I know that is the traditional Marxist (and perhaps even classic liberal) notion of unproductive labor. It would be quit easy to use existing occupational employment data and its probably already been done. Since goods production employment has shrunk world-wide as a share of total employment (only 200 million manufacturing workers, for example, half in China), it might be worthwhile to sort out productive v. unproductive service employment (such as health care and education v. financial and similar "services". Perhaps that's been done, too, but I haven't seen it.

Yes, I include that in the definition above. I'd lump occupations like physicians and educators in with productive labor since they add value to the commodity of labor...but then they dont always eg: cosmetic surgeons, and those who teach substandard or obsolete material. Considering these types of exceptions to what is rigidly defined as productive labor it seems very difficult to calculate the mass of productive labor. Does anyone know if anyone was able to operationalize this question and provide data?

I think there is an inherent problem with defining labour as productive/unproductive, purely on a philosophical/political basis. There is the issue of how people perceive what they are doing, i.e. some things can be seen as work for some, leisure for others and so on. There has been a big push to measure "social value" in terms of work of late and this can add an interesting perspective to this debate. I have attached a nice piece of work undertaken by the new economics foundation a couple of years ago, that attempts to measure social value in economic terms.

I understand what you mean about social value. But what I want to know is strictly according to the rigid rules of capitalism. Just the naked mechanics. Surely from a philosophical perspective this question gets muddled even further. I'm trying to limit this question solely on the reproduction of capital. I'm looking at the question in this way because markets dont care about the social values that come into play. All the market wants is profit...and since we are at the mercy of the market I have to look at it in this way if I want to know where we're headed. If we conclude that the majority of jobs in a given country are distributive of capital and not productive of capital it would seem to me that a day of reckoning would eventually culminate since this would result in running up a deficit and the market is unforgiving. I see great social value in jobs like social workers, waitresses, public servants, garbage men, etc. But when we look at these jobs in aggregate on the state level, if their function is based on the exchange of allready existing value then it would seem the more this portion of labor increases the less productive our countries would be. I'm not an economics buff or anything...I'm just trying to wrap my head around it. We see what has happened recently within the finance sectors where the production process appears to be circumvented completely and we've been feeling the impact. It seems that the further we get from tangible commodity exchange the deeper we're digging our own holes....

Hello Jason, thank you for your great subject on which I was thinking today too. On Facebook a coach wrote that at the moment lots of coaches and speakers are trained in Germany. That rose your question in me. Don't we need more "productive" people and less service? Of course, first it is important to define which job is productive and which is additional service. But thinking about it I find it difficult to differentiate. A doctor might on the one hand operate if he is a surgeon, but on the other hand he might consult his patients on how to get on with their life after the operation. Or another example: What are the jobs of a psychologist? If they hold seminars or coachings in stress management or work with burn out employees are the psychologists productive? Or do traffic psychologists who do behavioural course to people who had (a) drug or alcohol offence(s) which are part of German law productive work?

Sorry Jason that I don't have an answer for you, but it seems to me you first have to find the separation of the two before you can start to order the kind of modern tasks. When you finished that your next step would be to find a formular to calculate the productivity of each task. I think you will have to create a lot of assumptions to fix all the task into a mask before you will be able to calculate that. Then you will have to compare countries... And so on.

Dear Jason,

I would lump occupations like physicians and educators in with productive labor since they add price to the artifact of labor. Considering these sorts of exceptions to what's stiffly outlined as productive labor it appears terribly troublesome to calculate the mass of productive labor. Since merchandise production employment has contracted world-wide as a share of total employment, it would be worthy to planned out productive v. unproductive service employment (such as health care and education v. money and similar "services. thought economists and different social scientists purpose to bigger trade relaxation, lower union membership, smaller government, bigger gross domestic product growth, a bigger presence of the money services trade within the economy, and lower marginal tax rates on higher financial gain households as creating important contributions to growing financial gain difference and bigger financial gain shares for those at the highest of the financial gain scale within the us. to boot, some mention that gains to higher financial gain households are created potential by a growing pay gap between sure-handed and unskilled or educated versus less educated staff, within which higher financial gain households ar created up disproportionately of faculty educated and extremely trained people.".

Jason, how far do you want to peel the onion in defining “productive labor”? Each definition requires a set of assumptions about what activity adds value and what doesn’t.

The choice, of course, depends on your objective, e.g., practical, national policy guidance tool; as distinct from long term system sustainability evaluation. For instance, choosing “jobs” as your unit of analysis may be more useful for policy guidance, but misses value created outside of standard employment, e.g., entrepreneurship, personal invention, parenting, mentoring, etc. Yet the non-job activities, which are large and growing, hugely contribute (both positively and negatively) to societal well-being.

The metric for evaluating productivity is a crucial choice, and a very difficult one, at that.

Consider, for instance, a “distributive” financial sector job that may be labeled “un-productive labor”. Say it’s a small business loan origination activity within a bank. If the bank employees involved are evaluating the credit-worthiness of a loan applicant, then their decision to lend potentially enables value in the proposed project to be created (new jobs, purchases, building, etc.) or to be destroyed through failure of the enterprise and default. Isn’t that financial sector, banking job then productive in itself?

On the other hand, take an agri-business farmer who produces zillions of bushels of corn. That’s unquestionably a “productive” job, right? Well, it really depends on what measure you use. If you are just tallying “jobs” then clearly yes. But if you go to a deeper level in assessing what value is added by this activity, you may have a different assessment, even one of large value destruction as related to long term sustainability.

Take the high fructose corn syrup produced by such farmers. It is recognized increasingly as contributing to big health problems and costs from obesity, diabetes and cardiovascular disease. Considering the farm subsidies, healthcare burden, water depletion, energy-intensive methods, pesticide build-ups, how does one assess the “productivity” of agri-business farmers? And how do they contribute to long term sustainability? They may or may not contribute favorably.

I think your intention to separate productive and un-productive jobs is important -- though really tough -- to do! More power to you. I’ll be glad to help if I can.

