It’s International Workers Day, still celebrated as the May Day public holiday here in Queensland, at least when the Labor party is in office. So, it’s a good day for me to set out some tentative thoughts on work and its future.

Via Matt McManus, I found this quote from Marx ‘Fragment on Machines”.

The hand tool makes the worker independent — posits him as proprietor. Machinery — as fixed capital -posits him as dependent, posits him as appropriated

Reading this, it struck me that, whereas mainframe computers were archetypal examples of impersonal and alienating machines, personal computers are, or can be, regarded as extensions of their users, that is, as tools. Employers have long struggled to exert control over office computers and the workers who use them, making them extensions of the machine that is corporate IT. But these efforts have always been resisted, and have broken down, to a large extent, with the shift to remote work. My intuition, following Marx, is that this development presages a bigger shift in the relationship between between workers and bosses.

As far as neoclassical economics in the strict sense is concerned, it makes no real difference whether workers work on machines owned by their employers or using their own tools. In the first case, the wage is a simple payment for labour, and all the surplus from the enterprise goes as capital income to the employer. In the second case, the workers’ wage will include a ‘rental price’ for the use of tools, along with the ordinary labour wage. All that matters is that each factor of production should earn its marginal product.

Economists, including those classed as ‘mainstream’, have long recognised that the simple neoclassical model is inadequate. Beginning with a classic paper by Chicago economist and Nobel award winner Ronald Coase, it has been recognised that if the neoclassical model was a complete description, there would be no reason for firms, with their internal command structures, to exist. There is no a huge literature on transactions costs, principal-agent relationships and other ways of understanding the relationship between workers and bosses.

But as far as I am aware, the machine-tool distinction hasn’t been addressed in this literature, at least not explicitly. For bosses, a central feature of the machine, exemplified by the Taylorist time-and-motion expert, is the capacity for detailed control over the work of those employed to tend it. With a skilled worker using their own tools, such detailed control isn’t possible. In simple forms of production, where output can be measured easily, control over work can be replaced with production quotas or piecework payments. But in with collective products and where quality is hard to measure, such straightforward methods of control are no longer feasible. Workers can demand, and receive, more autonomy and require more motivation than simple monetary rewards and penalties.

In the case of computers, bosses have done their best to fight back with various forms of spyware and remote control. But this has turned out to be costly and counterproductive. As far as I can tell, most of these attempt have been abandoned. Similarly, despite repeated ‘back to the office’ announcements, backed up by dire threats, working arrangement seem to have reached an equilibrium of 2-3 days a week as the median, with the weekend increasingly starting early on Friday afternoon, rather than at the traditional 5pm.

The direct effects of these changes are confined to those workers (around 50 per cent of the total) for whom computers are the central tool. But when these developments coincide with a period of low unemployment, and with the new opportunities for organization offered by an era of universal Internet access, there are signs of a broader shift in the balance of workplace power, including a resurgence in support for unions.

Anzac Day (the anniversary of the disastrous Gallipoli landings in 1915) is always a sad day, but even more so this year, with the horrors unfolding before us in Gaza.

The carve-up of the Ottoman Empire by the British and French, of which the Gallipoli campaign was part is the direct cause of the current catastrophe. As well as grabbing colonial possessions for themselves, the Allies made promises to Jews (seeking a homeland) and Arabs (seeking independence from Turkey) which could not both be kept. The resulting conflict has never ended.

The war in Ukraine is also a consequence of the disaster that was rightly called the Great War, and of which the 1939-45 War and the Cold War were continuations. But that’s enough sadness for one day.

Robert Farley has replied to my recent post on the obsolescence of naval power. Unlike our previous exchange, a pile-on where I was (as he points out) in a minority of one, Robert’s tone is mostly civil this time, and I intend to reciprocate. Our disagreements have narrowed a fair way. On many points, it’s a matter of whether the glass is half-full or half-empty.

For example, Farley observes that despite Houthi attacks, 2 million tonnes of shipping per day is passing through the Suez canal. I’d turn that around and point out that 4 million tonnes of shipping per day has been diverted to more roundabout routes. However, since we agree that naval authorities overstate the macro importance of threats to shipping lanes, we can put that point to one side.

