Monday, December 11, 2006

Productivity Myth

- Labour productivity in Canadian businesses fell by 0.1 per cent between July and September, slightly less than the 0.3 per cent decline posted in the second quarter.

Productivity -- the ratio of gross domestic product to the number of hours worked -- posted an average quarterly growth of 0.5 per cent in the United States in the first three quarters of 2006, while Canada’s average growth remained at zero.

In the last two quarters, production advanced at exactly the same pace (0.4 per cent), while the number of hours worked grew at a more robust rate than production, increasing by 0.7 per cent in the second quarter and 0.6 per cent in the third quarter.

Productivity is actually profit. It has nothing to do with real productivity. In fact it is the measurement of how much surplus value is produced by increasing the effort of workers, the time spent producing that surplus value (it has nothing to do with any other product or actual physical object). It's known as speed up when it is applied on the shop floor. When applied in reality its called running on the spot.

There is no way that workers can ever catch up with the profit needs of their bosses. Even with increased production and time spent on the job. So while the workers are productive, their time inceasing to produce, the companies they work for are not.

They divest themselves of the wealth produced by the workers and invest it in other ventures. As prices decline for products, the workers have to increase their time to produce more cheap goods to make up for the declining rate of profit made by the boss.

So why did Canadian workers work harder and longer yet productivity/profitability declined. Because Canadian Capitalists failed to reinvest their profits in technology, more workers, or capital upgrades to their facilities.



Basket Case Economy



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