Knowledge that Transforms

In my 1985 paper, I argue that the difficulty which employers face in controlling the pace and quality of labor input yields a competitive equilibrium pattern of technical choice, involuntary unemployment, and labor market discrimination which is inefficient in a well-defined sense, and that this inefficiency may be attributed at least in part to the capitalist nature of the institutions governing the economy. I further suggest that the extent of work resistance by workers and the difficulty of employers acquiring about the workers' level of effort are endogenous in the sense that alternative economic institutions would generate different attitudes towards work and different patterns of cost. From Eskander Alvi's concluding remarks in his comment (1986), I gather that he agrees that workers' attitudes towards work are endogenous in the above sense. But Alvi also would like to claim that the costs of unemployment (and, by implication, discrimination and nonoptimal technical change) are not attributable to the class but rather reflect the deadweight loss to society from the informational structure (p. 1200). My point is precisely that the informational is not exogenous, but rather reflects in important measure the forms of work resistance, worker solidarity, and commitment to the job fostered by the of ownership and control of the labor process. Quite apart from the endoegeneity of work resistance, however, Alvi's claim that surveillance of the work process (what he calls supervision) merely improves the allocation of is demonstrably false. Starting from a position defined by the profit-maximizing firm's first-order conditions (my equation (10), p. 24), imagine that the wage is arbitrarily increased by unit, raising the cost of job loss to the worker and inducing a higher level of work effort. The level of surveillance inputs could then be hypothetically reduced to a level which induces the prior level of work effort. In this new situation the level of output is unchanged and the amount of surveillance input is reduced, all other inputs being unchanged. Thus the profit-maximizing level of surveillance is inefficient; the allocation of resources would be improved by a departure from the firm's profit maximum in favor of a high-wage, low-surveillance labor strategy. The reason is that raising the wage (which is costly to the firm but not resource-using to society) economizes on surveillance inputs which have real opportunity costs. The cost-minimizing wage is thus suboptimal; or, more pointedly, efficiency wages are inefficient. Alvi's penultimate paragraph poses the issue of costs in an especially insightful wayto claim that costs are endogenous to capitalist institutions, he writes, one must be able to characterize that social institution which eliminates or reduces ... the burden of incomplete information (p. 1202) and to show that this institution is incompatible with the class of capitalism. Exactly. And to claim, as he appears to do, that these costs are invariant across institutions or that capitalism minimizes these costs, Alvi would have to give compelling reasons why such information-superior institutions are not feasible. But, he is not able to take up the challenge he has so neatly posed. Both common sense and some fragmentary empirical evidence (referred to in my earlier paper) suggest that more egalitarian and participatory institutions -whatever their other characteristics-would be likely to reduce the degree of conflict over the pace of work, to reduce work resistance, to enhance the legitimacy and hence effectiveness of systems of control of labor effort and thus *Department of Economics, University of Massachusetts, Amherst, MA 01004.

There is a widespread conviction that the United States should be doing more to repair and improve its roads. The other papers in this session examine investment choices affecting the interstate highway system. In this paper, I look at the opposite extreme of the nation's road network: the local road system under urban government administration. The deterioration of city streets probably is linked as closely with a general undermaintenance of urban capital facilities, and postponement by cities of capital reinvestment decisions of all kinds, as it is to characteristics of the transportation sector. Cities with backlogs of street repairs are likely to confront backlogs for water pipe replacement, separation of combined sewer systems and sewer pipe replacement, and bridge and building repairs, as well. In 1982 when it passed the Surface Transportation Assistance Act, Congress recognized the special problems of city road repairs. It preserved the Federal Aid-Urban Program, which the administration had sought to eliminate, and for the first time required that 40 percent of the monies be used for rehabilitation, resurfacing, repair, or reconstruction, starting in 1984. A handful of states have also created special grant programs to assist cities in resurfacing city streets. In addition, capital repairs have acquired local political impetus in some cities. A favorite device has been the establishment of community reinvestment efforts, that bring together business leaders and political leaders to form infrastructure commissions of several years' duration, whose purpose is to win local public support for higher capital investment and maintenance levels. Have these efforts succeeded in reversing the trend toward postponement of urban road maintenance and repair? If so, which instruments of support have been most successful and hold most promise for the future?