There are two questions here to discuss: there's a question of fact, on USA reality of productive and unproductive jobs, that I am afraid I am not able to answer, for I do not know the elements, and a theoretic question, on the concept of productive and unproductive job,. This one we can discuss. Marxist understanding leaves its roots in classical Economics - we can see, e. g., in Adam Smith a similar concept of productive and unproductive job -. There's a book in Portuguese, written by Prof Vinicius Moreira de Lima. I've made a comment on it: . Now, these concepts, with development of an information society, must be rethinked. Many Economists thought Hummanities were not a useful knowledge. Now, knowing History and Geography, even of underdeveloped people, may be the difference between success or fail in the market battlefield.

Hello Jason, I have read somewhere, that everything we need can be produced by about 25-percent of the workforce. For example, less than 5-percent of Americans still live on farms, but they still produce a surplus of food for the other 95-percent. Although, obviously the US both exports and imports food. And that 5-percent does not include the many US workers involved in food manufacturing.

So you could say that 75-percent of us are either redundant or involved in what you define as unproductive labor. However, what appears unproductive to you might serve a vital purpose. You mentioned banking. There are no prosperous, wealthy countries in the world that do not have strong, stable banks. But there are many poor countries with widespread poverty where there are no banks or banks are very weak and unstable.

Links:

http://www.politicsol.com/resources/agriculture-farming-facts-population-percentage.html

http://www.careercornerstone.org/industries/foodmanu.htm

Hey, William: I've given some thought to automation also. You're right the family farm has been squeezed out by huge agri-corps. The gov. subsidies that these corps. have at their disposal as well as their access to capital dwarfed that of the humble family farm. But that leaves some 5% to produce in this sector. The other 95% are expelled to some other job. But all productive jobs are affected by this shrinking of the labor force eg: technological dynamism, increased efficiency, automation, centralization of capital, etc. And I think you're right about the idea that all our needs can be produced by 25% of the people..but then there is the production of needs themselves. Most of what we "need" today we didnt need in the past. It seems we're increasingly engaged in the production of needs themselves.

Hey Jason. Here is an article I think synthesizes the direction you're trying to head toward.

http://www.nytimes.com/2012/07/22/business/what-happened-to-the-craftsmanship-spirit-essay.html?pagewanted=1&_r=2&ref=homedepotinc

I have taught in a finance class that we can narrow the focus to three items of need though; food, clothing, and shelter. I think healthcare and the associated services like surgery and products like some pharmaceuticals could be made a fourth leg, but I think these four provide the basic needs other than our need to be in relationships with others. For the relationships, I do not think we need anything of a tangible productive item.

I agree with what many of the folks explained about regarding theoretical relativity, including the examples supporting banking. However, I think we can simplify the discussion to the aforementioned staples of need.

The discussion could perhaps be simplified by focusing in basic needs, but I am facing a problem identified by Werner Sombart on the relativity in characterizing a need as basic, for even food can be seen in, at least, two points of view: the need of eliminating hunger and the need of tasting (everybody knows that caviar is to be eaten, but it is seen as a luxury good, not essencial). And many of the great navigations had as motivation luxury goods. The great question could be then, as Prof Jason proposed - and I ask him to correct me if I am wrong - "what kind of work adds value?". And even in the "naked mechanics of capitalism", there is a problem that has been not solved: "what is the real source of value?"

First of all, it is probably worthwhile to think of most all jobs adding some kind of value. Whether distribution or storage of hard goods, distribution of services, financial or non-financial. Without the distribution, the "product" whatever it may be, would have no value, as it would not ultimately transact in the marketplace. The long-term evolution of the U.S. economy from manufacturing to a service oriented ecnonomy is a complex issue involving everything from exchange rates, relative labor costs, comparitive international pollution laws and enforcement, and of course, the impact of re-priced worldwide digital communication since the internet-bubble burst at the end of the '90s.

Second, referring to "at first glance", I would highly recommend reading Nobel Laureate Daniel Kahnemen's "Thinking, Fast and Slow" before drawing any conclusions from "first glances". Vis-a-vis employment on a macro basis, I would recommend looking at Gallup's latest calculations to measure actual employment, involving % of working age population to total population.

http://thechairmansblog.gallup.com/2012/09/the-right-global-employment-metric.html

@Frank: thanks for the links, I will check them out. I share the idea that distributive jobs play a market role in our economy. I do however question to what degree the workforce can be composed of distributive rather than productive labor. At the national scale it seems that tilting too much in distribution would seem unsustainable...sort of how GM went from a company that made cars and offered credit to a credit company that offers a few cars. I cant help but notice this shift all around me. Do you know what I mean? Something tells me that the more abstract we become, the more intangible, the more creative accounting practices we employ, and the less actual production of commodities is dangerous in the long term while being extremely profitable in the short term. It seems to flow from the practice of 'creating value' while skipping the production process, this seems to lead to market speculation, the formation of bubbles and crisis at increasing intervals. But then we can make the argument that with increased efficiencies in the sphere of production and automation that these folks have to go somewhere...hence the service "industry". And since traditional production jobs are ever decreasing as a result of this efficiency that more folks have to find work somewhere in the service sector.

I like Frank's comments as well as Ricardo's, but I think Jason brings us back to a history lesson. I believe hedonism may be a good concept to bring into the conversation. I think the distribution of information accelerates opportunities for profit and growth. However, I think Jason is right on point. The latest valuable item will eventually run out of steam, or be replaced by another latest and greatest. I've heard this concept referred to as the "throw away" society. I think our current paradigm of production goes hand-in-hand, and we heard perhaps the first logic from our politicians in many years when they expressed the simple matter of arithmetic. Like Jason said, I do not think the numbers can continue to add up.

