Question

Summarize and Explain the economic situation:

Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever. Whenever there is long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices. The public tolerates these practices because it either believes at bottom that the unions are right, or is too confused to see just why they are wrong.

The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions. Not only must we be causing unemployment with every technological improvement we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat.

To go no further back, let us turn to Adam Smith's The Wealth of Nations, published in 1776. The first chapter of this remarkable book is called "Of the Division of Labor," and on the second page of this first chapter the author tells us that a workman unacquainted with the use of machinery employed in pinmaking "could scarce make one pin a day, and certainly could not make twenty," but that with the use of this machinery he can make 4,800 pins a day. So already, alas, in Adam Smith's time, machinery had thrown from 240 to 4,800 pinmakers out of work for every one it kept. In the pin-making industry there was already, if machines merely throw men out of jobs, 99.98 percent unemployment. Could things be blacker?

Things could be blacker, for the Industrial Revolution was just in its infancy. Let us look at some of the incidents and aspects of that revolution. Let us see, for example, what happened in the stocking industry. New stocking frames as they were introduced were destroyed by the handicraft workmen (over 1,000 in a single riot), houses were burned, the inventors were threatened and obliged to fly for their lives, and order was not finally restored until the military had been called out and the leading rioters had been either transported or hanged.

Answer 1

Summary

                        The given situation talks about the condition in an economy wherein the innovation of new machines and technology creating a delusion of unemployment in the economy. It states that Adam Smith in his ‘Wealth of Nations’ has clearly indicated a notion of the same which makes it more agonising. It also talks about a case where in the era of Industrial revolution, the introduction of new stocking frames that lead to the job losses of many and thus sparked a riot in the process.

Economic situation

                        The above case study reveals the fact that introduction of technology has always resulted in a distress in the working atmosphere in the industries. It happened during the industrial revolution, the robotic revolution and the recent developments in the technology has been showing trends of the same. There is a concept of ‘technological unemployment’ which states the same. But the statistics also reveals that technological developments and innovations in machine industry has not resulted in the overall rise of unemployment in any economy. There is a fact that some of the sectors of jobs which are more suited to a mechanical input would get replaced, but the fact that some of the traditional methods which are being done by human effort has remained the same in the process. For example, considering the textile manufacturing and weaving industry, the introduction of the spinning wheel and similar machines has resulted in the reduction of the human effort in the same, but the fact is that still human presence is required to run much of those machines. The traditional weaving industry has also remained the same despite of these mechanical developments. The innovation has helped the industry to produce goods at a much faster rate at reduced cost in the process. Thus, we can see that although short-term unemployment can be the result of technological innovations and developments, long-term effects on the same is a controversial topic.