I am not aware of a productivity measure that measures unit output as a ratio of some measure of profit, although such a function could be constructed. Hell give an economist a pencil or a program and anything can be a function of anything else; certainly there is a function that connects those variables -- Sraffa makes use of one such in his Production of Commodities By Means of Commodities, I believe, but he doesn't call it a measure of productivity. I suppose it might be, though.
Efficiency is a very tricky notion in economics. Intuitively it has some relation to productivity, but the most basic notions of efficiency used in mainstream economics, notions like Pareto-optimality (the equilibrium state where no change could make anyone better off) are very far removed from the intuitive idea that an efficient system/arrangement/state/process is one that minimizes waste. The "minimizes waste" idea is related fairly closely to the usual measures of productivity -- it seems wasteful, again intuitively to produce a unit of whatever with more hours, workers, capital expenditure, resource use or whatever, than necessary. But standard economic notions of efficiency get there in a roundabout way by saying things like, free competitive markets that are efficient encourage producers to increase productivity measured along one or more of these dimensions.
Now Chuck would probably say, and he would have a point, that these notions of efficiency are mumbo jumbo to paper over the fact that "waste" (not a term of art in mainstream economics) is understood in terms, ultimately, of what is profitable -- and contrary to economic religion, market fundamentalism, that does not by itself, or perhaps at all, enhance social welfare (in the intuitive sense), maximize desire satisfaction or promote the common good. However, one has to know at least roughly how economists use these terms before one attacks them for distortion and apologetics.
The claim that the US economy is going all Enron on us because of deindustrialization is a familiar one, which does not mean it is wrong, from the '80s, Harrison & Bluestone, Weisskopf, those guys. And Chuck is probably right that the US empire is sooner or later headed the way of Ninevah and Tyre, maybe sooner rather than later. (Though mainstream economists might not dispute that. Market fundamentalism is blind of national borders.) I am suspicious, however, of the idea that physical production of goods has a specially sacred status, even in terms of importance to real well-being. We need goods, yes, but no matter what economy we live in we need other things too. Including (no matter what economy we live in) accountancy, legal services, customer service, sales and/or distribution, maintenance, transport, communications, programming -- lots of things don't involve making physical stuff for people to use or consume.
The problem with Enron wasn't that it failed to efficiently produce goods but that it dishonestly and self-deceptively induced "the market" to vastly overvalue the goods (oil, gas, other energy, water) and services (bundling and trading various commodities) that it did produce or buy and sell, and then (on a truly breathtaking scale) lied about, covered up, and buried the losses it incurred. And, actually, the market caught up with Enron and cut short the giddy overvaluation in its usual destructive, brutal, and savage manner -- and then the legal system collared the worst crooks there. There were other Enrons like Worldcom, but while they were were big, some bigger than Enron, neither the market nor the legal system could tolerate all that many, and they didn't. There are probably some others lurking, but really the lesson of the rise and fall of Enron is that smoke and mirrors won't last and probably will put you in jail.
However, it's a very bad mistake to confuse deindustrialization, which is one problem, with smoke, mirrors, lies, and fraud, which is another. We may not be able to thrive on honest and properly valued production of services while offshoring manufacturing and farming (though it is an huge exaggeration to say we don't do a lot of both or that we won't be doing a lot of both for a long time), but if it's honest and properly values it's not going to come down like Enron -- even though there will be other Enrons that will come down. And it's also a mistake to think that physical production is the only kind that counts.
--- Chuck Grimes <cgrimes at rawbw.com> wrote:
>
> Also, I'm not sure I understand the distinction
> between productivity and
> efficiency. Isn't increasing efficiency just
> producing more goods and
> services per worker?
>
> Miles
> _______
>
> No. Efficiency is a measure of the rise in profit,
> and that turns out
> not be linked to labor or labor's commonly
> understood
> `productivity'. For example it is much more
> profitable to sell a piece
> of overpriced equipment than it is to employ guys
> like me who are paid
> half what the sales crew gets to either make or fix
> equipment in an
> existing client base. No matter how fast, skilled,
> and commonly
> understood efficient I am, I will never match the
> rate of
> profitability of employing one salesman. Therefore I
> am less
> efficient, and consequently I exhibit less
> productivity than the
> stupid twit, slime bag, scum sucking dog licking
> mother humper of a
> jerk who is my cohort in sales.
