Productivity Analysis and System Coherence

Abstract

Productivity analyses have been undertaken by such a variety of specialists and in such differing contexts that few can cope with the broadly dispersed literature. It is not surprising, therefore, that the same problems are rediscovered time and again, that faulty concepts remain in use and that empirical findings are often misinterpreted. Such shortcomings will continue to hamper the development of this field until past advances are more effectively consolidated and the current frontiers more clearly delineated. In this paper, therefore, certain past findings will be used as points of departure for considering the problems and means of effecting further gains.

One comprehensive exploration of productivity analysis suggested four general conclusions, along with their analytical foundations, which seem to have withstood subsequent consideration well enough to serve as bases for this undertaking:

1. That productivity analysis serves a variety of purposes and hence requires a corresponding variety of appropriately designed measures:

2. That the productivity of any activity system should refer not to any single input-output ratio, but to an integrated network of such measures;

3. That the effects of productivity adjustments depend not only on their magnitudes, but also on the sources responsible for them, on the nature of the changes in input-output relationships involved, and on managerial choices among alternative means of harnessing their potential benefits;

4. That evaluating such effects requires supplementing physical with cost measures and then with successively broader criteria until these come to reflect the guiding objectives of the system under study.

Such conclusions imply that productivity adjustments may assume many forms, that apparent increases in productivity levels need not always be beneficial, that the very same pattern of productivity changes may have quite different effects in dissimilar circumstances and, finally, that productivity increases are not ends in themselves but merely one means of promoting more fundamental ends. Further development may seek to extend the original analysis beyond standardized commodity production to other economic activities, beyond a plant or firm to larger aggregates, and beyond short periods. But such elaborations of this framework require the strengthening of its conceptual foundations. Hence, it is to these that primary attention will be given.

Based on a paper presented to the Society, 23 September 1964.

Based on a paper presented to the Society, 23 September 1964.