By Mark Douglas Reiners, Guest Blogger
At the close of his Friday, May 4th 2012 weekly PBS/News Hour appearance, while discussing the important subject of structural economic challenges confronting this country, columnist/journalist, David Brooks, issued the following observation and challenging question: ". . . companies are doing a good job of producing stuff, they're just not using people to do it. Well who has an answer for that? I wish I knew."
Assuming that the generally laudably fair-minded Mr. Brooks meant this closing question to be more than merely a rhetorical nod of futility to the impossible, it is well past time that it be taken as seriously as it deserves to be taken. At the risk of inviting charges of economic heresy from the academy, I would like to answer Mr. Brooks' question not at all rhetorically, first by emphatically asserting that indeed there is "an answer for that"; the "who" I will get to shortly. But first, let me issue a prefatory note of alert: truly hearing the answer requires an ability and willingness to consider a theoretical perspective about capitalist/market economics which a.) asserts that our current econo-theoretical orthodoxy suffers from several deeply fundamental oversights in dire need of correction and, therefore, b.) falls outside the province of what is sanctified by inclusion in economic textbooks.
Tacitly embedded in Mr. Brooks' comment is clearly the prevailing labor-centric productivity presumption of conventional economic theory. Why is this important? Because associated with this presumption is the virtually blindly reflexive belief that there is no other viable mechanism for the mass distribution of income/wealth — and please note that I did not say 're-distribution' — other than labor. Wrong!
And while the conventional economic concept of productivity — labor-centrically defined, as generally obtains — is certainly not wrong, per se, there exists a little-known alternate characterization of economic production of profound importance in this context which beautifully illuminates why the presumption that only labor constitutes a viable mechanism for the mass distribution of wealth is wrong. And when coupled with the relatively modest financial and monetary institutional enhancements needed to operationally embody and effectuate it on a mass level, it has the most profound, promising and constructive social and economic implications. This alternate — or, more accurately, complementary — but conceptually quite distinct characterization of production is called productiveness. In lucid exposition based on the founding insights of the late Louis Kelso, here is how Syracuse University Professor, Robert Ashford distinguishes them:
"Productivity is the ratio of the output of all factors of production, divided by the input of one factor, most usually labor. In contrast, productiveness may be thought of as total work done by each factor. In relative terms, it can be expressed as the percentage of total output attributable to the productive input of each independent factor. (Emphasis added.)
"To explore the concept of productiveness and its relationship to productivity and growth, assume that in a pre-tool age, a person could dig a hole in four hours by hand. After the invention of a shovel, she can dig the same hole in one hour. In traditional economic terms, she has four times the productivity because she can perform four times as much work in the same time period. In binary economic terms, the productiveness has changed from 100% labor before the invention of the shovel, to 25% labor and 75% capital after the employment of the shovel. In terms of producing the hole, the worker contributes only one-fourth as much productive input, so her labor productiveness per hole has been reduced to only one-fourth of its former value. Seventy-five percent of the worker's former productiveness has been replaced by an equal amount of capital productiveness. Therefore, in this example, although capital may increase human productivity, more significantly, in binary terms, it replaces labor productiveness per unit of output." (Emphasis in the original.)
Reverting to Mr. Brooks' comment, since companies demonstrably are doing a remarkably good job of producing stuff, but increasingly able to do so sans people, the real and deeper structural challenge we face lies in the misguided resistance to recognizing this simple, subtle, but very powerful conceptual/theoretical distinction for the historic breakthrough that it is, and in having elevated an anachronistic and virtually theological adherence to the idea that only the single factor of labor is a legitimate means for the mass distribution of income/wealth to the level of the incontestably sacrosanct. That is not merely mistaken, but in a world of ever increasingly more sophisticated and productive technology, this oversight constitutes the very marrow of systemic risk.
Given that reality, the real question becomes why in the world we have chosen to conceive, design and operate a financial and economic system in a manner which ignores these insights, and perpetually reinforces a regime where the ownership of productive assets resides almost entirely in the hands of a tiny percentage of the population, rather than conceiving, and institutionally designing and operating a system where substantive, significant participation in the ownership of productive assets is universalized? And that is a question which completely transcends conventional political/economic labels of left and right.
The time is well past due for that transcendence to be embraced rather than trivialized, marginalized and ignored as has occurred now for over five decades; amounting to a de facto conspiracy of silence. With thanks to Mr. Brooks for asking the question, the answer lies in finally accepting that only a system predicated on the long-overdue recognition that income/wealth distribution needs to be universally binary in nature, and not — heresy of heresies — only about the singular factor embodied in "jobs, jobs, jobs", offers the prospect of being simultaneously systemically balanced, productively efficient and socially just, fundamentally.