POLITICAL ECONOMY - Productivity:of what and for whom?

Productivity: of what and for whom?

Musical chairs among the parliamentary cretins brought no change to the gabble around ‘productivity’. As Rudd’s Education Minister, Gillard had spelt out that her policy even for pre-schoolers was to drive up productivity. Abbott is going to refer industrial relations to the Productivity Commission while Rudd told the Press Club that productivity was more urgent than ever with the end of the mining boom. At the same time, the labour lieutenants of capital are spruiking up the Accord Process of capitulation as a route to the bosses’ paradise of productivity.

None of this carry-on is surprising since productivity is the bosses’ code word for profitability. The boss-class tries to make us believe that they want to improve productivity so that there will be more useful products in the world.

Scientific socialism

The drive for so-called productivity raises a central aspect of Marxism, namely, surplus value. Militants need to understand that key to capitalism if we are to push back the ideological and industrial offensive.


To win the battle of ideas in the current contest over productivity, we must grasp what Workchoices aimed to do for capital. The ALP and most unions ran the line that WorkChoices combined a nasty man with wrong thinking and a fondness for wage cuts.  Howard remains a nasty liar. However, his policy deforms were not a personality defect. Nor was he driven by bad ideas. Every social practice, of course, carries an ideological aspect. But neo-liberalism is more than a bad idea in the heads of nasty people. Like WorkChoices, neo-liberalism expresses the needs of capital. Those needs go beyond cutting wages.

WorkChoices was about the disciplining of labour-time. Capital buys our labour-power in units of labour-time. The productivity of capital is measured by how much value the boss-class can extract from each of those units.  Capital, therefore, drives up the rate of output per unit of labour-time. Managers do this through intensifying discipline over their wage-slaves who embody the capacity to add value.

Capitalists struggle to get rid of every obstacle to their freedom to have value added at any hour and under any condition. Even weak unions are a brake on the application of labour time. Hence, WorkChoices set out to abolish unions, not to tame them. Tort actions are taking up the attack.

Firms stand down workers without pay if there is a break in the production or circulation of surplus value. Bosses want to be free to call us in for random and broken shifts. That control over hours delivers a double advantage to capital. First, it pays for labour only when we wage-slaves are adding value. Secondly, the uncertainty of work hours bullies unorganised employees into doing whatever they are told for fear of not getting enough shifts to eke out a living. The bosses’ lie is that flexibility makes life easier for single mums.


On average, capital pays us in full for the socially necessary costs of reproducing our labour power. That is what bosses mean by a fair day’s pay. Of course, capital battles to keep all the value that is surplus to that amount. On top of enduring that exploitation, workers know only too well how much swindling goes on. In practice, the bosses do everything they can to pay below that socially necessary average. They will not pay super or penalty rates unless workers are organised enough to force them. Here is one of the reasons why Work Choices set out to disorganise working people.

Of course, each firm would rather pay no wages at all. GM wants to reduce wages by $200 a week. That cut does not guarantee that its factories will produce a single extra Commodore. Rather, the wage cut means that GM hopes to sustain the production of profit.

Capitals are not just involved in a race to the bottom on wages. There is no point in paying a dollar a day for one pair of shoes if a worker with a machine can make ten pairs in an hour. The low-wage factories, here and abroad, combine longer hours, more intense discipline and hazardous conditions. The Bangladeshi factory disaster was driven by deadlines for foreign orders. Deadlines indeed!

The rate of exploitation is not measured by wage scales. A highly skilled worker on $120,000 a year can produce more surplus value than a peasant trained to snap parts together. Hence, it is possible for the best rewarded employees to be more exploited than the worst paid.

Absolute surplus-value

Two ways to extend the length of the working day are unpaid overtime and abolishing smokos. Bosses are also notorious for owning clocks which run fast in the morning and slow in the afternoon. Women at call centers in the US of A are forced to wear diapers instead of going to the lavatory. Stepping up exploitation by a longer day has become more sophisticated now that mobiles, i-pads and home computers put workers on call 24/7.

