Productivity As Value

Economics has produced a number of theories on what is "valuable". Classic microeconomic theory claims that value is derived from "utility", or happiness. Marxist theory claims that value is derived from work & labour.

There hasn't been a unifying theory of value since JohnMaynardKeynes turned economics on its ear over 55 years ago with his book GeneralTheoryOfEmploymentInterestAndMoney, emphasising the symbol economy of money, credit, aggregate demand, and savings.

ProductivityAsValue is a proposition that has been put forth by a few economic observers, notably PeterDrucker, who has claimed that real value is gained through productivity, and that the enormous economic growth of the 20th century can be attributed to one thing: the application of knowledge to work, first formalized by FredrickWinslowTaylor, and later by the general PracticeOfManagement?. Technological change & capital investment are considered to be the most widely known "productivity boosters", but they're just specific instances of applying knowledge to work.

Some of the revival work in JosephSchumpeter's theory of innovation and PaulRomer?'s growth theory seems to point in this direction as well.

Huh? Are you saying, value = productivity?? Productivity, AFAIK is a quotient, unit of output (its value) per unit(s) of input(s) (its value). See CobbDouglasProductionFunction.

The thing that is not a quotient is called "production". It is measured by the value of that which is produced. Saying "value (of production) = production (of value)" doesn't buy you anything, you still have to say how you want to measure one or the other.

Am I getting you wrong? Please explain! -- FalkBruegmann

Let me see if I can better explain my understanding of it:

What does it mean for an economy to "help" society? In other words, what "value" does an economy provide? Classical economic theory argues the value is gained through cheaper products/services that promote increased utility & standards of living. Marxian economics argues that the value of an economic system is to provide equitable standards of living & employment for all.

ProductivityAsValue transcends the "utility & work" argument and says the value of an economy is to produce MORE stuff doing LESS work. It basically emphasises how important technology, innovation and "knowledge" are in an economy, vs just aggregate supply and demand. It claims the end-result of a successful economy is continued innovation, low prices, and more leisure time.

You'll have to forgive me if this all sounds incredibly naive, as I'm just a student of economics, but for some reason I think this idea has merit. -- StuCharlton

I didn't want to imply what you were saying sounded naive, sorry if I did, I just didn't understand it. BTW, I'm a student of economics myself, so I'll forgive you if you forgive me :-).

Thanks for your additional explanation; I thought you were saying "Productivity is the same as Value", while now I think you are saying "The value of the performance of a economy in a certain period stems from three things: 1. Production, 2. Leisure time, 3. an increase in technology, knowledge etc., which will lead to more production and leisure time in subsequent periods, i.e. an increase in productivity." Am I getting you right this time, or is this still way off? -- FalkBruegmann

Yup, you got it. I still have lots of thinking/reading to do about this theory, since there is no comprehensive analysis of it yet... it's sprinkled throughout Drucker's work since the 1940s, and especially in his essays during the early 1990s. Plus I want to read some of PaulRomer?'s work on technological change being endogenous to economic growth [which I've heard may gain him a NobelPrize some day]. My real interest in all of this is to understand some of the more leading-edge thought in economics & attempt to apply it to the Keynesian stuff I'm learning right now. -- StuCharlton