Capital Productivity

Michael Perelman michael at ecst.csuchico.edu
Wed Dec 29 13:47:40 PST 1999


Productivity has another dimension. Recently, the NYT had an article that claimed that the head of Coke was fired because he could not raise the price of his product. Had he done so, say through a marketing scheme to make people want more sugar water, the productivity of Coke's capital would have risen.

Doug Henwood wrote:


> matt hogan wrote:
>
> > Is capital more productive than labor? I seem to recall Doug
> >stating that productivity of capital is in a thirty year downtrend.
>
> According to the official productivity stats, yes. But the idea of
> the "productivity of capital" is problematic for several reasons.
> What is a unit of capital? There's no physical unit comparable to an
> hour of labor (and while there are all kinds of labor, you can at
> least average it all out), and how do you value a monetary unit of
> capital? How do you value the combination of hardware and software
> that allows me to type this at you? Does it include the university
> labor that went into the early versions of Eudora? Does it include
> Qualcomm stock at $1,000? Do we include all the Pentagon funding of
> (D)ARPA? Steve Jobs in his garage building the first Apple? Is all
> that captured in the price I paid for this computer, or what it'd be
> worth today (nearly 0)? And second, and not unrelatedly, capital
> equipment is fundamentally the embodiment of human labor - what is
> the machine's productivity but all the physical and mental labor went
> into it?
>
> Doug

--

Michael Perelman Economics Department California State University michael at ecst.csuchico.edu Chico, CA 95929 530-898-5321 fax 530-898-5901



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