This is part of a series that reflects on the implications of what societies choose to equate with wealth.
You might think that productivity is a big deal in this country, what with the attention given to Gross Domestic Productivity, or GDP. A closer look of what our GDP truly represents refutes this notion. First, consider that the GDP is expressed in dollar amounts, confirming that something produced does not get considered for this indicator until it becomes something traded. Beyond this obvious sign that the GDP is really a measure for trade rather than productivity there are some further problems with the GDP as an indicator of what we produce.
What is produced in a black market or what is bartered among friends or neighbors would not come under the radar of the GDP. I introduce this first only as the least troubling or significant of factors. More troubling is that the GDP encompasses much of the shenanigans that occur in the financial sector. Want to gamble on your health (health insurance)? The GDP covers this bet. Want to pay extra interest to a loan shark (credit card company)? The GDP considers such “productivity” worthy of note. Want to produce capital without having to produce stuff (futures trading and a part of realty)? In our economy this is considered production of the finest caliber.
Not to pile it on our revered GDP, but there is a further problem that extends beyond what we measure to what gets valued. It would probably take a whole chapter to explain this fully, the way we are conditioned to think in our economic system, so instead I ask you to read this paragraph and reflect on it a bit before continuing. If productivity is wealth, then there is no way that CEOs make one thousand times the amount of the lowest rung of workers in a corporation. Elite stars and athletes would not be paid obscene amounts, nor would a single painting be worth over $100 million dollars. These values result from the nature of trade, not productivity. Control or hype of what can be produced can enhance the value of trade independently of the production value. Misinformation (other than hype) can fulfill this same function. The GDP makes no distinction between the inherent value of production and the added value from trade or misinformation.
A better indicator of productivity would be the number of patents/copyrights granted. We do not pay attention to this anywhere near as often as GDP, stock market indicators or even the standard of living indicator. If we did we would raise an eyebrow or two to what happened at the turn of the millenium. The amount of patents always increases. In science we say that every answer introduces 100 new questions. The same addage applies to inventions. For example the Human Genome Project, which decoded our DNA, opens the door to synthesizing thousands of proteins, each a patent waiting to happen. Except that the number of patents granted in a year went down for a few years in the new millennium. This used to happen at about the same frequency as the Cubs winning the World Series. Read Systems out of Balance for why this happened, for now let us consider a society where productivity is wealth.
In a society where productivity becomes an environmental condition driving behavior David Ricardo would theorize about the education advantages that advances civilization, rather than the comparative advantages that advances a global economy. Herbert Spencer would apply his survival of the fittest metaphor to entrepreneurs like Ben Franklin, rather than corporations. Milton Friedman would be distinguished by his empirical foundation for maximizing improvements to productivity, rather than profits. The Supreme Court would define individuals as, well, individuals. They would establish education as a fence to liberty, rather than contracts or property.
When productivity is the impetus for wealth in a society, rather than consumption, the boundaries of a civilization take a different shape. They may extend to increase productivity within the civilization, but hop-scotching across the globe to exploit other societies would be counterproductive. By this distinguishing characteristic we might reconsider whether the Han Dynasty was really an advanced civilization, rather than an empire after the European model.
When productivity is wealth neither hoarding nor indulgence become adaptive traits that drive the economy. What takes their place is the desire to specialize. A society that produces lots of one thing really well could be considered productive, but not in the same league as a society that produces a great many different things, even of lesser quality. What spurs a desire to specialize is necessity, the mother of invention. Given the great diversity and adaptability of human nature what is considered to be a necessity varies, with specialization and productivity driven accordingly.
The contracts that facilitate trade and the strengths that enable exploitive consumption are of no great advantage to the productive society. The liberty to be diverse and a system of education or information exchange that fuels this type of liberty are all that is needed. When productivity is wealth then an economic system serves merit rather than greed. This is the type of wealth I support, but there is one other possible alternative for wealth to consider. The fact that a misinformation network outright condemns this particular alternative, while merely distracting us from the merits of productivity, means this remaining alternative should be given some credence.
Tags: Free Market Merit
