than Simon, in his headlong rush into the world of the computer, would care to examine...
...There are more complicated versions, none of which impinges in the slightest on Simon's use of the theory...
...The report of the Automation Commission is neither fish nor fowl: it is a document intended to make everyone happy...
...Furthermore, if he had read the entire article, rather than the few paragraphs on himself, he would have noted that I do acknowledge the phenomenon of increasing real wage rates...
...32-33...
...Simon's description of technical change...
...The article verifies the fact that sectors of the economy once supplying large numbers of jobs have declined markedly...
...One supposes that when raw nerves are exposed there will be some sort of reaction...
...The orderly mentality that insists that poverty is less important than Negro inequality appears rather strange, for the patent fact is that these two questions are in large part one and the same...
...The latter is a mish-mash of contradictory statements: half the report adopts the Simon position, which I criticized in my article, while the other half proposes a panoply of measures to meet the threat of technological change...
...Let me repeat, Mr...
...What Mr...
...Unfortunately, the social and economic problems of our time do not allow such an easy "program...
...He describes how Old Dobbin disappeared because the terms of trade in a sense turned against him as a result of mechanization...
...My argument is that no such restraint exists, that the competition, as it were, is not between tasks and machines, but rather between men and machines, with the latter absorbing tasks...
...The theory sought to explain such trade despite international barriers...
...Mrs...
...Would one be uncharitable to inquire as to the present state of affairs...
...That the "law" of comparative advantage is used as an argument to suggest limitations on the spread of technology is clearly stated by Simon, pp...
...All too often such reactions are like the flailing of arms by a patient in a dentist's chair...
...It is patent that the version of comparative advantage on which Loth Bell and Simon rely is the simple one I described in my article...
...Simon simply doesn't grasp the fact that a heavy human cost is involved in such shifts...
...While Simon hails a new world of androids, he assures us that it will make mensehen of us all...
...The virtue of my exercise in algebra is that it points to longrun contingencies of unemployment as a result of technology, an issue that is obscured in Simon's magnificent model...
...One might also ask what Simon means by "full productivity": I'd always thought that productivity was simply a rate...
...Simon to the original literature or to the formulation of the simple model of international trade to be found, say, in Bertil Ohlin's work...
...Moreover, the declining utilization of raw materials generated half as many jobs in 1958 as might have been required in 1947 to do the same work...
...Simon's formula is a statement about income distribution which confuses wage rates and wages and says nothing about the level of employment...
...If, indeed, Professor Weintraub is right, then obviously something is awry with Simon's algebra...
...CORRECTION: Please note that the equation which appeared on p. 251 of our May-June issue (in Ben Seligman's article "On Theories of Automation") should read: GNP U=L—pxH...
...Perhaps he meant "full capacity...
Vol. 13 • July 1966 • No. 4
