Is Being Less Productive Good for Humanity?
Horwitz, Steven, Freeman
It is not often that one comes across an article, especially one in arguably the most important newspaper in the country, that is so misguided across the board that one hardly knows where to begin in pointing out its errors. Unfortunately, such an article appears in the May 27 New York Times (tinyurl.com/7qfujg5). Tim Jackson's "Let's Be Less Productive" argues that the quest for more and more productivity and efficiency has led us to make any number of mistakes with respect to priorities and policies. Furthermore, he suggests that whatever good that productivity gains have provided in the past, there may be "natural limits" to those gains that will eventually lead to the end of growth. He concludes that we should ease back on the quest for greater productivity as a way to ensure sustainable growth.
Would being less productive really be good for humanity?
Jackson's problems begin with a profound misunderstanding of what economists mean by productivity and efficiency and the role that "output" plays in a market economy. His opening definition of productivity as "the amount of output delivered per hour of work" is perfectly serviceable. He also notes that it "is often viewed as the engine of progress in modern capitalist economies," which is also accurate, although it is not the only or necessarily the primary engine. The trouble starts in the next sentence: "Output is everything." Output for the sake of output is most certainly not what productivity is about. Producing what consumers want at the lowest cost possible is the goal.
Similar errors plague Jackson's discussion of efficiency. Here too he seems to think the point is to just do things faster, regardless of what the things are. He tries to show how silly that idea is by pointing to examples where doing things faster is strange, such as playing Beethoven's Ninth faster and faster each year, or trying to do detailed craftwork faster and faster. These examples, however, knock over a straw man. In the very first weeks of Economics 101, teachers introduce the concept of efficiency by emphasizing that it cannot be understood outside of the end that is being pursued. It cannot be "more efficient" to play Beethoven faster because that is not what people want. The same is true of craft work: People want the care and detail that go into such work, so it is not more "efficient" to get craft workers to work faster. It is inefficient given that what people want is a carefully produced, detailed piece of work (or to hear Beethoven's Ninth more or less as he wrote it).
Jackson then points out how crafts, music, and other service industries are desirable because they are not about the "outpouring of material stuff" and therefore might promote sustainability. What Jackson fails to recognize here is one of the fundamental truths of economic history: The reason cultural products and services are taking up such a large portion of economic activity is that we have become so very productive and efficient at making physical stuff.
Take agriculture. For most of human history, we have had to devote the overwhelming majority of human labor to just feeding ourselves. The incredible productivity growth of the agricultural sector has meant we can do that by employing, in the United States anyway, only about 2 percent of the population. At first the labor no longer needed there went into manufacturing to produce the physical stuff we wanted. Of course we then got incredibly productive at making physical stuff. People claim that the U.S. manufacturing sector is stagnating because there has been little job growth, but when you look at what it actually produces, you see that it is stronger than ever - precisely because it is so productive that it doesn't need more labor to make more stuff.
The combination of productivity gains, which produce higher wages, and declining costs of food and manufactured goods means that people have a great deal more disposable income. …