Abstract
In his seminal 1939 paper,2 Sir Roy Harrod stressed the need to ‘think dynamically’. In this spirit, this chapter attempts to apply the basic insights of the simple Harrod-Domar model to an assessment of the impact of technological change on employment. On the assumption that the demand for labour is a function of the demand for output, the advantage of the approach outlined is that it allows a clear theoretical distinction to be made between, on the one hand, the direct and indirect labour-displacing effects of new technology, and, on the other, the factors generating compensatory demand for labour. The latter can be divided into increases in demand induced by new technology and increases in demand determined independently of technological change.
I should like to thank members of the School of Economic Studies, University of Leeds, who commented on earlier drafts of this chapter. In particular, I should like to thank John Brothwell, John Bowers and Professor Mike Surrey. The usual disclaimer with respect to responsibility for content, of course, applies.
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Notes
R. F. Harrod, ‘An Essay in Dynamic Theory’, Economic Journal, vol. 49 (1939) pp. 14–33.
J. K. Bowers, ‘Labour Mobility and Economic Depression’, Leeds University School of Economic Studies, Discussion paper, no.28, 1975. P. Cheshire, ‘Is It the Inner City Miasma that Causes Unemployment?’, Guardian, 12 November 1979.
E. Lederer, Technical Progress and Unemployment, Studies and Reports, Series C, vols. 20–22 (Geneva: ILO, 1935–8). (My emphasis.)
Cited (p.50) by H. P. Nieisser, ‘“Permanent” Technological Unemployment’, American Economic Review, vol. 32 (1942) pp. 50–71.
A distinction borrowed from W. Driehus, Employment and Technical Progress in Open Economies, mimeo, 1979.
For a good summary see A. Heertje, Economics and Technical Change (London: Weidenfeld and Nicolson, 1977).
M. Bourniatin, ‘Technical Progress and Unemployment’, International Labour Review, vol. 27 (1933) pp. 327–48 gives an insight to the cruder form of the neo-classical approach.
J. Sleigh, B. Boatwright, P. Irwin and R. Stanyon, Department of Employment, The Manpower Implications of Micro-electronic Technology (London: HHSO, 1979).
C. Hines, The Chips are Down (London: Earth Resources Research, 1978).
C. Jenkins and B. Sherman, The Collapse of Work (London: Eyre Methuen, 1979).
For example, N. Kaldor, ‘A Case against Technological Progress?’, Economica, vol. 12, OS (1932) pp. 180–96.
A. Thirlwall and R. J. Dixon, ‘A Model of Export-led Growth with a Balance of Payment Constraint’, in J. K. Bowers (ed.), Inflation, Integration and Development: Essays in Honour of A. J. Brown (Leeds University Press, 1979).
For an interesting discussion of a similar distinction based on supply-push versus demand-pull classification, see N. Rosenburg, Perspectives on Technology (Cambridge university Press, 1976).
W. E. G. Salter, Productivity and Technical Change (Cambridge University Press, 1966), in particular, stresses the extent to which inventions may be autonomous of demand changes and how they may not contribute any tendency towards macro-economic equilibrium.
See, for example, W. Fellner, ‘Two Propositions in the Theory of Induced Innovation’, Economic Journal, vol. 71 (1961) pp. 305–8 among others.
For some good discussion of the importance of historical time in models of growth and accumulation see J. Robinson, ‘History vs Equilibrium’, in Collected Economic Papers, vol. V (Oxford: Basil Blackwell, 1979),
and A. Bhaduri and J. Robinson, ‘Accumulation and Exploitation: an Analysis in the Tradition of Marx, Sraffa and Kalecki’, Cambridge Journal of Economics, vol. 4 (1980) pp. 103–15.
A number of writers in OECD, Structural Determinants of Employment and Unemployment (Paris: OECD, 1979) make the points which follow.
A Lamfalussy, Investment and Growth in Mature Economies: The Case of Belgium (London: Macmillan, 1961).
C. Sautter, Investment and Employment on the Assumption of Slower Growth (Paris: OECD, 1979).
T. Gregory, ‘Rationalisation and Technological Unemployment’, Economic Journal, vol. 40 (1930) pp. 551–67.
The importance of profitability in the diffusion of new techniques is stressed in all of the following: S. Davies, The Diffusion of Process Innovations (Cambridge University Press, 1979);
L. Nabseth and G. Ray, The Diffusion of New Industrial Processes: An International Study (Cambridge University Press, 1974);
J. Schmookler, Invention and Economic Growth (Cambridge, Mass.: Harvard University Press, 1966).
E. Mansfield, The Economics of Technological Change (London: Longmans, 1969).
D. Hamburg and C. L. Schultze, ‘Autonomous Versus Induced Investment: the Inter-relatedness of Parameters in Growth Models’, Economic Journal, vol. 71 (1961) pp. 53–65, in particular pp. 56–7.
P. A. Baran and P. M. Sweezy, Monopoly Capital (London: Pelican, 1968).
R. Eisner, ‘Components of Capital Expenditures: Replacement and Modernisation Versus Expansion’, Review of Economics and Statistics, vol. 54 (1972) pp. 297–305.
For a good discussion of such distinctions and their likely impact on employment see J. M. McLean and H. J. Rush, ‘The Impact of Microelectronics on the UK: a Suggested Classification and Illustrated Case Studies’, Science Policy Research Unit, Occasional Paper, no. 7 (1978).
R. Wragg and J. Robertson, Britain’s Industrial Performance since the War: Trends in Productivity, Employment, Output, Labour Costs and Prices by Industry in the UK 1950–73 (London: Department of Employment, Research Paper no. 3, 1978).
See Lederer, op. cit.; E. Lederer, Technical Progress and Unemployment, vol. 28 (Geneva: ILO, 1933); Nieisser, op. cit.; Heertje, op. cit;
M. Blaug, ‘A Survey of the Theory of Process Innovations’, Economica, vol. 30, n.s. (1963) pp. 13–32.
For a good discussion of wage flexibility and employment see R. Simmons, ‘Keynes, Effective Demand and the Real Wage’, School of Economics Discussion Paper, no. 78, University of Leeds (1979).
For an attempt to combine trend and cycle in a model of growth see M. Kalecki, ‘Trend and Business Cycle Reconsidered’, Economics Journal, vol. 78 (1968) pp. 263–76.
F. Blackaby, ‘The Target Rate of Unemployment’, in G. D. N. Worswick (ed.), The Concept and Measurement of Unemployment (London: Allen and Unwin, 1976).
P. Sweezy, ‘The Crisis of US Capitalism’, lecture given at the University of Leeds (May 1980).
N. D. Kondratieff, ‘The Long Waves in Economic Life’, reprinted in Lloyds Bank Review (July 1978).
J. Schumpeter, Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist Process (London: McGraw-Hill, 1939).
University of Cambridge Department of Applied Economics, Economic Policy Review, no. 4 (March 1978); see also Hines, op. cit.
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© 1983 Derek L. Bosworth
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Jones, D. (1983). Technological Change, Demand and Employment. In: Bosworth, D.L. (eds) The Employment Consequences of Technological Change. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06089-4_3
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