by Lederer
[Title Page and Preface: The Problem of Technical Progress]: The author introduces the problem of technical progress within capitalist dynamics, noting that traditional equilibrium theories often overlook its potential for long-term disruption. He argues that the recent global economic crisis has shifted public sentiment toward skepticism of rationalization, necessitating a new theoretical analysis of how technical changes affect the labor market and production. [Theses on Structural Unemployment and Technical Speed]: Lederer outlines five key theses regarding the impact of technical progress. He posits that structural unemployment depends on the tempo of progress relative to capital formation and population growth. He also critiques the 'blessing of technical progress' as a capitalist ideology, suggesting that modern self-organization of capitalism reveals the imperfections of automatic market processes. References are made to Barton, Ricardo, and Marx as predecessors in this line of thought. [The Dual Nature of Technical Change and Table of Contents]: This section describes the contemporary capitalist economy as a scene of both destruction and potential, where rapid technical shifts threaten the production structure while offering possibilities for increased real income. It includes a detailed table of contents covering compensation theories, static and dynamic effects, credit, and capital formation. [Chapter I: Arguments of Compensation Theories]: Lederer examines 'compensation theories,' which argue that technical progress only causes temporary unemployment before market forces automatically reintegrate workers. He critiques the specific variant of this theory which claims displaced workers are absorbed by the production of new machines, demonstrating through a compound interest logic that this would require an unrealistic progressive growth in the machine-building sector. [The Displacement and Absorption of Labor through Technical Progress]: Lederer examines two variants of how technical progress affects the economy. The first suggests that labor displacement is temporary because the resulting shift in purchasing power—whether to entrepreneurs as profit or consumers via lower prices—eventually creates new demand that re-absorbs workers. He critiques the static nature of this view, arguing it fails to account for the full circulation process. He references Schumpeter's 'new combinations' and distinguishes between technical production and economic production, citing Marx and Böhm-Bawerk to show that technical efficiency alone does not explain economic categories like ground rent or interest. [Methodology of Economic Dynamics and Static Equilibrium]: This section discusses the methodological challenges of defining economic dynamics. Lederer argues that dynamics can only be understood as a sequence of disturbances relative to a static equilibrium. He identifies technical development and population movement as the primary drivers of these changes. He notes that a realistic theory of dynamic flow inevitably encounters business cycle phenomena (Konjunktur) due to the structural differences between production goods and consumer goods industries and the role of the credit system. [Effects of Technical Changes in a Static System]: Lederer analyzes the impact of increased production efficiency within a static framework using three scenarios based on the elasticity of demand. 1) If elasticity equals one, prices drop proportionally to the increase in quantity, benefiting consumers without changing the producers' total revenue. 2) If elasticity is greater than one, total revenue increases, leading to capital shifts and potential dynamic growth. 3) If elasticity is less than one, prices drop faster than demand rises, which can lead to losses unless only a few producers adopt the new technology. He concludes that in a purely static system with flexible factors, technical change does not necessarily lead to permanent labor displacement. [Technical Progress in a Dynamic Capitalist System]: Lederer transitions to analyzing technical progress within a dynamic capitalist system characterized by profit-seeking and reinvestment. He defines a 'dynamic equilibrium' as a state of steady growth in population, capital, and consumption without technical change. He explains how the monetary and credit systems must expand to support this growth. He introduces the concept of the 'organic composition of capital,' noting that modern technical progress typically involves increasing fixed capital while relatively or absolutely reducing the labor force. [Quantitative Analysis of Technical Progress and Unemployment]: Lederer provides a detailed numerical simulation of technical progress in the mining sector. He demonstrates that when a portion of an industry adopts labor-saving technology requiring high capital investment, it draws capital away from other sectors. This leads to a 'relative' reduction in total employment growth. Even if the total number of workers increases slightly, it falls short of the 'normal' trend, creating structural unemployment. He highlights a critical paradox: a massive disruption in the labor market (thousands of lost jobs) may be driven by a relatively small increase in total social profit (only 1.8% in his model). [I. Steigerung des Gewinnes]: Lederer analyzes whether increased profits resulting from technical progress can compensate for labor displacement. He distinguishes between the redirection of existing purchasing power (amortization/normal interest) and the application of 'extra profits' (Übergewinn). He argues that if entrepreneurs consume these profits, they merely shift demand from workers' goods to luxury goods, causing further friction. If they invest the profits, compensation remains uncertain due to the time required for new production units to form and the potential lack of existing capital capacity to employ the displaced workers. He concludes that a closed exchange circuit is formed at a lower level of employment, and the shift from consumption to production goods often exacerbates rather than solves the displacement problem. [Analyse der Freisetzung und Einleitung der Preissenkungswirkung]: This segment quantifies the displaced labor force and critiques the idea of automatic compensation. Lederer notes that the reduction in turnover is less than the reduction in the workforce due to increased efficiency. He begins examining the 'Effect of Price Reductions' (Wirkung von Preissenkungen), arguing that even if prices fall, the resulting consumer savings merely replace the lost purchasing power