I once heard retired architect mention that Winston Churchill called capitalism "opportunity monetized". If we take that one layer deeper, I think we can look at capital gains or dividend distributions. Either way, I believe we are talking about pure profit, regardless of the nature of the product. Again, I agree with Jason that there is a limit; I believe there are only so many third-world nations we can tap to build our ever increasingly creative ways to produce "goods" and services like overseas call centers and manufacturers if for nothing else than our service oriented job becomes increasingly devalued because people will inherently reduce consumption to the common denominators that are repeatable consumables of survival unless a self-destructive behavior.

I believe we can look at Great Britain, Rome, and other empires, coming full circle to the history lesson and the basic math. The United States can only continue to borrow so much money before we must product consumable products that we can trade for others. Frank, I agree that the macro and micro economics conversation is more complex when we filter it through the systems we have constructed. However, the rich and the poor must eat, have clothing, and shelter regardless of the depth of the refrigerator or pantry, closet, or square footage of the house. I will look at the Sombart piece as well, but I think we're steering away from real production and more toward philosophy when we get into relativity.

@Kent & @ Jason: Good points, all. Jason, I appreciate attempts to apply reductionist logic in order to get to the base of what is "real" and what might be "less real" in the production of necessary goods and services, and even to what might be on that "necessary list". After all, we humans have a natural tendency to see things based on how they have been, rather than how they may be.

Kent,re: meeing one's basic needs. The immediate needs of all those citizens not in the 1% are always at the forefront of my concerns. I personally have known, and do know, so many in the bottom 50%, the bottom 10%, as well as family and friends who lived through the Great Depression, that it would be impossible not to be first concerned about those with the least, when thinking about economics. Those who are in the top .05% are unlikely to ever go without any of the basics, however they are defined. Even the 1%-ers, though their situation tends to be less established, with more downward mobility, are of littlle concern. Their ability to save when things are good is more than enough to protect them when things are bad.

In my forthcoming book, which develops a replacement term and model for the obsolete concept of "recession", one of the questions asked is "What are the long-term effects of a central bank's low real rate of interest policy? Both during the initial period, and after a financial crisis?" This is essentially our experience here in the U.S. for at least 15 years. One effect is that low real interest rates in a period of accelerating technology end up favoring financial inovation at the expense of "hard asset" investment. I exclude commerciall real estate here, as that is an industry with a sole purpose of raising other peoples money to put at risk, and in the process earn fees. There being a seemingly inexhaustible supply of international money availablre (hence the fast CRE recovery, false though it may be). The single family residential market is an entirely different story, for another venue.

The result of the low interest rate environment is exactly related to Jason's question. Low rates divert investible funds away from hard assets (productive ones) and into "financially innovative products". This, at the expense of goods-producing jobs in the U.S., which are then shipped overseas to the markets with the cheapest currencies, fewest labor protections, and worst pollution practices. One side effect is the increase in the "unproductive jobs" Jason is focused on. The distribution and service industry jobs that cannot be exported. And this situation would seem to be unsustainable. Of course, this is not to suggest that higher interest rates would have anything but disasterous effects on a recovery now that long-term low rates have done their damage. Unfortunately, no one has a clue as to what would generate a recovery in a relevant period of time.

There are no easy answers, and certainly not any within the field of orthodox economics (I refer to John Quiggin's "Zombie Economics" to make this point clear). At a time such as this, it may be worthwhile to survey some of the more readily available literature regarding technological development and downstream innovation. Examples include "Race Against the Machine", "The Light in The Tunnel" and Kurzwiels "The Singlularity is Near", this latter for it's macro explanation of exponentially accelerating technological change and the associated potential social disruptions. While none of these offer much insight or solace for short-term solutions, (there still will be large numbers of people with "lost decades" in their lives, specifically those just starting their working lives, and those in the last ten years of theirs), the insights to the mid-term possibllities these books and others offer are likely to change one's view on "labor as a commodity", amongst other historically embedded economic theory.

What I refer to as "The Economists' Tsunami" is a not-simple subject suggesting sudden obsolescence the most-revered economic theories of the last two hundred years (See the INET website, or Krugman's "How Did Economists Get it so Wrong?" Sept. 6, 2009, NYTimes) The Economists' Tsunami is a critical look at how little of the economics canon has survived since the crisis. Of course, those with vested interest in explaining the current phenomena in terms of established theories(those with tenue or columns to write weekly) must defend using the tools they know. However, if one looks at physics, biology, chemistry, and medicine, it is impossible to think economics is somehow immune from the dynamics that have crumbleld the foundational building blocks of those fields over the last decade or more. The question may not be one of fitting today's unprecedented crisis into existing models. Nor does the productio of popular works such as Cowen's "The Great Stagnation", or Koo's "In Search of the Holy Grail" , both full of embarrassingly illogical passages move the profession back toward relevance. The question may be can economists trained in theories between thirty and 200 years old free up their thinking enough to generate relevant models to encompass the "acceleration of economic time" , the realities of globalization, and whether a large part of the labor market can still be considered a commodity.

Ultimately, as to Kent's main concern, a society that produces enough for everyone, but cannot employ enough of the population to support the purchase of it's output, is in fact, an unsustainable situation. At least as it is now structured. The question of course, is how long does it take to restructure such a society, and in what way. The obvious goal being that the needs of all are met, and the potential for all people, at every level of society, are enabled and incented to maximize thier own human potential.