Capital increases its take of surplus value by extending the number of hours we work. Its owners can benefit even if these extra hours are paid for at overtime rates. This is possible because equipment is not idle and so the overhead for each unit of output is lowered. Best of all for capital is unpaid overtime, and there is plenty of that.

The greater the value of the plant and equipment the more capital there is to be idle. Mining is a prime example, with twelve-hour shifts. Lighting and computer-controlled machinery allow the corporates to operate the open-cuts around the clock.

Relative surplus value

At the same time, capital tries to extract more surplus value during the standard hours. Its agents do this through piece-rates, speed-ups, and bullying. 

Occupational health and safety fall victim to productivity drives. Through speed-ups, capital passes the cost onto the worker through injury and death. The law backs them up. As Marx puts it: killing is not murder when done for profit. One proof of his insight is in the youngsters killed installing pink bats. Year in and year out, supermarket chains drive truckies to drugs and death to meet delivery schedules.

The capitalists also install machines to extract more surplus value. As Marx says, they introduce technical improvements only if an  investment promises to keep up the rate of exploitation. The bosses favour innovation only when it protects profit. Labourers with picks and shovels can produce as much surplus-value as the driver of a front-end loaders if the navvies’ wages per hour are low enough. That happened during the 1930s depression.


Profit-taking is not an end in itself, just as exploitation is but one step towards the expansion of capital. ‘Accumulate! Accumulate!’ Marx writes. ‘That is Moses and the Prophets.’

Marx explains how money-capital goes into the production of commodities, which must be sold to secure a greater sum of money-capital to re-invest. The most important element in these new commodities is that they carry more value than went into their production. Almost all of that extra comes from our labour.

Excess capacity

Each capital strives to get a bigger share of its market. To do so, it produces more units to sell at a lower price per item. Each commodity therefore carries less surplus value. That smaller portion means less potential for profit-taking out of each sale. To make up for that shrinkage, each firm tries to sell a larger number of units. The result is overproduction. Hence, capitalism is inherently wasteful.  Indeed, the more goods that the system produces the more inefficient it becomes.

Workers are the largest group of potential buyers but, because of exploitation, we cannot afford to buy all that we produce. After the 1940s, capital bridged that gap by hire-purchase and credit cards. The current economic implosion was delayed by pushing up debt levels among working people. The sub-prime crisis in the US of A was the froth on a tsunami of mass marketing. The so-called Global Financial Crisis (GFC) remains a crisis of over-production.

Before the 2007 crash, the capacity to make autos in North America was greater than the effective demand of the entire world. The closure of Ford is one more backwash from that excess capacity. Crises from over-production lead to the destruction of physical capital. With that loss comes the destruction of people’s lives.


Productive and unproductive are scientific terms. To say that some kinds of labour are unproductive is not a moral judgement. For capital, ‘productive’ means labour that is productive of surplus value. Take the example of an operative painter. When she goes to her paid work, she sells her capacity to add value to capital. Its agents make sure that they extract as much surplus-value from her labour-power as they can. They discipline her labour at work to produce as much surplus-value as possible.

Now contrast that situation with one where she repaints her own house. She uses the same skills as she does at paid work, but she produces no surplus-value. Why not? Because she has not sold her labour-power to capital. According to the needs of capital, her labour at home is unproductive. At work, she produces a use value and an exchange value. At home, she produces only use values.

Service sector

We often hear that the service sector has displaced manufacturing. White- and pink-collar jobs for public servants, bank clerks, nurses, teachers, shop assistants and barristas are the future. It is truer to say that many service workers have moved from what capital sees as unproductive to productive labour. A hundred years ago, Australia had 150,000 domestic servants. They were known as ‘slavies’, on call round the clock with perhaps one day off a month. Nonetheless, they were unproductive. None of them added surplus value. Rather, they were paid out of the surplus value produced elsewhere.

What has changed is that most service workers now produce surplus value. In 1913, domestics worked for an allowance and their keep in return for putting a roast chicken on the dinner table. In 2013, people sell their labour-power to KFC to put chicken nuggets into take-away cartons. They service capital, not households. Putting less labour-time into each meal is the spice in capital’s finger-lickin’ recipe for profit.

