In this post I show the surprising results of the empirical literature on hours of labor reduction: Contrary to the commonsense assumption, if hours of labor are reduced, the reduction will probably have no impact on wages at all.
Borsch-Supan states there are arguments for the idea reducing hours of labor will reduce the rate of unemployment, but these arguments rest on assumptions that go against the empirical evidence (which he calls “counterfactuals”). The question he asks us to ponder is whether, based on empirical evidence, there is a case for the idea employment will increase if hours of labor are reduced.
By contrast, there is no basis for such an argument within labor theory, because the expansion of employment in labor theory is determined by the rate of surplus value and, all else held equal, the quantity of surplus value produced is a function of the duration of labor. If the duration of labor is reduced, the mass of surplus value will also be reduced; if the mass of surplus value is reduced, the rate of expansion of the existing capital (new employment of living labor) must also fall.
At the same time, a reduction in the mass of surplus value produced means the mass of profits have fallen, since profits are nothing more than the mass of surplus value divided by the total capital invested. Since profit is the motive of capitalist production, the capitalist will again take steps to increase profits by further reducing wages. How this is done is not important at this point, but in labor theory there is no reason to assume fewer hours of labor increases employment — just the opposite: fewer hours of labor accelerates the reduction of living labor in production.
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