While a student of economics and not a teacher like my esteemed superiors here, it is my observation that the lack of "productive" jobs will eventually collapse upon itself because it was the increasing productivity of a larger and larger middle class (ie raw numbers of people) and their income that allowed for the growth of manufacturing and jobs to satisfy the increasing demand. As that middle class shrinks and more people lose purchasing power, demand will shrink and our need to produce anything will dimish. As we know, as our purchasing power shrinks, we are allocating diminishing income (at least here in the US, and I think this is true globally today) to a smaller number of higher priced essentials - food and fuel - leaving little room in our budgets for all the non-essentials that increased our quality of life such as nicer homes, cars or nicer cars, clothes beyond those needed for work and one good suit, etc. The reason money is cheap is because we can print it and it is losing its intrinsic value. As our savings is reduced to sustain our quality of life, the "non-productive" jobs will go away, too, as we won't need bankers and insurance agents and waitresses when we can no longer afford those services. I see the bubble of "non-productive" service jobs being just that, a bubble, that will burst. So, to the point of Frank, that the .05% will never go without, they have never gone without - but without a vibrant middle class, their consumption cannot sustain entire economies but support only a few in their inner circle who supply their increasingly rare and therefore increasingly expensive lifestyles, leaving most of the rest of us without productive or non-productive jobs, but rather scratching out personal sustainance in isolation thus collapsing the sophisticated economic system that has evolved due to the proliferation of goods and ability to trade among ourselves to raise all our standards of living.

Hey folks. I think we're getting closer to Nirvana here. I believe a big portion of our issue, unfortunately, rests in Frank's answer; the length and detail, more than the substance. Tying this to Peggy's reply, who acquitted yourself well, I think the two of you are blending in the socio side of socio-economics; regarding the .05%, 1%, and Middle Class.

Not to divert too far from the central topic, because I believe the dynamics of these three demographics can significantly influence production and consumption..., I want to make one thing clear.

I do not believe the .05% nor 1% have much to bargain for if the 99% or 99.95% refuse to offer the raw materials for consumption.

With regard to regulations, or lack of, as well as labor laws including fair wages, I think it's rather perplexing that majority of Americans have executed two things. One, we have permitted the farming out of most durable production. Two, we have abdicated a significant amount of the socio-politico-economic influence in our nation that is perhaps more power than anything.

I think Frank alluded to it with the differences between the U.S. policies and those of other nations, even if not intentionally, because his comments lead to collective bargaining, minimum wage and equal pay laws, and those environmental regulations he speaks of that lead toward the inevitable bane of many conservatives (for lack of better terms); unions.

But we don't need to go political, or to endorse unions. I believe the sense of American unity, or lack of, dates back the same 15 years Frank speaks of because of political science which I think is considerably similar to jurisprudence. The plain; there is a science to have a public discussion of persuasion on one hand and good way to win an argument on the other.

I have a friend who I've known for about 17 years now who expressed the best answer I've heard yet to our situation, though. Stop buying the garbage!

I'll let my cohorts, here, fill in what you thing the garbage may be..., but hope you will tie it back to Jason's question on production. Good stuff...

@Frank, Kent, and Peggy: thanks, you folks have given me more to think about. As I've said before, I'm not an economist nor have I ever really studied it in any depth so your posts are much appreciated. thanks again..

Hi Maynard,

I agree that we should have some soul-searching. Here is where mine led to:

http://www.nytimes.com/slideshow/2012/09/24/world/europe/20120925-SPAIN.html#1

At the same time, two of the three wealthiest footballers play in La Liga of Spain and a fourth makes the top 10:

http://www.forbes.com/pictures/mlh45eel/no-1-david-beckham/

This soul-searching is essential to our quality of life. As we get into any issues of ethics and morality, we are making "value" judgments, using the term value in its meaning of those set of beliefs that drive our behaviours. However, in the strict economic sense, I believe the term "value" means something that has inherent worth ie someone else will trade something for it - in the structure of our current way of life, that trade would be made in money. While it appears I may be going down a rabbit trail here, not so, in the sense that it brings us back to Jason's original question about what is the tipping point where the percentage of non-productive service jobs relative to productive jobs becomes unsustainable. I am going to go further down the trail here, in that perhaps as our culture and society changes, our definitions of what is productive and non-productive, and what does and does not have inherent value, changes, too. We didn't know we needed cars until we had them. We didn't know we needed global communications until we had it. What was unimaginable a century ago is essential today. Let me suggest this evolution will continue so that the answer to this question today may be different today than it will be in the economy we are creating. I understand and empathize with Maynard's point of view about the worth of LCDTV (lowest common denominator television) and nutrition-free meals , but the reality is that if someone is willing to trade for something else, it has economic value - no matter how little value we may assign to it in our own allocation of personal resources. And therefore our economic definition of productive, non-productive and valuable goods is driven by the market, and whether people are willing to trade to get something - thus creating the economy we have - the circulation of goods and services for which people are willing to trade currency in the current construct.

Bringing here Peggy Salvatore's approach, of economic value as related to something we are able to change for anything - even money -, we could say that production of films, even for entertainment (there are, e.g., documentaries, whose proposal is in another way), would be productive labour, for they are put into the market. It puts us in front of one of the presence of a concept coming from theory of labor as the source of work applied in a situation where the main concept is - perhaps my perception is wrong - the utility as the source of value.

While I may not subscribe to the terminology, I do appreciate the importance of the disctinction between hard products, and soft products or 'unproductive' labour. US is increasingly relying on the international exchange of some of its soft products, with the hard products. How sustainable is such an approach?

Environmentally, it has led to less pollution (than would have been otherwise). So nature is comfortable with this, although it has led to export of polluting industries.

What about humankind?

Economically, it depends upon the continued demand for the soft products abroad, and the terms of trade.

For the continued demand for the soft products, a continuing monopolistic lead based on technology is required. For continuing good terms of trade, a measure of strategic importance and leadership in the world are required. The latter also involves military and political domination.

All good things come to an end. When and how the above conditions will be upset by history is a matter of history, not economics.

60%

I'm wondering whether my 60% guesstimate is too low, After all, by virtue of the exact wording if the question, the entire health care industry in non-productive.

The hard answer for what you want is actually pretty easy to come up with since the BEA tracks contributions to GDP by industry. http://www.bea.gov/

That being said the question as to what creates real value added products in an economy is not so easy. It is easy to look on manufacturing, taking raw materials and turning them into something of value, as the goose that lays the golden egg in an economy. Consider this however, due to productivity increases this process hasn't created so much added value as it used to, (unless you are building Mercedes), but what about a chef that takes a piece of fish and makes a really outstanding meal that has a high perceived value.

