In the UK, both Teresa May, Prime Minister and Chancellor Philip Hammond have both recently made statements asserting the need for greater productivity from workers in order to increase their pay from this increased productivity. This proves quite conclusively that despite a university education neither of them understand the economic processes of the capitalist mode of production. They are not on their own. The call for productivity has become commonplace among European elite. As this desire is likely to be replicated almost everywhere among the global elite, it is well worth examining the concept of productivity further.

Productivity, in the economic sense is the rate at which products (commodities, materials and services) are created either as finished products (or as parts and raw materials destined to be used in the production and operation of finished products). The time it takes to produce something under the capitalist mode of production, is the socio-economic basis of its value. So making it quicker reduces it’s value but other factors being equal, this is compensated to some extent by the fact that there are more products to sell in a given period of time. Hence greater potential profits.

Mr Hammond in his autumn statement to the British Parliament (November 2016) gave the following example. ‘In Germany what took 4 days to complete took 5 days in the UK. In other words German workers were making things quicker than workers in the UK. As a consequence, the UK government wanted UK workers to at least match them or make things in an even shorter time. As noted, the elites alleged motive for desiring UK workers to work faster or more efficiently was so they would get increased wages and salaries.

The secondary (or perhaps primary) implication of this simplistic, not to mention confused, logic being that with increased wages and salaries workers will be able to buy more things or perhaps prevent themselves having to visit a food bank or losing their homes. However, as we shall see there is no direct economic link between what wages are paid (and therefore will buy) and how much is produced in a given time. What wages will purchase also depends upon the cost of living, not how quickly particular workers produce things. Over the last 30 years, productivity has undoubtedly risen everywhere in the advanced capitalist countries but, taken as a whole class, most ordinary working people (white collar and blue) are certainly not better off. Indeed, past increased productivity has had two important and serious effects upon peoples lives. The first has already been mentioned but let’s consider it further in the light of Philip Hammond’s comparison of British and German workers.

Post War productivity.

Car workers, for example, are producing far more cars per hour in 2016 than they were two or three decades ago, but in certain areas what their wages will buy has gone down. In many countries despite numerous ‘speedups‘ (productivity increases) in automobile production, whole factories have closed down and working communities have been devastated by unemployment and poverty – Detroit in the USA for example. In the UK the coal industry and coal mining communities were also destroyed despite incremental advances in mechanised mining productivity. This process of factory closures and community devastation (including small businesses) is a direct result of global productivity increases.

For under the urging of international investment capital, productivity had increased even faster elsewhere than the US, UK and Europe – Japan and Korea – for example, where wages were also far lower despite higher productivity. Under the capitalist mode of production, increases in productivity, spurred on by competition for profits, has for decades pitted workers in one country against workers in another country. It has been a downward race toward the lowest wages possible. As a consequence closure after closure occured as thousands upon thousands were pushed into benefit queues for state handouts, or to applications for charity or in many cases to homelessness and begging.

Even for those workers still producing automobiles in the 21st century, the price of the new cars they make means that fewer of them can afford to purchase one along with the anciliary costs (insurance, tax etc.) which are needed to operate them. Over the same period of 30 years, the general productivity of most US, UK and European workers has risen, even if not at the same rate as Germany. Nevertheless fewer and fewer of these workers are able to buy or rent a decent home. In many regions, of the UK, teachers, health workers, local government employees, fire-fighters, electricians, engineers, transport workers and factory workers, despite increases in productivity, are now living a precarious hand to mouth existence.

Productivity and redundancy.

It is very little different in the USA along with the rest of Europe and many other parts of the industrialised world for this process of relative and absolute impoverishment is a global phenomena. Increased productivity under the present capital dominated economic system is actually a means for employers and investors to gain more profits whilst workers work harder and steadily work each other out of a job. In other words productivity leads to redundancy. It represents a confidence trick played upon workers, when they are told by economists, business men (and women) and politicians, that their salvation lies in increased productivity. The opposite is the most probable and indeed the eventual case.