A more relevant case is that of China’s capacity (or lack thereof) to mount a seaborne invasion of Taiwan. I said that China has only a handful of modern landing craft and that their announced plan relies on civilian ferries. Farley points out that China has constructed 16 large, modern amphibious assault vessels in the past 18 years, with more on the way. That’s more than might normally be implied by the word “handful”, but not in a way that meaningfully challenges my argument.

According to Robert’s link, the ships in question can carry 800 troops, or about 10 000 if all of them were used. That’s enough to do a re-enactment of the Dieppe raid, but not to play a major role in an invasion of a country with a standing army at least ten times as large. And the implied rate of construction (one per year) suggests this isn’t going to change any time soon. This leisurely approach is consistent with the CCPs need to maintain a public position that it is willing and able to reunite with Taiwan by force, along with a private recognition that this isn’t possible and wouldn’t be wise if it were.

Now I come to the question of expertise. Robert is miffed that as an economist, I declaim on subjects on which I have no expertise, and also by my use of the term “naval fans”. The latter was a snarky response to our previous interaction and I withdraw it.

But as Robert himself admits, naval authorities routinely make claims about the economic role of naval power on which they have no expertise (some of which have been proved thoroughly wrong by the current partial closure of the Suez Canal, as well as by lengthy closures in the 20th century). The same authorities routinely point to the vast amount of of shipping passing through the South China Sea as evidence of the need to protect this waterway against China, where most of this shipping originates or ends. This clip from Australian satirical show Utopia makes the point.

The bigger problem with claims about expertise arises when it’s applied to events that are too rare, and too unlike each other, to provide a real evidence base. That’s true of global economic crises, for example. Economists mostly failed to predict the Global Financial crisis, and disagreed about both its likely course and the appropriate policy response.

It’s true in spades about naval warfare. As Robert says “all naval wars are incredibly rare and we have to analyze the hell out of the empirical evidence we can get our hands on.” Until 2022, the only significant instance in my, or Farley’s lifetime, was the Falklands War, which can be read either as a demonstration of the continuing relevance of navies or as an illustration of their vulnerability even to weak opponents like the Argentine Air Force. But that was forty years ago, when anti-ship missiles were much less well-developed.

In the absence of significant empirical evidence, naval experts have had to rely on the outcomes of exercises and simulations to make predictions. Unsurprisingly, these have tended to reaffirm the importance and power of navies (compare the many economists who extolled the financial sector before the GFC).

In particular, most naval experts saw Russia’s Black Sea Fleet as a powerful force that would play a decisive role in a war with Ukraine. Farley points out some partial successes in obstructing Ukrainian exports, but this is nothing like the total dominance most experts predicted.

As regards Taiwan, it’s interesting to contrast the steady drumbeat of warnings from US generals and admires that an invasion is imminent with this assessment by (non-military) experts that an invasion is not likely and (on the majority view) not feasible.

I’m not sure where naval experts fall on this spectrum. But, as with economic crises, this is an issue on which you can pick your expert.

In all the discussion of Leif Wenar’s critique of Effective Altruism , I haven’t seen much mention of the central premise: that development aid is generally counterproductive (unless, perhaps, it’s delivered by wealthy surfers in their spare time). Wenar is quite clear that his argument applies just as much to official development aid and to the long-standing efforts of NGOs as to projects supported by EA. He quotes burned-out aid workers “hoping their projects were doing more good than harm.”

Wenar provides some examples of unintended consequences. For example, bednets provided to fight are sometimes diverted for use as fishing nets. And catching more fish might be bad because it could lead to overfishing (there is no actual evidence of this happening, AFAICT). This seems trivial in comparison to the lives saved by anti-malarial programs

It’s worth pointing out that, on Wenar’s telling, a project that gave poor people proper fishing nets (exactly the kind of thing that might appeal to the coastal villagers befriended by his surfer friend) might be even worse for overfishing than the occasional diversion of bednets.