We must face the fact, especially with the continued use of robotics, that manufactured goods will no longer deserve the mantle of representing the "real" economy. Or if they do still represent the real economy what that means has slid to the point where an alternative must be found.

What one should be wary of are things that have a transitory perceived value, like certain economic inputs based around speculative excess, or things which create associated costs that can negate the benefit, like casinos. These can be destructive over time. Another thing which one must be careful of is things supplied by public spending. This isn't because such investments may not create additional economic activity over time but because the ability to afford that type of investment is finite and the desire to pursue them beyond what is affordable can also be destructive.

Are only goods and services that go through the market considered? Probably this is the case in most of the comments. But there are many non-market goods and services that have 'value' in our society. Indeed the BEA imputes the rental value of owner occupied housing. And what about all the owner home repairs, cleaning, and maintenance? What about woodlot fire wood? What about all the homemaker services, child rearing services, child education, off the books work, volunteer work in everything from hospitals, schools, food pantries, churches, art galleries, etc.?

So to just talk about the market omits a huge amount of productive services and goods and if you add that to the total derived in any manner from market G&S, you might be surprised.

On that basis, I would guess that 90 percent may be too light.

Most of the discussion seems to follow the question.

I have a few questions. Why is waitressing uproductive, and only a distributive job. Similarly banking services. I am a little unclear about finance, since, only part of finance sector activities link up to production, and other parts may be only speculative.

I think that essential to the discussion at hand is to isolate the portion of activities that contribute to value addition without or in excess of material transformation in terms of time, location, convenience, or dimensions. This requires a system of valuation independent of the market process, since the market treats all interventions as value additions.

In view of the difficulties facing the above procedure, I dont know how successful estimates can be made.

Instead of productive and distributive, I suggest the nomenclature of soft products and hard products with the latter referring to 'material' products.

History of USA shows that the balance between the two has varied with corresponding changes in the international division of labour, accelerating with Nixons China visit.

The question of sustainability of the altered balance between the the two types of products depends in the final analysis of the continued ability of USA to participate in the international exchange of its soft products with hard products from abroad.

This in turn will be decided by its strategic advantage in soft products, their necessity to the rest of the world, terms of trade, and its political power.

I think I should clear up my terms: by productive labor I mean jobs that result in a net increase in value for the nation as a whole...for this reason, waitressing doesnt count since it merely moves existing value around...same with much of finance etc. It seems to me, and I am no economist, that the only way to increase existing national value is to produce goods that can be sold abroad and thus have a national increment. Nothing done within our borders increases value but simply moves it around. I could be totally full of shit, and I'd be the first to admit it...I suppose I'm waiting on one of you to tell me. Thanks for any help with this...I'm really at a brickwall with this. Any thoughts would be helpful...

Dear Jason, Please do not disparage yourself. You may be uniniated, but that does not automatically disqualify you from thinking, or from being right.

You have given out an interesting idea. You are measuring the value of all labour by their addition actual or potential to exports. In this way, you regard only labour in internationally traded goods and services and all others as unproductive. We can call this the marginal foreign sector productivity of labour. (Labour in imported goods can be valued by the goods it substitutes).

There are two problems here. 1) Financial services of USA are an important item of sale abroad. So they are not all unproductive even in your limited definition. 2) Labour in goods and services that have no foreign sector are automatically classed as unproductive in your terminology. That sounds a little harsh. It is not productive if it is of no use to foreigners?!?

In conventional thinking even moving things around adds to value if the market accepts it. This is because change in location adds to convenience and therefore utility. To put it specifically, only the 'thing' is moved around, not the value, value is added along with utlity. The more the economy and people develop, the more is convenience valued. For instance, in my country (India) rural people would walk a mile to collect free firewood rather than pay for it. In other words the convenience of having firewood at the doorstep has not economic value. On the other hand, urban people would pay for this convenience. You of the USA will pay even more for this convenience. Similarly waitressing has an economic value for the same reason. THe dish on your table has more value that the dish on the stove of the restaurant.

Your question seems to be an attempt at resurrecting the 18th century French economic thinking of the Physiocrats who saw value only created in agriculture and manufacturing was merely the transformation of existing value. There appears to be a large number of modern day commentators who view services in the same way, which to me is logically flawed. The example of the waitress is an interesting example. As a consumer of a meal, it does me no good for my meal to go cold in the kitchen. Taking the value added by the farmer, the distribution of the products to the restaurant, the value added by the chef, and the delivery of the meal to the table are all important steps. If service has no value, why pay a 15% tip? The evidence that services add value is that consumers are willing to pay for them. So, to me, the candidates for unproductive jobs are those that consumers are not willing to pay for but have no choice. The main redistributor of value is the government not the private service sector. There are 11.7 million federal, state, and local workers in the U.S., which is 8.7% of total employment (there are also 10.2 million education workers, but, since education is instrumental in raising the value of human capital I would exclude these--wish I could break out administrators though). The point is that there is nothing inherently unproductive in service sector work since value added comes from the different between the price I am willing to pay and the cost of the inputs to provide the good or service.

The assumption is wrong, un-productive labor as it is seen in this question does not exist. Any job has a utility, otherwise nobody would pay for it. Utility creation is by definition productive.

There is another type of negative-productivity jobs, that's jobs in bankrupt companies.

I'm not saying that these "un-productive" jobs have no utility...surely they do, otherwise they wouldnt sustain a demand. What I'm talking about is the net creation of value...with the waitress: (s)he produces a product or service but in the end the net quantity of value remains the same...it merely is moved from the customer's wallet to that of the restaraunt...this is what I'm talking about. In this scenario the total amount of value has not changed...its merely moved from one person within the economy to another....it seems to me that we can only see true net growth if this exchange happens between members of different economies such as: the example cited by Rahul regarding the export of services within the finance sector. It seems that while there are vital or desirable services that are bought and sold within a given state that these are distributive (since they only entail the freeing up of otherwise stationary capital/money). A waitress may add value to the product but in the end the exchange is taking place within an economy and so is distributive and not bringing in more value from outside the system...the totality remains the same.

