4 ms·

keynes failed to see that competition is relative- that is, how hard you have to work is relative to the people you’re competing with. so where did all the extr

keynes failed to see that competition is relative- that is, how hard you have to work is relative to the people you’re competing with. so where did all the extra value go? it accumulates to any place that is inadequately checked by competition: monopolies

dalbasal 6y ago
If this is Keyne's failing (I agree it's a part of it) then the majority of economists still make this mistake. Where they do acknowledge it, it's usually via frivolous examples. Your friends have cool cars, so you need one too.
- dustingetz 6y ago
  Another angle is as discussed in Mythical Man Month - due to O(n^2) growth of communication overhead, the optimal team size is 2. 2 people working 100 hours a week >>> 5 people working 40 hours a week, as is obvious in any early stage startup.
zzbzq 6y ago
The textbook explanation for why Keynes' workweek prediction failed is that he failed to account for the shift to a service economy, which provides ample room for people to expand what they work on and what they spend on. The crisis within that explanation is that the number of people employed in the "service" category has not grown proportionately with gains in productivity. In fact, it's barely grown at all. The type of job that has filled the gap is "administrative/clerical." This observation has led David Graeber to propose that perhaps Keynes was essentially right, and that the only reason we don't have the shorter work week is basically that we refuse to let it happen. We would rather continue "working" whatever number of hours was customary in our culture (40 hours a week in the US, less in Europe, many more in Asia) and if there's not enough to actually do (there isn't) we have a small number of people do the work for 40 hours and the rest are just managers and administrators sitting around in a redundant meeting or staring at a screen waiting for the next redundant meeting.
- dustingetz 6y ago
  Monopoly billionaire CEOs worked 100 hours a week during periods of intense competition (pre monopoly) not 40. The extent to which one is not forced to work 100 hours a week is the extent to which competition is not yet very fierce. As discussed in book Moral Mazes, even if there is no work to do, middle managers still must compete for scarce executive positions and thus project an appearance of long hours.
- dalbasal 6y ago
  What got me thinking of this prediction was actually Graeber, and Tyler Cowen. Both noted some evident facts about productivity that I hadn't heard mentioned often. Stuff that was simply "out of theory" and irrelevant to it despite seeming logically contradictory to theory. The observations about efficiency in administration in the digital age is particularly striking. I do think Graeber tended to overstate conclusions. I actually think we understand inflation wrong, and that this becomes relevant over long time scales. Some productivity trends just overestimate reality. We haven't really become as wealthy and efficient as the measures suggest. Another problem is non fungibility. Not owning a smartphone in 1970 is different from not owning one in 2020 in ways that we can't be quantified in dollars. You can't buy a 1960 education or 1990 healthcare. It isn't sold, and it wouldn't have the same value even if sold. It's way too complicated to dismiss with a "our expectations have gone up."
  - nradov 6y ago
    To an extent we can compare with less developed countries where it's still possible to buy the equivalent of a 1960 education or 1990 healthcare.
- nradov 6y ago
  If that hypothesis was correct then why haven't smart CEOs fired all the redundant workers? They certainly have ample incentive to do so, and in the US at least there's nothing to stop them from downsizing if they wanted to.
  - deleted 6y ago
    [deleted]

dalbasal 6y ago

If this is Keyne's failing (I agree it's a part of it) then the majority of economists still make this mistake. Where they do acknowledge it, it's usually via frivolous examples. Your friends have cool cars, so you need one too.

dustingetz 6y ago
Another angle is as discussed in Mythical Man Month - due to O(n^2) growth of communication overhead, the optimal team size is 2. 2 people working 100 hours a week >>> 5 people working 40 hours a week, as is obvious in any early stage startup.

zzbzq 6y ago

The textbook explanation for why Keynes' workweek prediction failed is that he failed to account for the shift to a service economy, which provides ample room for people to expand what they work on and what they spend on. The crisis within that explanation is that the number of people employed in the "service" category has not grown proportionately with gains in productivity. In fact, it's barely grown at all. The type of job that has filled the gap is "administrative/clerical." This observation has led David Graeber to propose that perhaps Keynes was essentially right, and that the only reason we don't have the shorter work week is basically that we refuse to let it happen. We would rather continue "working" whatever number of hours was customary in our culture (40 hours a week in the US, less in Europe, many more in Asia) and if there's not enough to actually do (there isn't) we have a small number of people do the work for 40 hours and the rest are just managers and administrators sitting around in a redundant meeting or staring at a screen waiting for the next redundant meeting.

dustingetz 6y ago
Monopoly billionaire CEOs worked 100 hours a week during periods of intense competition (pre monopoly) not 40. The extent to which one is not forced to work 100 hours a week is the extent to which competition is not yet very fierce. As discussed in book Moral Mazes, even if there is no work to do, middle managers still must compete for scarce executive positions and thus project an appearance of long hours.
dalbasal 6y ago
What got me thinking of this prediction was actually Graeber, and Tyler Cowen. Both noted some evident facts about productivity that I hadn't heard mentioned often. Stuff that was simply "out of theory" and irrelevant to it despite seeming logically contradictory to theory. The observations about efficiency in administration in the digital age is particularly striking. I do think Graeber tended to overstate conclusions. I actually think we understand inflation wrong, and that this becomes relevant over long time scales. Some productivity trends just overestimate reality. We haven't really become as wealthy and efficient as the measures suggest. Another problem is non fungibility. Not owning a smartphone in 1970 is different from not owning one in 2020 in ways that we can't be quantified in dollars. You can't buy a 1960 education or 1990 healthcare. It isn't sold, and it wouldn't have the same value even if sold. It's way too complicated to dismiss with a "our expectations have gone up."
- nradov 6y ago
  To an extent we can compare with less developed countries where it's still possible to buy the equivalent of a 1960 education or 1990 healthcare.
nradov 6y ago
If that hypothesis was correct then why haven't smart CEOs fired all the redundant workers? They certainly have ample incentive to do so, and in the US at least there's nothing to stop them from downsizing if they wanted to.
- deleted 6y ago
  [deleted]