Service quality

To boost labour productivity, capital has to measure output which is difficult for the service sector. Human services have a twofold character: one is quantitative while the other is qualitative. Take the example of a library. Some of its tasks are like routine process work, for example, the restacking of books. Here, it is possible to set targets as a manager would do on an assembly line. However, libraries have a second function. Some users seek help to understand what a resource offers them. These inquiries can take two minutes - or two hours. The call for quality overtakes the drive for quantity.

That rule applies more broadly. For instance, it is madness to say that placing a stent into an artery should take forty-seven minutes and not one second more. Similar complications arise for teachers. Each child has individual needs but providing that level of attention is costly. Budget-cutting governments, therefore, drive schools into rote learning and standardised NAPLAN tests which are no more than serial child abuse.  Education is reverting to instruction with undermines inventiveness in adulthood.

Self-servicing capital

Capital shifts costs onto customers by making us pay with our time. We see that tactic in supermarkets with self-checkouts, while banks have ATMs and on-line transactions. Or we are made to queue for longer because Coles and Westpac employ fewer staff.

As a result, customers have become casual employees who provide our time for free to replace the counter staff. We are told how convenient the new arrangements are for us as customers. We are not told how much of our time we give to the corporates as unpaid labour.  Self-service thereby boosts productivity as profit. Banks take their billions from interest rates, fees and from sending work off-shore. They also make money through treating us  as unpaid hands.

Practical theory

Communists show why capital is driven to boost its rate of exploitation. Marx’s account of exploitation applies in every workplace. Nonetheless, exactly how surplus value is extracted and circulates is peculiar to each moment and location. Militants enrich Marx’s scientific discoveries by investigating how surplus value is produced in millions of situations.

Communists work out ways to relate the truth about productivity to hour-by-hour issues around the job. Hence, our twin tasks are to study science while attending to everyday conflicts in each workplace. We learn from our collective study and from shared experience. Organising becomes an education for militants as much as for the rank-and-file in a living unity of theory and practice.

One task is to discover how the buzzword ‘productivity’ strikes other workers. Some will already see through it as propaganda for more exploitation. Militants can spread those insights. Among some of the rank-and-file, however, there will be uncertainty. They might see positive features in the rhetoric. ‘Shouldn’t we all contribute?’, they’ll wonder. Yes, our class does while the bosses are forever on the take, and give only when forced to do so.


Confusion about the substance of ‘productivity’ exists on both sides of the class divide. Because the boss-class dare not own up to the fact that the expansion of capital depends on exploitation, they fall victim to their own propaganda.

The agents of capital are no longer game to admit the truth even among themselves. Before the 1820s, bourgeois political economists - Adam Smith and David Ricardo - owned up to exploitation. Once the workers got organised, the promoters of capital had to mask that truth. Yet bourgeois economists still had to advise capitalists on how to expand. The experts marginalised production to focus on consumption.

Smith and Ricardo accepted that workers added all the value. The current crop  of apologists claim that value is decided by consumer preference. They reject the law of value in favour of their so-called law of supply and demand. They deny that prices are determined around the value of the labour power that goes into commodities. One side-effect is that they believe that selling shares to the greater fool is productive of value.

Market value

When capitalists are not rabbiting on about ‘productivity’, they babble about ‘adding value’. They run the one into the other. For hundreds of years, accountants have grappled with how to put a monetary value on businesses. The basic rule is to deduct liabilities from assets. But what counts as an asset? Should auditors accept goodwill and brand recognition? If so, how do accountants put a number of those intangibles? One answer has been to run away from such complications. Nowadays, accountants are paid to accept whatever the stock-market says.

In 2008, the media reported that billions had been wiped out on the stock market. Those billions never existed. They were one form of fictitious capital. Such fantasy figures are concocted by multiplying the price of the last shares traded  by the total number of shares. The result is a skyscraper of cards. The ‘value added’ was of value only to speculators.