Wenar applies his critique to international aid programs. But exactly the same kind of arguments could be, and are made, against similar programs at the national level or subnational level. It’s not hard to find burned-out social workers, teachers and for that matter, university professors, who will say, after some particularly dispiriting experience, that their efforts have been worse than useless. And the political right is always eager to point out the unintended consequences of helping people. But we have plenty of evidence, most notably from the last decade of austerity, to show that not helping people is much worse.

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My latest in Crikey

Peter Dutton can’t seem to take a trick on nuclear power. Any option he puts forward seems to vanish as soon as he makes a commitment.

Since Dutton became opposition leader, he’s pushed the idea of small modular reactors (SMRs). At least in their original concept, these were reactors small enough (say 50-to-70MW capacity) to be built in a factory and shipped to sites where they could be installed in whatever number was required. The leading candidate was NuScale, a US firm that had contracted with a group of utilities in Utah to develop a pilot project of 12 (later reduced to six) SMRs.

The idea had the enthusiastic backing of the Australian Nuclear Science and Technology Organisation (ANSTO), the government’s official adviser on nuclear technology. The ANSTO website includes information on how SMRs can be constructed in three to five years, and that the US will have them operational by 2026.

That sounded too good to be true, and sadly, it was — NuScale abandoned its project late last year. After a bit of prodding, ANSTO added a disclaimer and a note that the “three to five year estimate” came from a research paper by the University of Leeds, which in turn could be traced to a dodgy consulting report from 2014.

On nuclear, Coalition prefers the optimism of misleading, decade-old, unverified claims

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Having given up hope on NuScale, Dutton needed an alternative.

He settled on Rolls-Royce, a reassuringly familiar name with a long track record of engineering excellence, not always matched by its financial success (it was famously nationalised and broken up by the Conservative UK government in the 1970s). It produces the nuclear reactors to be used in the submarines we will acquire under the AUKUS deal.

Rolls-Royce also offers what it calls an SMR, though this is something of a misnomer. At 470MWe, the reactor scarcely qualifies as small. It’s far too big to be built in a factory and shipped to its installation site. The “modular” description refers to the fact that the design uses 1,500 “modular components”, which are to be produced in a factory then assembled on site. 

This is precisely the approach that was attempted, unsuccessfully, in the Westinghouse AP1000 design. Of four AP1000 reactors started in the US, two were abandoned with a loss of billions of dollars while the other two (at Vogtle in Georgia) have finally been completed, years late and billions over budget.

Despite these concerns, Rolls-Royce looked like a frontrunner, at least in the UK. Its design was the first to enter the Office for Nuclear Regulation approval process in 2021, with a target delivery date of 2030. The UK government provided £210 million (about A$400 million) in funding to support the project.

So, late last week, Dutton briefed Simon Benson at The Australian on a plan to deliver Rolls-Royce reactors into the grid by the mid-2030s. 

What could go wrong? Plenty it seems. Just as The Australian story appeared, the UK government announced the winners of a grant to build SMRs in County Durham, and Rolls-Royce was not among them. UK deployment of the Rolls-Royce design now seems unlikely.

Rolls-Royce is now talking about building its first plants overseas. Poland has been mentioned as a possibility, but that’s a furphy. Under the now-departed Law and Justice government, Poland announced deals involving a string of different reactor designs: the AP1000, the GE Hitachi Nuclear Energy’s BWRX-300 (a direct competitor for Rolls-Royce), Last Energy microreactors, and even NuScale. Few if any will actually be built. 

So, if Dutton goes ahead with Rolls-Royce, Australia could be in the unenviable situation of building “first of a kind” (FOAK) reactors with an untested design. Even more than nuclear plants in general, FOAK projects are notorious for delays and cost overruns. For a country like Australia, with no established nuclear industry or regulatory structure, it would be madness to try such a thing.

What next for Dutton’s nuclear policy? There’s still time for a climbdown before the policy is officially announced, but it’s unclear that the nuclear true believers in the LNP would accept such a thing. He could switch to a design with slightly better chances, such as the BWRX-300, but that would risk a third embarrassment if the design failed. So he has little choice but to press ahead with the Rolls-Royce dream and hope that it is not finally dispelled before the 2025 election.