The issue of equal pay for comparable work has in recent years come to the forefront of debate in the political arena. Crucial to estimating the potential consequences of comparable worth legislation is an understanding of the causes of sex differences in occupations. Earlier studies have found evidence that sex differences in labor force attachment may explain sex differences in occupations. (See Solomon Polachek, 1977, 1979, 1981; and my 1984 paper.) However, Paula England (1982) and Mary Corcoran et al. (1983) find that women with high labor force attachment are no more likely than other women to be in male occupations. This result suggests that when choosing occupations, women may face constraints in the form either of direct labor market discrimination preventing them from entering male occupations, or of a socialization process through which women and men acquire different tastes for occupations. Virtually all the evidence discussed above is derived from data on women who came of age in the late 1940's and early to mid-1950's. This paper seeks to determine whether young women today continue to face the same constraints. To do so, the structure of occupational attainment for two cohorts of women is compared. The older cohort, 2894 women taken from the National Longitudinal Survey of Mature Women, was born in the decade before World War 11 (1929-1937), and the younger cohort, 2632 women taken from the National Longitudinal Survey of Young Women, was born in the decade following (1944-52). The paper compares the two groups when each cohort was aged 30-38: in 1967 for the older cohort and in 1982 for the younger cohort. Thus, the observations on the two groups are separated by the crucial decade of the 1970's when the effects of equal employment opportunity legislation and the women's movement are thought to have taken hold. Section I compares the two cohorts and finds that the younger women are more attached to the labor force and enter more skilled, less female occupations than their older counterparts. Section II attempts to determine the underlying reasons for the younger women's increased occupational attainment.

As the history of Keynesianism illustrates, the distinguishing features and exact claims associated with a particular economic policy doctrine are rarely clear in the early stages of its development. Supply-side economics is no different. Like Keynesianism it has received political applications before its content was settled. Thus, expository work remains to be done before supply-side economics is likely to attract the detailed attention and criticism that will ultimately define its place in the policy discussions of our discipline. To help place the new approach to economic policy, this paper selects some properties and conditions that could be consonant with major aspects of supply-side doctrine. In preparing this selection, we are quite indifferent to whether those from whose thoughts or models we pick are professed supply siders. Furthermore only two of several possible points of distinction are developed. The first theme we wish to elucidate is that supply siders insist, more than most economists, that policy should be conducted by rules relating not to procedure (stable money growth), but objectives (stable prices). Procedural rules (tax indexing) or constitutional restraints (balanced budget) may be resorted to as a second-best. Such positions may be advocated if the feedback control mechanisms involved in gearing economic policy instruments directly to final targets are prevented from functioning reliably in the existing political system. In general, however, supply-side economics presents itself as firm and principled on targets, but flexible on methods. The second point is that, to appreciate the elasticity optimism which brought supply-side economics to public attention in the first place, the short run should be extended to one generation and the long run to several generations. The overall impression we hope to convey is that even though supply-side economics has lacked a dominant intellect as challenging as Keynes was to Keynesians and non-Keynesians alike, it may have something beyond mere variations in emphasis to contribute to the concerns of economic policy.

E I Coll Jan 22, 1833 My dear Madam I have read John Hopkins's Notions on Political Economy with great interest and satisfaction, and am decidedly of opinion that they are calculated to be very useful. They are in many respects better suited to the labouring classes than Miss Martineau's Tales which are justly so much admired. I am strongly therefore inclined to advise you to publish them in as cheap a form as you can, for general circulation, and to give away. We shall be happy to purchase a dozen of them to distribute to the Cottagers in our neighborhood. I think your doctrines very sound, and what is a more essential point, you have explained them with great plainness and clearness. [If I were obliged to find any fault, I should say that you have presented in rather too brilliant and unshaded colours the advantages which would accrue from the abolition of the Corn Laws, so as to excite expectations which cannot be realized.a In the actual state of the redundancy of labour in this country, it appears to me scarcely possible to conceive that the money wages of labour will not fall nearly in proportion to the price of corn, and the labourers be greatly disappointed.b It will no doubt give a stimulus to foreign trade; but it must for a considerable time aggravate the redundancy of labour in country parishes; and during the process of the change, there will probably be more thrown out of work than in any other case of the restrictions of the freedom of trade, on account of the largeness of the concerns. It will also tend to raise the value of money and increase the pressure of the national debt. Still I am for the removal of the restrictions, though not without fear of the consequences.c I have been (interrupted?) and must finish. Most truly yours T. Robt Malthus

In theory, a patent confers perfect appropriability by granting legal monopoly of an invention for a limited period of time in return for a public disclosure that assures, again in theory, widespread diffusion of social benefits after the patent's expiration. The rationale for this social contract rests on the recognition that technological knowledge has certain attributes of a public good. From this perspective, knowledge, once created, is believed to be freely appropriable by others, and the free-rider problem thus limits the incentive to create new knowledge. By conferring property rights that restrict temporarily the wide use of new knowledge, the patent system is supposed to create the incentive to engage in inventive activity and to undertake the costly investment typically required to reduce an invention to practice.