of displaced workers, failing to create additional demand for labor. [Wirkung von Preissenkungen und Lohnsenkungen]: Lederer examines the effects of price and wage reductions on employment. He critiques J.B. Clark's theory of 'gelatinous' capital, arguing that capital equipment is rigid and cannot instantly adapt to a larger labor force at lower wages. He identifies two cases for wage cuts: 1) rigid labor demand, where wage cuts simply shift production from consumption to production goods without increasing total employment; and 2) non-rigid demand, where lower wages might allow for increased production. However, he emphasizes that real recovery and re-absorption of labor only occur after new capital investments increase the 'organic composition of capital' across the economy, eventually allowing real wages to rise again. [Effect of Surplus Investment over a Longer Period]: Lederer examines whether dynamic entrepreneurs can immediately reinvest savings from labor efficiency to absorb displaced workers. He argues that while theoretically possible, the physical creation of new production facilities takes years, and a rapid increase in the organic composition of capital can lead to structural unemployment if accumulation lags behind labor supply. [The Role of Fixed and Working Capital in Investment]: A technical discussion on the conversion of working capital into fixed assets. Lederer concludes that automatic compensation for displaced workers is unlikely because absorption requires significant time and spontaneous, purposeful investment of surpluses. [The Effect of Additional Credit]: Lederer analyzes the impact of credit-financed investment on the economic cycle. He engages with Schumpeter and Hahn, arguing that additional credit acts as a lever for technical progress by inducing 'forced saving' through price increases that outpace wages. However, this often leads to a necessary deflationary correction and temporary unemployment when liquidity must be restored. [The Significance of Reserves and the Business Cycle]: This section explores how unused production capacities and labor reserves (the unemployed) dampen the initial shocks of technical progress but do not eliminate them. Lederer argues that technical progress during a boom defers labor displacement, which then manifests more severely during the subsequent depression as structural unemployment. [Technical Heterogeneity and Capital Destruction]: Lederer critiques static models (like Clark's) by introducing technical heterogeneity. He discusses how new, efficient plants render older ones obsolete, leading to capital destruction. This loss of value acts as a 'general cost' to society that reduces the surplus available for creating new jobs. [The Process of Capital Formation and Modern Stagnation]: Lederer analyzes German investment data (1924-1928) to show that only a small fraction of capital goes into expanding industrial employment. He describes a transition to 'rentier capitalism' where monopolies and high organic composition of capital stifle the 'automatic' compensation of labor displacement, suggesting a need for social control of production. [Bibliography and Publisher Advertisements]: A list of publications by Emil Lederer and other contemporary economists (Heimann, Somary, Haensel, Weber) published by J.C.B. Mohr (Paul Siebeck). [Postscript: Emil Lederer's Life and Theory]: An essay by Hans Ulrich Eßlinger summarizing Emil Lederer's biography and his theoretical contributions. It highlights Lederer's opposition to wage cuts during the Great Depression and his focus on the 'race' between labor displacement by technology and absorption through capital accumulation.
The author introduces the problem of technical progress within capitalist dynamics, noting that traditional equilibrium theories often overlook its potential for long-term disruption. He argues that the recent global economic crisis has shifted public sentiment toward skepticism of rationalization, necessitating a new theoretical analysis of how technical changes affect the labor market and production.
Read full textLederer outlines five key theses regarding the impact of technical progress. He posits that structural unemployment depends on the tempo of progress relative to capital formation and population growth. He also critiques the 'blessing of technical progress' as a capitalist ideology, suggesting that modern self-organization of capitalism reveals the imperfections of automatic market processes. References are made to Barton, Ricardo, and Marx as predecessors in this line of thought.
Read full textThis section describes the contemporary capitalist economy as a scene of both destruction and potential, where rapid technical shifts threaten the production structure while offering possibilities for increased real income. It includes a detailed table of contents covering compensation theories, static and dynamic effects, credit, and capital formation.
Read full textLederer examines 'compensation theories,' which argue that technical progress only causes temporary unemployment before market forces automatically reintegrate workers. He critiques the specific variant of this theory which claims displaced workers are absorbed by the production of new machines, demonstrating through a compound interest logic that this would require an unrealistic progressive growth in the machine-building sector.
Read full textLederer examines two variants of how technical progress affects the economy. The first suggests that labor displacement is temporary because the resulting shift in purchasing power—whether to entrepreneurs as profit or consumers via lower prices—eventually creates new demand that re-absorbs workers. He critiques the static nature of this view, arguing it fails to account for the full circulation process. He references Schumpeter's 'new combinations' and distinguishes between technical production and economic production, citing Marx and Böhm-Bawerk to show that technical efficiency alone does not explain economic categories like ground rent or interest.
Read full textThis section discusses the methodological challenges of defining economic dynamics. Lederer argues that dynamics can only be understood as a sequence of disturbances relative to a static equilibrium. He identifies technical development and population movement as the primary drivers of these changes. He notes that a realistic theory of dynamic flow inevitably encounters business cycle phenomena (Konjunktur) due to the structural differences between production goods and consumer goods industries and the role of the credit system.
