From: michael perelman (michael@ecst.csuchico.edu)
Date: Sat May 31 2008 - 13:45:18 EDT
Also, monopolistic forces, such as intellectual property right, increase measured productivity. Jurriaan Bendien wrote: > That's a useful review. My own take on this which I aim to write up some > time is that Dumenil & Levy's empirical measurements of productivity, > based on a relationship between official data on inputs and outputs, can > be questioned conceptually. Once this is done, their notion of > productivity is undermined. > > Among other things, Marxist and non-Marxist economists often assume that > data on net output (or, roughly, the sum of factor incomes) measure the > value of new products produced, whereas net output only intends to > measure the new gross value added by production. > > It may be that if we deduct total intermediate consumption from total > gross output of production (the total turnover or total gross sales > revenue) defined in some suitable way, that we obtain an approximate > measure of the value of all the new products created together within an > accounting interval. > > But, if let's say a factory produces a car which sells at the factory > gate for $20,000, that $20,000 unit price does not simply represent the > value added or the factor incomes generated by the factory - it also > includes intermediate operating costs in building it. When you buy the > car, in other words, you do not just pay for the wage costs and gross > pretax profit income of the manufacturer implied in building the car, > but also the intermediate operating costs, including for all the > componentry purchased to make the car. In Marxist phraseology, the unit > price of the car is not V+S, but C+V+S. > > In the NIPAs, unlike UNSNA, intermediate consumption is not tabulated in > the derivation of gross output (as is the practice in UNSNA), but it is > shown in the input-output tables. Taking the (rounded) data for the year > 2004 as example, > > Gross output = $21,346 billion > less intermediate consumption (= $9,612 billion) > equals net output (or GDP) = $11,734 billion > > So in the NIPA's, total intermediate consumption (value of purchased > goods and services inputs used up in production) is about 45% of total > gross output (roughly, the total turnover). About half of total > intermediate consumption in the US consists of services. The largest > intermediate items by value are manufactured goods and > financial/business/professional services. > > Why is all this significant? For a number of reasons, of which I will > mention a few obvious ones. > > As said, the new value added by a sector does not equal to the sum of > unit prices of products actually sold by that sector; inputs and outputs > are valued at producer's prices. > > Secondly, the magnitude of intermediate consumption can fluctuate > semi-independently from the magnitude of net output. This can be easily > verified in the NIPAs since the statisticians in fact calculate how much > total inputs it takes to produce one dollar of output by sector. > > Thirdly, if the nature of throughput and output changes a lot, > qualitatively, across a couple decades, then it becomes difficult to > compare earlier and later financial data because it may refer to > completely different objects. If for example in 1980 the output of > phones was (say) $10 billion, and in 2008 the output of phones is $20 > million, how do we evaluate the increase in productivity since mobile > phones were only a niche market in 1980 and produced very differently? > > Fourthly, economic accounts provide no measures of physical productivity > - the market value of products produced may go up or down even although > the physical output keeps increasing strongly. > > Fifthly, as regards modern companies, the total revenue of the > enterprise may bear no relationship to the total unit prices of outputs > sold, because the enterprise has significant costs and revenues > completely unrelated to those outputs. > > The accounts are built up on the principles that for every selected > purchase there is a sale, for every selected expenditure there is an > income, for every selected asset there is a liability and so on. But as > regards capitalist production, more value comes out of it than goes into > it (otherwise there is little point in producing), and nearly half the > outputs of some enterprises are the inputs of other enterprises. The > account then tries to straddle the difference between capital > accumulated and total new product values with a bunch of distinctions > which aim to define and measure the net addition to wealth. This results > in the notion of value added, but this notion in reality does justice > neither to accumulated capital nor to the actual value of products > produced and sold, except that we can then estimate that for total > production, valued in some suitable way, there is an aggregate > standard price (=GDP) equal to the value of the total new products > produced and circulated in an accounting interval. > > In summary, I think the "fetish" people often fall victim to is that the > sectoral "net output" values cited in economic statistics represent the > sums of the "unit prices of products and services produced". On that > basis, we can of course devise all sorts of ways to measure productivity > by relating sectoral inputs and outputs, but, if in reality those inputs > and outputs merely describe a predefined subset of total costs and total > sales, we ought to be more skeptical of the productivity indicators > provided. > > I think that properly considered, Dumenil & Levy's conclusion ought to > be that although physical productivity increased strongly, the actual > income generated by that additional physical productivity was in no > proportion to the increase in physical output. That would be a more > Marxian conclusion: more and more commodities are produced, and more are > produced per worker, but their unit-values declined in real terms and > therefore the real incomes generated by them was not proportional to the > increase in physical output. But this is obviously difficult to test, if > we lack data on outputs of physical product units. This conclusion means > that productivity growth did not stagnate in labour terms or physical > terms, but that the longterm tendency was for output to be devalued in > real terms. > > Jurriaan > > > > > > ------------------------------------------------------------------------ > > _______________________________________________ > ope mailing list > ope@lists.csuchico.edu > https://lists.csuchico.edu/mailman/listinfo/ope -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 _______________________________________________ ope mailing list ope@lists.csuchico.edu https://lists.csuchico.edu/mailman/listinfo/ope
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