Monday, June 20, 2011

Factoring productivity

OK, I've been lazy of late.

So, I've started doing a little research, I came across this little beauty an ONS report on 'Multi–factor productivity: estimates for 1970 to 2009' (if that title doesn't engorge your erogenous parts, no economic text book will).

Basically, Multi-factor productivity (or Total factor productivity) is the nearest empirical measure we have top the Marxist idea of 'the rate of profit' - it is a measure of the value added over labour and capital inputs (normal productivity is just measured against labour inputs).

So, if I told you that between 1995 and 2009 the MFP/ROP for the UK was 0.3% you'd have a clear idea that this is *not a good thing (for capitalists)*, it means, out of the trend overall growth rate of about 2% only a tiny fraction was true capital profit. Check out the relatively easy to read annex at the end, that compares Gross Value Added (GVA) and MFP.

It also explains why in the recent trends, we can see financial services performing so highly - people were chucking money into the financial casino because there just wasn't a proper industrial outlet (it also means that the current drops in output are actually genuine corrections for the inflated activity not justified by the real growth rate of the MFP/ROI.

The big Marxist question is what comes first, the crisis, or the fall in the ROP - clearly, as the report says, they seem to be related, and the collapse of ROP in essence is the crisis.

Labels: , , , ,


Post a Comment

<< Home