Read full textLederer analyzes the impact of increased production efficiency within a static framework using three scenarios based on the elasticity of demand. 1) If elasticity equals one, prices drop proportionally to the increase in quantity, benefiting consumers without changing the producers' total revenue. 2) If elasticity is greater than one, total revenue increases, leading to capital shifts and potential dynamic growth. 3) If elasticity is less than one, prices drop faster than demand rises, which can lead to losses unless only a few producers adopt the new technology. He concludes that in a purely static system with flexible factors, technical change does not necessarily lead to permanent labor displacement.
Read full textLederer transitions to analyzing technical progress within a dynamic capitalist system characterized by profit-seeking and reinvestment. He defines a 'dynamic equilibrium' as a state of steady growth in population, capital, and consumption without technical change. He explains how the monetary and credit systems must expand to support this growth. He introduces the concept of the 'organic composition of capital,' noting that modern technical progress typically involves increasing fixed capital while relatively or absolutely reducing the labor force.
Read full textLederer provides a detailed numerical simulation of technical progress in the mining sector. He demonstrates that when a portion of an industry adopts labor-saving technology requiring high capital investment, it draws capital away from other sectors. This leads to a 'relative' reduction in total employment growth. Even if the total number of workers increases slightly, it falls short of the 'normal' trend, creating structural unemployment. He highlights a critical paradox: a massive disruption in the labor market (thousands of lost jobs) may be driven by a relatively small increase in total social profit (only 1.8% in his model).
Read full textLederer analyzes whether increased profits resulting from technical progress can compensate for labor displacement. He distinguishes between the redirection of existing purchasing power (amortization/normal interest) and the application of 'extra profits' (Übergewinn). He argues that if entrepreneurs consume these profits, they merely shift demand from workers' goods to luxury goods, causing further friction. If they invest the profits, compensation remains uncertain due to the time required for new production units to form and the potential lack of existing capital capacity to employ the displaced workers. He concludes that a closed exchange circuit is formed at a lower level of employment, and the shift from consumption to production goods often exacerbates rather than solves the displacement problem.
Read full textThis segment quantifies the displaced labor force and critiques the idea of automatic compensation. Lederer notes that the reduction in turnover is less than the reduction in the workforce due to increased efficiency. He begins examining the 'Effect of Price Reductions' (Wirkung von Preissenkungen), arguing that even if prices fall, the resulting consumer savings merely replace the lost purchasing power of displaced workers, failing to create additional demand for labor.
Read full textLederer examines the effects of price and wage reductions on employment. He critiques J.B. Clark's theory of 'gelatinous' capital, arguing that capital equipment is rigid and cannot instantly adapt to a larger labor force at lower wages. He identifies two cases for wage cuts: 1) rigid labor demand, where wage cuts simply shift production from consumption to production goods without increasing total employment; and 2) non-rigid demand, where lower wages might allow for increased production. However, he emphasizes that real recovery and re-absorption of labor only occur after new capital investments increase the 'organic composition of capital' across the economy, eventually allowing real wages to rise again.
Read full textLederer examines whether dynamic entrepreneurs can immediately reinvest savings from labor efficiency to absorb displaced workers. He argues that while theoretically possible, the physical creation of new production facilities takes years, and a rapid increase in the organic composition of capital can lead to structural unemployment if accumulation lags behind labor supply.
Read full textA technical discussion on the conversion of working capital into fixed assets. Lederer concludes that automatic compensation for displaced workers is unlikely because absorption requires significant time and spontaneous, purposeful investment of surpluses.
Read full textLederer analyzes the impact of credit-financed investment on the economic cycle. He engages with Schumpeter and Hahn, arguing that additional credit acts as a lever for technical progress by inducing 'forced saving' through price increases that outpace wages. However, this often leads to a necessary deflationary correction and temporary unemployment when liquidity must be restored.
Read full textThis section explores how unused production capacities and labor reserves (the unemployed) dampen the initial shocks of technical progress but do not eliminate them. Lederer argues that technical progress during a boom defers labor displacement, which then manifests more severely during the subsequent depression as structural unemployment.
Read full textLederer critiques static models (like Clark's) by introducing technical heterogeneity. He discusses how new, efficient plants render older ones obsolete, leading to capital destruction. This loss of value acts as a 'general cost' to society that reduces the surplus available for creating new jobs.
Read full textLederer analyzes German investment data (1924-1928) to show that only a small fraction of capital goes into expanding industrial employment. He describes a transition to 'rentier capitalism' where monopolies and high organic composition of capital stifle the 'automatic' compensation of labor displacement, suggesting a need for social control of production.
Read full textA list of publications by Emil Lederer and other contemporary economists (Heimann, Somary, Haensel, Weber) published by J.C.B. Mohr (Paul Siebeck).
Read full textAn essay by Hans Ulrich Eßlinger summarizing Emil Lederer's biography and his theoretical contributions. It highlights Lederer's opposition to wage cuts during the Great Depression and his focus on the 'race' between labor displacement by technology and absorption through capital accumulation.
Read full text