The productivity & growth illusion

Posted on September 18, 2016


Politicans, economists and several labour leaders keep telling us that we need more growth and greater productivity in order to claw our way out of the present economic crisis. At the same time there is increasing acknowledgement especially in the labour movement, of the job loss impact of the “Fourth Industrial Revolution”.

Among the latest to raise concerns about the rise of the robots and the loss of jobs is Association of Mineworkers and Construction Union president, Joseph Mathunjwa and finance minister Pravin Gordhan. But this is in the context of the generally uncriticised call for greater productivity and more economic growth.

Yet this seems a ridiculous position to hold, since the major cause of the ongoing crisis is over production and over capacity, caused by greater productivity and consequent economic growth. Because productivity is merely the measure of how much more product or profit is produced per worker.

The measure of economic growth also often reflects a country going deeper into debt since sales in the retail sector are part of the growth calculation. And when many such purchases are of imports, national indebtedness rises.

But there have been benefits of greater productivity and growth. However, they have flowed largely to a tiny minority of the world’s growing population. The rich, quite simply, have got richer, in the process creating an ever widening pool of often hungry and increasingly desperate and angry people.

Strongly policed and protected islands of affluence are starting to emerge in what is beginning to look like a spreading and turbulent sea of discarded humanity. Against this background, and often motivated from within the labour movement, have come calls to radically alter a political and economic system that seems bent on self destruction.

For many, it seems a case, as the exiled Russian revolutionary Leon Trotsky wrote in 1938, of capitalists “tobogganing towards disaster with their eyes closed”. But the eyes of those in charge of this increasingly destructive ride are closed only to any idea that there is an alternative to the economic vehicle they control and benefit from.

They are also aware that the capitalist toboggan has skirted the abyss several times in recent history, although they tend to downplay the trail of physical and ecological damage it has caused in the process. The historically fairly recently developed capitalist vehicle, based on competition and the accumulation of profit, has proved remarkably resilient, but at the cost of the lives, dignity and humanity of millions of men, women and children.

Those who sit astride this vehicle seems mesmerised by illusions of everlasting economic growth and greater productivity. And they have successfully persuaded — often by co-option — large segments of labour from attempting seriously to challenge the system.

This is done by claiming that, while there is no alternative, there are remedies: more regulation or less regulation. Less or more nationalisation or privatisation. But an increasingly cynical and angry public are no longer so accepting of these failed measures, so new remedies have to be proposed.

The latest, most carefully considered and well presented putative solution comes from Olivier Scalabre of the Boston Consultancy Group (BCG) one of the world’s leading business consultancy companies. To counter fears about the Fourth Industrial Revolution, he has announced the “Fourth Manufacturing Revolution”.

By using the latest technology, he points out that it will be possible — and possibly desirable — to decentralise. Using such technologies as 3D printing, manufacturing will be possible not only on a national or regional, but even local, level. It sounds seductive, being able to “bring home” manufacturing capacity previous outsourced to countries such as China, Bangladesh, Turkey or Vietnam.

But the problem is that the concept is again based on the illusion that greater productivity and economic growth will be to the benefit of all in a system incapable of ensuring this. Organised labour, in particular, must realise that the Scalabre proposal is just another measure that tries to deal with the symptoms and not the cause of our economic woes.