Having started with the Physiocrats and their flawed view that only the agricultural sector adds value and manufacturing is merely transforming value, let me throw in Adam Smith and the division of labor as the source of added value (or at least the major source). Of course, we can divide labor and be very efficient in producing stuff no one wants and so we need a yardstick to measure value, which is the surplus between the costs of the inputs and the price of the output i.e. profits. Now we can make the distinction between socially productive and privately productive but again this often involves the government. The U.S. tax system is compicated and so I am willing to pay to have someone prepare my tax return. This is privately efficient but a social waste of time (my tax accountant is a smart Brit and could do other things). In the main, the sector of the economy that spends its time rearranging the deck chairs is the government. Any private unprofitable employment gets weeded out by the market.

Jason, I believe the way you are looking at the issue is still somewhat narrow. What you seem to want to say is that the creation of assets adds value to the economy while services merely move money around. Fair enough. But consider these scenarios, a house painter paints a house, the house is now worth more, an accountant finds a tax strategy that adds to a manufacturing plants profitability and so the companies value is increased, or even in the case of the waitress, the waitress performs her job in an outstanding manner and so the restaurant is helped to prosper, this not only affects the bottom line of the restaurant but the perception that the business location is itself a good business location causing the asset that the building etc. represents to appreciate in value.

This argument also gets rather mixed up in nominal versus real value in the economy, it is much more difficult to get value added in the economy if the monetary base is static, meaning that the argument over what produces additional value in the economy has as much to do how economic activity is pumped up as it does with where the money is going.

This idea about "unproductive labour" can be derived from Smith and Ricardo (classical economics). The same idea was adopted by Marx. They use the labour content approach to value.Today most economists accept the value theorem of the marginalist shool (Jevons,Menger, Walras) which derived value from utility. I suggest Jason should read a bit on this in order to understand why even formulating such a question led to such an mutlitude of answers and disagreements. This is the case when even though we use the same word, but we mean something very different.

Actually, fundamentally, this is a question of faith on what value is. I would not argue that the classical approach is inferior to the mainstream, just one should be aware which one is more in use.

If we would consider the complexity of the supply chain of goods and services it is hard, if not impossible to prove there is such thing as a non-value work.

To flip the coin of your examples, can exports be efficient if workers do not have waitresses to bring them food at the table, or public servants "shuffling chairs"? Can exports exist and be efficient if there is no financial market to provide hedging on foreign currencies, capital for investment or financing for the credit market?

Let's take a "shoe shiner" on Wall Street utility. Does he have an impact on exports? The answer is yes, as brokers spend less time and thought shining their shoes themselves, having more time to trade commodities, in an slightly more efficient way, on the commodity exchange. All services have a cumulative effect, and a marginal significance. Yes, the commodities market can exist without shoe-shiners, but does-it work just as good?

The economic growth is limited by the one resource limitation required for system growth. If you replace resource with "utility", the lack of one simple utility from a hugely complex system can stop the system from growing. This is one of the drawbacks of planned economies, as it is impossible to determine all utilities required for such a complex system development. Market does this selection better, not perfect, just better. If there is a demand, there is a utility, as weird, alien, even immoral as the service in question may seem to our eyes.

This is butterfly effect (Lorenz) in practice. There are simply too many unknown factors. Assuming the lack of importance is wrong, assuming below a significance importance threshold, is the correct approach. Yes a waitress is not critical in normal circumstances for exports value, but it can be.

Well, I think Peter Foldvari has reached the goal. We can not measure the value by utility when we are before the work of an expert that helps us in solving, e. g., a judicial claim. As well as work would not explain the value of something in an auction, we can not have any help from "utility" when we must verify if the loan to the expert is or not reasonable. And we could ask: ow can we avaliate news, e. g.? News are not rare things((not in economic sense) and, however, they have got a market value.

The question itself is flawed - it deletes "any job" that consists of "services" - which, MORON, is about 75% of existing employment in the U.S.

You live in Mexico? China? Maybe the 18th century?

@Ed: it doesnt delete any job that consists of services...only those that dont bring in value from outside the system (state). If a trader brings in value from outside the system by selling his services to an investor in India then it increases the net value here in the U.S. But a painter painting a house may increase the value of the house but the exchange was completed from start to finish within the system and so, at least in my eyes created no new value within the system. If the system were closed, say if the U.S. economy was totally in isolation (no outside trade whatsoever) then the only source of value would be limited to the surplus value created within its borders by domestic labor. How long this could last I dont know...but even in this scenario we see that the value still remains the same in totality it only shifts around. The source would be labor, then when this labor is performed above and beyond its cost of replacement it can be siphoned off as surplus value and then profit...but in a closed system, much like energy it cannot be created nor destroyed it can only change form from potential to kinetic...Of course I make no secret that I've never studied economics that's why I pose the question to you folks.

@ed: perhaps this is why U.S. economy is getting into trouble the past 5yrs...maybe that 75% figure is part of the problem...if not, then why would trade deficits matter? I feel as though we've become so abstract in our conceptions of value that a hanful of folks on Wall St. think they can simply create value out of thin air...I dunno, it just seems like we're distancing ourselves from reality more and more. BTW, I'm from U.S....21st century...lol.

ps. this same logic can apply to manufacturing within a closed system as well. If a worker manufactures a widget and that same widget is sold and consumed within the system then no value was really created in the process...the value started as units of time and energy within the labor process and this is then transfered through exchange to the consumer...albeit with a portion skimmed off by the capitalist/employer etc. But the value has labor as its source and the laborpower itself is nothing more than time and energy (which includes skill etc.) So if laborpower consists of time and energy then what we see by the end of the working day is the worker losing time and energy and the capitalist absorbing it...As far as utility being the source of value I'd have to disagree. An object can have utility but be of no value...I could use a stick off the ground to scratch my back therefore the stick has a utility or use-value...but that stick doesnt become an exchange value until labor has been applied to it...eg. some one goes out and expends labor in the process of finding me a proper stick or fashioning it, polishing it, bending it to shape etc. Only after labor has been applied to it does it earn its place within the market.

