Increasing worker productivity manifests as greater returns that predominately go to capital owners, not workers. That concentrated wealth in the hands of capital owners is wielded as power in the political, economic, and physical realms.
The "product" that the increased productivity buys is control over policy at whatever level of government, not more washing machines or tires.
Returns of what? I feel like this argument is leaving out words and skipping logical steps. Hamburgers are a product, cars are a product, cleaning services are a product. Wealth is not a product.
If you have a company and worker productivity goes up 200%, where does the product go? Wealth created selling that product may go to the owner, and carry power with it, but that doesn't answer the fundamental question. Where is the product?
> If you have a company and worker productivity goes up 200%, where does the product go?
In a mature industry, there is no new product, because all else equal, demand doesn't change. The company makes the same amount of product, but with fewer workers (aka layoffs).
Even in an industry serving growing demand, increase in worker productivity is not the cause of increase demand for product produced by that industry. Any growing enterprise knows it's first more important to focus on demand than increasing productivity, usually by hiring workers at the lowest cost possible. Otherwise, your competitor will serve your customers needs before you do. Premature optimization is a waste.
What increases demand for products is technological innovation plus a need/desire for more personal convenience, comfort, and time, coupled with the funds to purchase those in the hands of a growing population. Why have most companies have staked their future profits on the developing world's demand growth? Because the developing world has the desire for all of the above plus a growing population.
The question of where the new product goes has nothing to do with the question of worker productivity unless the workers have the funds to purchase those products. The product goes where the purchasing power is.
Capital's share of the return, however, goes into assets and as I described earlier, power. It doesn't go into purchasing any increase in product created.
>The question of where the new product goes has nothing to do with the question of worker productivity unless the workers have the funds to purchase those products. The product goes where the purchasing power is.
That is my exact question, who is purchasing the goods? we have high employment and have supposedly high productivity. We dont have massive national export surplus. You say capital isn't purchasing the goods, so what gives?
Where is the black hole that is consuming all of the goods, if the workers dont get them, the rich dont get them, and they aren't exported.
> Where is the black hole that is consuming all of the goods, if the workers dont get them, the rich dont get them, and they aren't exported.
Take new cars as an example. We are producing fewer of them [1], they are larger and more expensive, and they are mostly being sold to wealthier people. So yes in this case, capital owners (people more likely to have more wealth) are the ones purchasing the product.
Also, for a while we have been shifting towards a services based economy, so for a lot of this production growth, you won't see physical products. For example, you can't see the software IDE subscription I signed up for yesterday.
We also don't have a national export surplus because we import so many goods that are not worthwhile to manufacture here, while we export a ton of services, petroleum, and other raw extracted materials, all industries that scale with technology/capital/machinery and not labor.
This still seems to negate the point you made earlier that there are huge productivity gains and 100% of them have gone to shareholders. It doesn't seem realistic that they are using all of the new services. I feel like I'm repeating myself, so I think this is the last post.
> This still seems to negate the point you made earlier that there are huge productivity gains and 100% of them have gone to shareholders.
I didn't say 100%, I said most (re-read my comments upthread). Please don't misrepresent my words. I choose them carefully.
Greater productivity does not automatically equal a commensurate increase in products/services delivered, which seems to be the flawed assumption you are unable to get past.
Here is a concrete scenario to illustrate this.
A company makes 1M units of a product at a cost of $1/unit, and sells them for $1.50/unit. Profit/unit is $.50.
Productivity doubles, so the same million units can now be produced for $.50/unit. When sold for $1.50, profit is now $1/unit.
The $.50/unit increase in profit goes mostly to shareholders.
There are no new products, no new services.
In reality, demand varies over time, so product output varies with that, but the gains in profit mostly have gone to shareholders.
The only time they ever go to labor is when labor is in short supply or when labor organizes to demand a larger share.
The "product" that the increased productivity buys is control over policy at whatever level of government, not more washing machines or tires.