Political Econ of Growth. Paul A. Baran
“consumers’ sovereignty” treat as an unsurmountable obstacle, or as a manifestation of reprehensible arbitrariness, is wholly accessible to scientific inquiry and to rational judgment.
III
More complicated and quantitatively less easily encompassed is the identification of unproductive workers. As pointed out earlier, the mere distinction between productive and unproductive labor encounters a determined opposition on the part of bourgeois economics. From the experience of its own youth it knows this distinction to be a powerful tool of social critique, easily turned against the capitalist order itself. Attempting to do away with it altogether, it seeks to quench the entire issue by judging the productivity, essentiality, usefulness of any performance in terms of its ability to fetch a price in the market. In this way, indeed, all differences between various types of labor disappear—all except one: the magnitude of the remuneration that any given activity commands. As long as a performance rates any monetary reward, it is treated as useful and productive by definition.11
From the preceding discussion it should be clear, however, that market valuation cannot be considered a rational test for the appraisal of the “adequacy” or “efficiency” of a socioeconomic organization. Indeed, as stressed above, the acceptance of this test would involve circular reasoning: judging a given socioeconomic structure by a yardstick that itself represents an important aspect of that very socioeconomic structure. Thus what is productive and what is unproductive labor in a capitalist society cannot be decided by reference to the daily practice of capitalism. Here again, the decision has to be made concretely, from the standpoint of the requirements and potentialities of the historical process, in the light of objective reason.
Considered in this way a not insignificant part of the output of goods and services marketed and therefore accounted for in the national income statistics of capitalist countries represents unproductive labor. To be clear about it: all of it is altogether productive or useful within the framework of the capitalist order, indeed may be indispensable for its existence. And needless to say, the individuals engaged in this type of labor may be, and in most cases are, “upstanding citizens,” hardworking, conscientious men doing a day’s work for a day’s wage. Therefore their classification as “unproductive laborers” involves neither moral opprobrium nor any other stigmatization. As very frequently, men of good will may not only not achieve what they strive to achieve but may accomplish its very opposite if constrained to live and to work within a system the direction of movement of which is beyond their control.
As can be easily seen, the isolation and measurement of this unproductive share of a nation’s total economic effort cannot be undertaken by the application of a simple formula. Most generally speaking, it consists of all labor resulting in the output of goods and services the demand for which is attributable to the specific conditions and relationships of the capitalist system, and which would be absent in a rationally ordered society. Thus a good many of these unproductive workers are engaged in manufacturing armaments, luxury articles of all kinds, objects of conspicuous display and marks of social distinction. Others are government officials, members of the military establishment, clergymen, lawyers, tax evasion specialists, public relations experts, and so forth. Still further groups of unproductive workers are advertising agents, brokers, merchants, speculators, and the like. A particularly good example is given by Schumpeter—one of the very few contemporary economists who was not content to dwell on the level of “practical intelligence” but attempted to rise to some understanding of the historical process:
A considerable part of the total work done by lawyers goes into the struggle of business with the state and its organs … in socialist society there would be neither need nor room for this part of legal activity. The resulting saving is not satisfactorily measured by the fees of the lawyers who are thus engaged. That is inconsiderable. But not inconsiderable is the social loss from such unproductive employment of many of the best brains. Considering how terribly rare good brains are, their shifting to other employment might be of more than infinitesimal importance.12
What is crucial to remember is that unproductive labor as just defined is not directly related to the process of essential production and is maintained by a part of society’s economic surplus. This characteristic it shares, however, with another group of workers that would not fall under our definition of unproductive labor. Scientists, physicians, artists, teachers, and similarly occupied people live off the economic surplus but engage in labor the demand for which in a rationally ordered society, far from disappearing, would become multiplied and intensified to an unprecedented degree. Thus while it is perfectly appropriate from the standpoint of the measurement of the total surplus currently generated by society to include these workers in the class of individuals supported by the economic surplus, it would seem advisable to treat them separately if what is at issue is the assessment of the magnitude of the surplus potentially available for rational utilization. “Labor may be necessary without being productive.”13
This distinction becomes particularly useful when not only the possibilities of economic growth but also the transition from capitalism to socialism is considered. For what is defined above as unproductive labor is bound gradually to disappear as a socialist society advances in the direction of communism. In fact, certain classes of unproductive workers are immediately eliminated with the introduction of a planned economy, while others remain for considerable periods of time in systems transitional from capitalism to communism such as, for instance, the USSR. It may well be said that the degree to which unproductive labor in our definition has been abolished, and institutions such as the army, the church, and the like have been dispensed with, and the human and material resources thus freed have been directed to the advancement of human welfare, represents the most important single index of a socialist society’s progress towards communism.
The group of workers, on the other hand, that is supported by the economic surplus and that is not covered by our definition of unproductive labor expands greatly with the development of a socialist society. As Marx predicted, the part of the total product “… which is destined for the communal satisfaction of needs such as schools, health services, etc.… is … from the outset … considerably increased in comparison with present-day society and it increases in proportion as the new society develops … [while] the general costs of administration not belonging to production … will from the outset, be very considerably restricted in comparison with present-day society and it diminishes in proportion as the new society develops.”14 Thus the resources used for the maintenance of the individuals who draw on society’s economic surplus, but are not included in unproductive labor as I defined it, cannot be considered to represent a fund potentially available for purposes of economic growth.
Once more: regardless of the difficulties that may be encountered in attempting to gauge accurately the volume of unproductive work performed in a capitalist economy, in times of emergency the nature of this task is no less clear than the need for curtailment, if not elimination, of nonessential consumption. Unproductive workers are drafted into the army while productive workers are deferred. Labor exchanges try to move people from unproductive to productive employment. Rationing boards issue different ration cards to individuals in different occupations, with productive workers receiving preferential treatment.
Conceptually no more complex, although perhaps still more difficult to measure, is the third form in which potential economic surplus is hidden in the capitalist economy. The waste and irrationality in the productive organization that fall under this category can be observed in a great number of instances, and result in a reduction of output markedly below what could be obtained with the same input of human and material resources. There is first the existence (and continuous reproduction) of excess capacity unproductively absorbing a significant share of current investment. We do not refer here to manpower, plant, and equipment that are reduced to idleness in times of depressions. To that we shall come later. What we have in mind now is the physical capacity that remains unused even in years of prosperity, and not merely in declining but also in expanding industries.15
An investigation of excess capacity in the United States in 1925-1929 was made by the Brookings Institution.16 “Capacity” of an industry is there defined as the output which it would turn out with the length of the working day and