The idea that market prices accurately reflect values was decisively disproven by the global financial crisis of 2007-2008. With no change in on the ground realities, which market price (pre-crash or post-crash) accurately reflected values?

The global value of financial derivatives was more than ten times the total GDP of the entire world in 2008, when the crisis occurred. On a micro level, the stock value of firms can be more than twenty times the real on-the-ground value of the assets and revenues generated.

An incredibly large proportion of financial transactions are pure gambles. For example, while real international trade is only about $100 billion daily, foreign exchange transactions amount to $ 4 trillion. Thus the vast majority of such transactions are purely speculative gambles about the freely floating exchange rates.

To answer the original question, one must consider that "labor" done in generating and selling gambles on various real assets earns huge rewards -- people on Wall Street earn huge salaries -- but they do not do produce real value added.

I think it is important to apply a data analysis envelopes approach to really assess productivity because otherwise we sesgamos to a partial analysis as I have noticed in all discussions. The DEA approach considers the total fatores production and therefore a broader approach considering that this is due to discuss face population growth.

Dear Asad,

There is no such thing as "perfect price" as circumstances changes every second. Every investment is a gamble, as it involves placing money into something and expect a more or less unpredictable outcome. Even choice of education is a gamble, even choice of religion is a gamble, as they all are managed by the same rule, you invest money, work, belief into something that cannot be known. People invest in a lot of things, in the things they believe to bring them something in the near or distant future. The size of the financial market and of the derivatives is the measure of the trust and belief people having money have in that system. Money have value because of our belief that they have, and their value is generated by amount of that belief.

Banks, being in the business of managing money and risk on investment have designed the derivatives to share risks. Their belief has been proven wrong to some extent, just as people's belief in communism has been proven wrong.

People believing in some religion had generated the pyramids, people believing in trade and goods acquisition have generated the super-markets, people believing in information have generated Internet. It is the same process, just measured in money, that always builds-up oversize things, strong belief can be just as wrong as weak belief, knowledge is just a strong belief based on strong arguments.

So, to get to the point, investing in what people believe is important, relevant cannot be seen as "unproductive" unless their belief is proven wrong.

I assume you believe more in tradition (based on the picture), some value of the material world and less in money, probably you believe in the value of education and research, money managers believe in money. You believe in building knowledge and skills, they believe in building money piles, who can say who is right in the end? If you believe in God, you believe he will be the judge. If you believe in science you will find ways to measure, compare, analyze and draw conclusions based on strong arguments.

Unproductive labor is a concept some old school (very old) like Ricardo, Smith, Marx, have tried to push, but it is wrong, as all utility-value relationship is subjective and influenced by time, culture. They were themselves influenced by the age they lived in and civilization that shaped them like we all are.

For the Waitress her job is important and productive as it provides the means of her existence, for the restaurant owner her job is important and productive as it is providing the means of his existence, who are we to judge?

Marx (wrong) demonstration that capital does not produce anything led to communism, been there, seen that, it was wrong in so many ways it takes volumes to describe.

Another perspective: see Baumol W.J (1990) and Murphy Shleifer and Vishny(1991) -allocation of talent and implications for growth-

Totally agree, but from the 60 on the issue of productivity in the agricultural sector has improved the Cobb Douglas function and raised the data analysis envolovenment approach

If the market analysis combine quantities and prices for both the supply and demand for, then a DEA approach can measure the impact or side effect of a price increase in a particular item.

Mr. Bolos: can you please tell me what communist society you're refering to by "been there, done that"? Because so far as I can tell, no communist or socialist state has ever existed...only usurpations and frauds. Also much of your argument hinges on the presumption of a free market....but we can see that nothing is further from the truth.

Dear Jason,

I am from East Europe, i do not need diagrams to know how communism was.

You can theorize about-it but the real life experiment failed badly. In science, any theory proven wrong by experiment it is a wrong theory.

Each communist country had it's own system, and none was good. If you think could do a better job, please, choose a computer and virtual people to test your theory, and keep your system virtual. And do not underestimate the intelligence of people that tried to make communism work, they were not all stupid, or corrupt, they were just wrong.

I do not assume markets are perfect, far from it, i know crony capitalism, monopolist control, corporation takeover, unemployment, i see-it every day. Still, it is better than communism. You have the luxury of choice, something you don't appreciate as much as you should. You can choose the car, the phone, the juice, the milk, the TV program, the internet sites, you have billions of choices you take for granted. True, all choices have a price, but that's freedom.

Imagine a place where milk, coffee, tee, juice, car, phone, TV, are chosen for you. That's planned economy, the mainstay of communist economy. Yes you can have a car, but all people have the same car, all people drink the same beer, they cannot choose, because consumerism is waste in the communist approach. If beer is determined to be a waste, you will not find any to buy, if TV is considered a waste of time you will have no TV to watch. And the choice is not yours, it is centralized for the greater good.

Communism was not flawed because of lack of competence or intelligence, or desire to improve, it was flawed from the scientific root, the doctrine, and all that intelligence, competence and even hard work was wasted. People are not ants.

so you see no difference between socialism and central planning? Do you suggest one cannot exist without the other? I think this is an error. Frankly, I think if you believe this, then you are wrong...remember, just as there was desperate poverty within these states that you mention, there was also desperate poverty in the West, which you seem to champion as the trophy of capitalism...and again, I think this is flawed. Central planning does not equal socialism.

Dear Jason,

Central Planning in practice needs production, consumption and distribution control. And that leads to communism, as a wide scale plan will not work with unpredictable free choice. Just as if you want a communist society you need to equalize consumption and that is done by planning. You may not like-it, but central planning does generate communism, and communism generate central planning and increased government control.

