Do the economies of specialization justify the work ethics? An examination of Buchanan's hypothesis

Buchanan [The Economics and the Ethics of Constitutional Order, University of Michigan Press, Ann Arbor, pp. 159-178; The Returns to Increasing Returns, University of Michigan Press, Ann Arbor, pp. 331-342] proposes an interesting hypothesis explaining the prevalence of an ethic encouraging more work. Economies of specialization mean that more division of labour may increase productivity. If everyone works more, this increases the extent of the market which enables higher degree of division of labour and hence higher productivity. Individual choice between leisure and work thus results in a sub-optimal level of work. One way to counteract this is to maintain a work ethic. This paper examines the validity and significance of this hypothesis in the Yang-Ng framework of inframarginal analysis. Buchanan's thesis probably has more relevance in ancient times when the work ethics originated but is less significant in the current world of global trade where the billions of individuals involved is sufficient to sustain specialization without artificial encouragement of additional work effort. On the contrary, the competition for relative standing, the materialistic bias caused by our accumulation instinct and advertising, and the environmental disruption of material production and consumption suggest that the discouragement of long working week may be more conducive to welfare. (C) 2003 Elsevier Science B.V. All rights reserved.