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Christian Economics in One Lesson, Chapter 7

Written by Gary North on May 16, 2015

The Curse of Machinery

And Pharaoh commanded the same day the taskmasters of the people, and their officers, saying, Ye shall no more give the people straw to make brick, as heretofore: let them go and gather straw for themselves. And the tale of the bricks, which they did make heretofore, ye shall lay upon them; ye shall not diminish ought thereof: for they be idle; therefore they cry, saying, Let us go and sacrifice to our God. Let there more work be laid upon the men, that they may labour therein; and let them not regard vain words (Exodus 5:6-9).

Three issues were involved here: theological, judicial, and economic. Theologically, it was this question: “Who is God: the gods of Egypt or the God of Moses?” Judicially, it was this question: “Who represented God in history, Pharaoh or Moses?” Economically, it was this question: “Does a decrease in the division of labor make men poorer?”

According to the polytheistic theology of Egypt, Pharaoh was a god. He was the primary link between the realm of the gods and mankind. The Egyptian state was therefore divine. Pharaoh was the pinnacle at the top of this pyramid of earthly power. Moses was calling this theology into question. Pharaoh recognized this. “And Pharaoh said, Who is the LORD, that I should obey his voice to let Israel go? I know not the LORD, neither will I let Israel go” (v. 2).

Moses at this point in the confrontation was not calling for the exodus. He was demanding — not asking — that the Hebrews be permitted to journey three days from their compulsory work center, participate in a covenantal feast, and then return. Pharaoh recognized that this was an attack on his divinity and therefore also on the legitimacy of the Egyptian state. This would be a festival of liberation. He refused to let them go. This was the beginning of the public confrontation between two cultures. One was thoroughly statist. The other was not.

Pharaoh imposed negative sanctions on the Hebrews, but not on Moses. He sought to undermine Moses in the eyes of the people. The punishment was economic: Pharaoh’s refusal to supply the Hebrew slaves with straw. Straw was a necessary ingredient in bricks. This new rule forced onto the slaves an additional task: gathering straw. This decreased the division of labor. It increased the costs of production. It therefore increased the workload on the slaves. That was the goal of the decree. Pharaoh understood basic economics.

What if some inventor after this declaration had come up with a way to increase the output of straw gatherers? What if he invented a reaper that cut down the straw faster? Would this piece of machinery have increased the division of labor for the Hebrews? Of course. Would this have decreased the slaves’ workload? Of course. Would this have been a benefit to the slaves? Of course. Would Pharaoh have outlawed the Hebrews’ use of this invention? Of course.

A problem that we face today is this: modern politicians imitate Pharaoh. They adopt a comparable policy of restricting the introduction of tools that increase the division of labor and thereby increase the productivity of workers. They do so for the same reason that Pharaoh did: to increase the amount of labor necessary to complete required tasks. What is different is this: they justify this as a humanitarian measure. Pharaoh knew better. He was a far better economist than the typical politician is today.

Let us consider the economics of the hatred of labor-saving machinery.

1. Owner
Who are the owners, and what do they own?

There are multiple owners: an inventor with an idea, a customer with money to spend, a capitalist with money to invest, a businessman with organizational abilities and also an assessment of the economic future, an owner of raw materials or land, and a worker with labor to sell. Each of them is legally sovereign over whatever asset he owns. He possesses the legal right to exclude others — the essence of ownership. Each of them wants to benefit from his property. Each of them needs the cooperation of the others. They have the potential for increasing their wealth through cooperation.

They all benefit from a private property legal order. This means that the free market itself is an economic asset. The legal rights of property are assets. But these assets are legally different from the other forms of property. They cannot be bought and sold on an open market.

Consider workers, since the loss of jobs is the focus of the resentment against machinery. Workers own the right to rent their labor services. Some new technique of production may or may not lead to greater income for all of them. If they become skilled in using the new machine, they will benefit from rising wages. But they may be dismissed from employment if the cost of the marginal output of the machine costs less than hiring a particular laborer. The machine in no way interferes with the legal right of workers to make bids to employers. They do not own their jobs; they own only the right to make a bid for a job. Nobody owns a job. A job is the outcome of successful mutual bids: employers vs. employers, and workers vs. workers.

Workers are not the only owners involved in the introduction of new machinery. All owners may be affected. But the legal and moral issue at hand is the right of all owners to make bids.

2. Window
The business owner, the inventor of the new machine, the resource owner, the capital owner, and the worker all act as economic agents of future customers. The customers retain authority, because they possess the most marketable commodity: money. Their decisions in the future will determine which businesses, which inventors, and which workers were correct in assessing the future demand of customers.

The system of economic sanctions in a free market economy mandates that producers serve the demands of customers. So, from the point of view of customers, it is irrelevant whether a machine or a human being has produced what they want to buy. The customers want the best possible deal. If the introduction of machinery leads to a decrease in employment for certain workers, customers are probably unaware of it, and even if they are aware of it, most of them do not care. What they care about is themselves. In this respect, they are no different from the businessman who decides to buy the labor-saving machine, the inventor who sells the machine, and the workers who will use the machines in order to increase their personal output and thereby keep their jobs.

If the labor-saving machine or process decreases the cost of labor for business, then in all likelihood the businessman will decide to increase total output, in order to sell this output to a greater number of customers. In order to sell to more customers, the business will have to lower the prices of the final products. This is a benefit for customers, although it will not be a benefit to rival businesses, rival workers, and rival sellers of machinery. But the free market system is not structured so as to benefit producers at the expense of customers; it is an outcome of a private property system which inherently benefits customers. Customers shout: “May the best man win — as determined by us.”

3. Stone
The stone is thrown at machines. Politicians do this in the name of protecting existing jobs. The politicians ignore customers. They ignore future jobs. These are things not seen by politicians. “Workers own jobs!” But they do not.

(For the rest of the chapter, click the link.)

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