Abstract
In his 1817 pamphlet on the conditions of the laboring classes, John Barton (1789-1852) argued that the introduction of machinery would reduce the demand for labor not only when the amount of capital was held constant, but also in the case of capital accumulation. Schumpeter noted that Barton surpassed the other classical economists in his recognition of the substitutability of capital for labor, but Schumpeter's interpretation could lead to the conclusion that Barton did not intend to show that a reduction in the demand for labor would occur as a consequence of the introduction of machinery. This paper examines the assumptions behind Schumpeter's perspective and investigates theoretical problems in Barton's argument.
In his treatment of factor substitution, Barton reasoned that all laborers displaced by machinery would soon find jobs as real wages fell. As for the accumulation of capital, in Barton's analysis additional capital in the form of machinery would be introduced in response to higher real wages, leading to a reduction in the wage share of total income.
The letter he received from Ricardo on 20 May 1817 led Barton to consider that introducing machinery would bring about a reduction in the demand for labor even when the amount of capital was increased. However, he was not able to distinguish the effect of machinery from the effect of capital accumulation on employment.
Though there were theoretical problems in Barton's attempt to show the effects of the introduction of machinery on employment, his thinking on machinery was later developed by Marx into the theory of an industrial reserve army of labor.