If the same number of workers through productivity increases can produce things faster, then by the same token fewer workers can produce the same number of things, and as already noted, this can (and has) led to large-scale unemployment in all the advanced countries. If these fewer workers then increase their productivity (and they have) then there becomes a downward economic spiral for workers and an upward economic spiral for those at the top of the economic pyramid. Which is exactly what we now have in Europe and North America. However, lower purchasing power, redundances and poverty are not the only negative effects of increased productivity.

It should be obvious that increased productivity produces more and more products which even if they are all sold, increase the need for more and more scarce raw materials to make them, create more spin-off manufacturing pollution and more problems of waste and rubbish disposal. Viewed without the rose-tinted spectacles of bourgeois pro-capitalist ‘experts’, the world is already producing too much too quickly.

The effects of increased industrial and agricultural production along with the commercial transportation of its results are already exhausting resources, polluting the air, the seas and destroying the ecological balance of the planet. Furthermore the tangible results of increased production, under the capitalist mode of production need to be sold at a profit or production will be halted either temporarily or permanently. This is another inter-related aspect of the capitalist economic process, which our political and scientific elite do not appear to understand.

Productivity and consumption.

Yet it should be obvious that production – under any socio-economic system – is ultimately dependent upon consumption. If what is produced is not consistently consumed, then sooner or later, there will be surplus production. Over time that surplus of products will either rot if it is organic, deteriorate if not protected from the elements if metallic, or would need to be stockpiled. Such a surplus would become an uneccessary economic burden if continued beyond a certain point. Capitalism is no different in this regard except that it routinely goes beyond that certain point and often dumps surplus things in the sea. A rational non-profit making socio-economic system would under such circumstances slow down production or declare longer holidays from production. At the very least it would orchestrate a reduction in productivity to avoid such a waste of resources, not increase productivity.

Capitalism cannot do this and the reason is simple. Production and consumption under capitalism is not based upon what is rationally needed, but upon what is profitable. What is rational for capitalists is usually not rational from a perspective of the interests of working humanity. The rationale of capital is to maximise surplus-value ie profits and interest. That is its driving motivational purpose for production and for increasing productivity. Although the value which becomes profit is created (as added value) during the process of production, is only realised when the products and services are sold. For this reason there has to be enough buyers to purchase enough of the products at a price which produces a profit.

When there are not sufficient buyers at these prices then production ceases either slowly (through short time working) or quickly (through closure or bankruptcy). Is it not obvious that if productivity is increased, then there has to be even more buyers with sufficient cash (or credit) to purchase these products at the profitable price? It is here we unveil yet another of the partially hidden (and little understood) contradictions within the capitalist mode of production – a crisis of relative over-production. It is not that more production is created than is needed by people (housing for example) but more production than can be sold at a profit. We have seen earlier, that past productivity has led to large-scale unemployment and therefore to less purchasing power for the goods which are streaming off the various production lines. Therefore further, productivity increases – under the present system – will only make the matters worse.

More goods chasing fewer buyers has already produced a crisis of relative over production. It was this which led over some decades in the 20th century to the financial crisis of 2008 and the current unstable condition of the economic and political structures of most of the capitalist dominated world. Decades of capitalist production had produced not only vast quantities of products and serious ecological, pollution and disposal problems, but also large quantities of surplus capital whose owners looked for further profit by investing in collatoralised debt. This particular speculative bubble eventually burst and triggered the above mentioned 2008 financial collapse. Incidentally there is bound to be another such collapse because investment greed is still creating numerous speculative bubbles. For these reasons, increased productivity under the capitalist mode of production, is the last thing working people and the other non-human planetary life forms need.

R. Ratcliffe ( November 2016)

This entry was posted in Anti-Capitalism, capitalism, Economics, neo-liberalism, Politics and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.