As each worker can produce more and more fewer workers are needed to produce

As each worker can produce more and more fewer

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unemployment. As each worker can produce more and more, fewer workers are needed to produce 100 goods. The important point, however, is that the economy is not restricted to producing a fixed output. To the contrary, the very reason why entrepreneurs such as Arkwright or Wedgewood introduced machines was that they were planning to produce more at a lower cost. As long as output is allowed to rise, higher productivity need not result in unemployment. The question may arise at this point of whether the entrepreneurs who, thanks to machinery, can now produce more at a lower cost will actually be able to sell all these extra goods. Will the demand be there to snap them up? This was, indeed, another concern of contemporary observers. The critics were constantly worrying about the “glut” of goods that the Industrial Revolution was bound to cause. In an 1826 letter to statistician John Rickman, a long- time friend, Robert Southey wrote, “if some more effectual step is not put to the erection of new cotton mills, &c., than individual prudence is ever likely to afford, at some time or other the steam-engine will blow up this whole fabric of society. […] [T]hey are manufacturing more goods than the world can afford a market for, and the ebb is then as certain as the flow…” 16 Carlyle expressed a similar concern in his 1843 book Past and Present , dedicating an entire chapter to “over-production.” He wrote: 16 Robert Southey, The Life and Correspondence of Robert Southey , ed. Charles Cuthbert Southey (New York: Harper & Brothers, 1855), 442. 6
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But what will reflective readers say of a Governing Class, such as ours, addressing its Workers with an indictment of ‘Over-production!’ Over-production: runs it not so? ‘Ye miscellaneous, ignoble manufacturing individuals, ye have produced too much! […] He that seeks your indictment, let him look around. Millions of shirts, and empty pairs of breeches, hang there in judgment against you. We accuse you of over-producing: you are criminally guilty of producing shirts, breeches, hats, shoes and commodities, in a frightful over-abundance. And now there is a glut, and your operatives cannot be fed!’ 17 It is, of course, entirely possible for any producer to overestimate current demand and produce too much of a good. But we don’t need to worry about an entire economy becoming “too productive” and running against the problem of lack of demand. One way to think about why this is the case is to realize that when workers become more productive, the production of each good becomes cheaper . The entrepreneur is still paying the worker for one hour of labor, but he’s getting more goods from that hour of labor. Of course, this is the very reason why the entrepreneur was eager to introduce machines and raise labor productivity—cheaper production gives him an advantage over competitors. And if there is competition, as there certainly was during the Industrial Revolution, lower costs of production will lead to lower prices for the finished products. In turn, lower prices will spur higher demand, reassuring the entrepreneur that
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