>
> This should provide some insight into the nature of
> the class war on
> labor. Direct labor, as in making something has the
> absolute lowest
> rate of return, is the least productive, and least
> efficient way to
> make money. That is exactly why capital hates labor.
> Capital's dream
> is to never see another guy like me, ever again.
> This is the whole
> secret to neoliberalism. It abolishes labor by
> farming it and its
> costs out to somewhere else and then passes the
> resulting product
> around fifteen loops of bullshit to make money at
> every turn. It is
> more productive and efficient to manage the
> marketing, flow, and
> distribution of finished goods than it is to
> manufacture them. That's
> why we don't do that dirty work anymore.
>
> So returning to the innovation and creativity
> question. About 80% of
> economic creativity and innovation is in designing
> business systems
> that depend less and less on labor and more and more
> on some form of
> business service, transaction, or make believe
> product, like a new
> twist on some existing contractual agreement.
>
> Take Enron as an example. They figured out ways to
> milk every state
> consumer of gas, oil, and electricity by just owning
> and therefore
> controlling the pipelines and wires in a critical
> hub of the power
> industry. There was no tangible product. They
> produced absolutely
> nothing. Yet they were enormously productive, highly
> efficient and
> therefore darling of Wall Street and all the new
> wave neoliberals.
>
> Another great example is the horseshit telecom
> industry. They get to
> charge me for an already existing telephone I have
> had for twenty
> years with all sorts of new `products' that all
> amount to clicking a
> mouse on some option on some screen on some computer
> in New
> Deli. Fucking nothing was `produced' and virtually
> nothing
> happened. Except now I get to pay more. That is a
> highly efficient and
> very productive industry.
>
> As for creativity and innovation in the more
> commonly understood
> meaning of these words, no. Capital does not creat.
> It buys low and
> sells high.
>
> Take the whole agribuz-pharma-med bio-science
> industrial complex. It
> must easily out distance anything the old
> nuclear-weapons-energy-military-hard science
> industrial complex of
> yore ever did. Pfizer, Novartis, Bayer, Monsanto,
> Duval, GE (medical
> division makes high end body imaging systems and
> scanners), or any of
> the giants don't bother with basic bio-science. They
> buy the people
> who did that kind of creative work in their publicly
> funded state
> university systems on federal grants. The industry
> pulls them in and
> chains them to the lab benches devoted to developing
> production methods
> on already existing product lines, like diabetes
> meds, where all the
> basic research has already been done at high public
> cost. Then when
> they find a niche, they send their lobbists to DC to
> make sure it is
> patentable, and therefore a `product' for which they
> own the sole
> rights to market the motherfucker. Short form. Drug
> companies don't
> invent drugs, they copyright them. This is a very
> hi-tech scam method
> of doing exactly the same thing---get rid of or
> transfer labor costs.
>
> So, taking all this into consideration, I'd say
> about sixty to seventy
> percent of the US economy is complete bullshit. It's
> made up of legal
> fictions, non-product products like Enron, and other
> frauds and
> produces nothing. This high end superstructure of
> nonsense lives off
> of the remaining twenty to thirty percent that does
> actually provide
> for the material needs of the country, but that
> infrastructure is
> slowly dying. And in an irony I have never
> understood, its most
> essential components like food, clothing, and
> shelter pay the worst
> wages of any labor sector in the entire economic
> spectrum. When and if
> all the smoke an mirrors collapse, the US will join
> the UK of the
> post-WWI era. A third rate and rather crummy place
> that lives off its
> glory days of a lost empire and the financial
> manipulations of its
> elites.
>
> I've tried to stay away from these rants because
> they really disturb
> me in the deepest sense of the word. I go nuts with
> rage at this
> bullshit. The economy is doing fine. It is just that
> we are living in
> a god damned nightmare, stumbling over the homeless
> in the streets,
> watching people we love die everyday, and instead
> spend our lives
> working at utterly useless jobs, pushing paper
> around and pretend to
> be producing something while adding absolutely
> nothing to the material
> benefit of the greater society. And this is the
> public good, because
> the economy is the public good. What's good for the
> economy is good
> for the country. Kiss my ass.
>
> CG
>
>
> ___________________________________
>
http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>
____________________________________________________________________________________ Finding fabulous fares is fun. Let Yahoo! FareChase search your favorite travel sites to find flight and hotel bargains. http://farechase.yahoo.com/promo-generic-14795097