--- Tahir Wood <twood at uwc.ac.za> wrote:
> chain. But to say
> that there is no meaningful distinction has some
> pretty weird
> implications for non-capitalists. It means, for
> example, that a fortune
> teller's one hour of labour is equally productive to
> that of an engineer
> or a bicklayer or a train driver. Yes I do think
> that trapnsporting
> workers to and from work is productive; I don't
> think that selling
> insurance is ultimately productive. The fact that we
[WS:] While the above makes sense in principle, what are the operational criteria for distinguishing productive from unproductive labor? It seems that it is emotive factors - if the writer likes an occupation (e.g. factory worker or an engineer), it is "productive", if he/she does not (e.g. insurance or used car dealer) - it is "unproductive."
I think that a better way of conceptualizing this subject is transaction cost approach. Transaction costs are "unproductive" in the sense of being a drain on the productive capacity, but yet they are necessary to carry the production. For example, you have to have legal arrangements (transaction cost) to carry out production by free market agents e.g. to secure contracts and enforce them. Therefore, legal cost are productive in the sense of making production under certain institutionsl arrangements possible.
However, a different instituional arrangement (e.g. vertically and horizintally integrated organizations, aka cartels, keiratsu, or centrally planned economies) may not involve contracts between independent parties, and thus legal costs of contracting are not a part of its transaction costs. Everything else being equal, a vertically and horizontally integrated instituion offers lower transaction costs than free market, and thus it is more productive or efficient than free market.
With that in mind, three observations are in order:
1. Whether an activity is productive or unproductive depends solely on the institutional system in which it takes place. What is productive under free market may be unproductive under a cartel-like arrangement. It thus folows hat a better approach is talk about productivity or efficiency of the institutional systems of production rather than individual activities.
2. However, different systems may involve very different types of transaction costs. Cartels may eliminate transaction costs of contract procurement and maintenance, but they may incur other types of transaction costs e.g. that of administrative superstructure. Therefore, to compare productivty or efficiency of institutional systems of systems of production, it is necesary to take ALL transaction costs into account.
3. Taking all ttransaction costs into account is very difficult, if at all possible, because different systems have different capacity of externalizing (i.e. dumping outside the system) its transaction costs. A classical example is waste and environmental pollution, which capitalist countries like the US can externalize in different ways, e.g. by exporting its waste to poofr countries or by ignoring the poluution and its social and environemental effects, that is, dumpring that cost on the general public. Furtehrmore, every institutional system creates a cognitive framework that helps to conceal at least some of its transaction costs from public scrutiny.
To me the above aproach makes more sense, concpetually and operationally, than the vulgar marxist infatuation with manufacturing over services.
Wojtek
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