No sector in recent capitalism has been more innovative than finance. Yet, the world’s most successful investor, Warren Buffett, refused to buy into derivatives or collateralised debt obligations because he could not understand them. The crash of 2007-8 showed that traders did not understand them either. What they did understand was they had invented new ways to grab  money without going through the tiresome and risky business of making and selling commodities. Most of these financial instruments are parasitical on the capitalists who do so.

And so are all rent-takers. Rinehart is the perfect example. She does not exploit mine-workers directly. Instead, she lives off the rents that RTZ pays her for leases inherited from her father. She is utterly unproductive in the worst sense.

The only way to add value is through exploitation onto expansion. First, capital has to exploit labour to extract surplus-value; secondly, capital has to sell the goods and services we supply so that as much surplus value as possible can be realised as profit; thirdly, capital has to invest at least some of that profit in extra resources. Only then can capital go on to extract ever more surplus value . And so on …. until the next crisis.

Producing barbarism

Under capitalism, even the most destructive enterprises are deemed productive so long as they add surplus value. Wars and drugs are prime examples.

It is easy to see how war is productive of profit for individual corporations from Haliburton to Boeing. But war can also be productive for the whole capitalist system. The biggest example is how military expenditures kicked the US out of its1930s deflationary cycle.

Drugs also benefit individuals and the system. Western imperialists used opium in the nineteenth century as a weapon against the Chinese people. The drug trade is productive of profit with cocaine and heroin just other commodities for capital. In addition, more drug money went through the banks in 2008 than came from stimulus packages. Thus, money laundering rode to the rescue of the financial system upon which the entire system depends for flows of money-capital and credit.

Producing communism

Within capitalism, unproductive labour is morally superior to productive labour since the latter is grounded on exploitation. Under communism, all labour will become unproductive in that sense since there will no longer be exploitation.

Communists raise tough questions about productivity: what kind of society is produced? We draw a line between what is productive under the rule of capital and what should be produced to serve the needs of working people. For capital, productivity means the addition of surplus value. Workers struggle to produce a world without the want, the war and the waste that capitalism over-produces.

Boosting ‘productivity’ under capitalism has landed the world with a super-abundance of material goods. Their over-production plunders the wealth of nature, leaving mountains of garbage and oceans polluted with islands of plastic waste. The expansion of capital produces the destructiveness of war.

Surplus value comes from the collective efforts of working people everywhere. Hence, no individual is responsible for all of the value that he or she adds. Even a lone craftsperson depends on workers in transport and power supply. Under socialism, all workers will be paid the full cost of reproducing our labour power. Some of that reward will come to us as money-wages. The closer we move towards communism, the more of our needs will be supplied as social goods such as free public transport, education, health and housing.

When communists speak of boosting productivity, we hold to a vision about the kind of society that we can build together. Our collective efforts promise to enrich individual creativity, protect the wealth of nature and meet collective needs. Engels explained the part played by labour in the transition from ape to man. Putting the highest social value onto the productivity of social labour will make us more human.

The following is background

The Productivity Commission

Abbott has pledged not to bring back WorkChoices. There is little need to since the ALP kept most of it. After 2007, the ALP delivered Work Choices Lite as un-Fair Work Australia. The Building and Construction Commission continues in fact if not in name.   

Anyway, the boss class has plenty of other laws to use against us. Grocon is leading the charge with an action for damages (torts). The aim is to terrorise unions into doing nothing. The ones that do stick up for their members will face bankruptcy.

Meanwhile, instead of full-blown WorkChoices, Abbott will refer industrial relations to the Productivity Commission which is stuffed with neo-liberals. Even when its 200 staff do first-rate research, the Commissioners rewrite the evidence to prove that the market always knows best. Abbott’s call for independent expert advice is therefore a fraud. The recommendations are a foregone conclusion. The Commissioners never deviate in thought from what the Business Council struggles to enforce in practice.

Even the name of the Productivity Commission is a blind. The organisation had its origins in the Tariff Board. When Whitlam slashed tariffs by 25 percent in 1973, he replaced the Board with an Industries Assistance Commission. That body soon became known as the Industries ‘Destruction’ Commission when it removed protection. In 1998, Howard rebadged the Commission with ‘Productivity’.

See also: Marxism


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