Radical reforms have a price tag, all idealists believe is worth, or ignore-it all together. My advice, learn about communism and try to understand why it has failed. And you should appreciate more what you have.

Best regards, Bradut

It seems to me that, with homelessness and hunger at historical highs, unemployment, and income inequality at unprecedented levels, in the USA, a more relevant issue is to learn about how capitalism has failed. Have a look at this graph:

http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

and read Joseph Stiglitz: The Price of Inequality.

Dear Asad,

These inequalities can be solved with a few laws, regulations and taxation within the system, not trough revolutions and communism. It's tweaking instead of blowing the system and building a new one. People need time to assimilate change.

A society that allows productive people to advance in a constructive manner is a good society. You can have a king rewarding competence, or a dictator, or a democracy. The difference is that democracy allows non-destructive change of leaders, thus lowering change cost. In economic dimension it is the same with free market, it allows change to happen smoother, at a lower cost. In kingdom system a moron can have the good given right to rule, in a dictatorship a initially competent ruler may rule even if due to age, illness, constant exposure to flattery and lack of opposition becomes incompetent.

Best regards

Bradut

Dear Brad

Deeper understanding of all issues results from careful evaluations of arguments from both sides. I would like to strongly recommend that you read Naomi Klein's book The Shock Doctrine: The Rise of Disaster Capitalism. It provides a detailed historical account of the economic history of the twentieth century. The truth is that I learned more economics from this book than I did from my Ph.D. in Economics.

I beg Bradut's pardon, but if planning innexorabily did lead to communism, we could not explain planning in France, after II World War, under Governments of Giscard d'Estaing or Charles De Gaulle. It is well documented in Bernard Chenot's "Organisation économique de l'État", published eighteen years before Miterrand.

Planning is one thing, planned economy is an entirely different thing.

Heard a good military expression "no plan survives contact with the enemy" (Helmuth von Moltke, or Clausewitz, not sure). Basically, no plan survives reality.

It is one thing to have a public strategy, and good management to deal with reality (tactics), and another to mix strategy and tactics in a nice detailed "doomed to fail" plan. Reality is to relative and fluid to allow a rigid, stiff approach.

@Ricardo, the "left" was always strong in France (just not strong enough).

@Asad: Naomi Klein is a great writer, it is always a pleasure and a challenge to read her books, and the responses she gets from her opposition. I will seek the book you mention. She does have quite an opposition.

Greetings my esteemed in the case of developing countries as percentage centroamerica can say that a good percentage of Latinos are a force productive works now as impacting economic activity in the U.S.

But neither De Gaulle nor Giscard were lefty Governments. "Left wing" was then opposition.

Government goes at the null gravity point between the ruling party and it's opposition.

I think we are talking different languages, for the null gravity point is State, specially where we have got separation of Powers into Legislative, Executive and Judiciary, not Government. Government is concrete exercise of Power, mainly Executive, and has its identity distinguished of Opposition. But it would be better discussed in another line, for we are now evading the point of the question put by Jason.

Agreed... opened a new topic here:

https://www.researchgate.net/post/Planned_or_market_economy?ev=home_person_add_comment_question_target

Dear Asad,

Naomi Klein is a ideological activist, not an economist. The Shock Doctrine is a portmanteau description of particular events strung together with bits of social theory into an alternative historical fiction. For a more holistic layman's narrative, I suggest Capitalism & Freedom by Milton Friedman.

Description of facts is not a question of convenience to ideological positions, for the right or left wing. There is a difference between description and valoration of facts. I do not accept marxist point of view, for I am an assumed weberian, but, just like Schumpeter in his "Capitalism, socialism, democracy", I do respect Marx as a witness of his time. The fact someone is marxist does not convert into a lie a proposition that this someone ennunciated. If a marxist does say that we cannot jump from Empire State without dying, it does not make such a proposition false. As a scientist, I think Samuelson is a more impartial analyst than Friedman or Klein, who are in different parties and, of course, will call each one "lier" to get anyone to their causes.

Yes but there's a difference between description of facts and 'anecdotal pleading' as Johan Norberg put it. Among modern economists though I would suggest Stiglitz or Rodrik.

What about logistics, trains, shipping and truck driving? Are they productive or un-productive?

In this regard I have understood that only zero productivity seen in underdeveloped countries, but I wonder what percentage of productivity is produced by the Latino

@Juan: as I see it, logistics, trains and shipping etc. are technically "un-productive" since they seem to only move existing value around. Sure they are necessary but they add no value to the product. Their improvements in efficiency merely decrease waste, they dont increase the value. But I could be wrong...and I suppose many more well read folks on here will correct me if I am.

@Jason,

@Juan

There cannot be production without a chain of supply, bringing raw materials from source to processing. Products have 0 utility and implicitly 0 value unless there is a system of distribution allowing them to reach consumers. So without transports, material goods production has 0 value, thus 0 productivity.

@Jason and @Bradut: Thank you, guys! I must confess this 'ideological economy' approach is really new for me. My school of thought goes more in the line that Value is determined by effort and opportunity, (labour and time?), so if one works on something when it's needed, then it's worth something (i.e. it is valuable) even if it s bringing it closer, making it pretty, or fixing it. Very Milton and Weber-ish, I know. I promise I will look into the works of some of the authors that have been mentioned here to broaden my perspectives. Anyway, it is kind of cute to see discussions on capitalism and marxism, like my grandpa used to remember.

Please: Capitalism is a political term that has very little to do with economics.

Real economic discussion needs to deal with market economy versus command economy which can come in many political forms. Name them as you please, but don't bore me with political rhetoric.

@bradut: the product still has the same value...but the distribution portion simply has none...it varies in degree of negativity...the distribution side of it all is only as valuable as it decreases the amount of value wasted...you get it? So productive jobs increase value while distributive jobs consume value...and their relative value is only insofar as they consume the smallest amount along the way...

@ Bill, one of the problems to determine which part of the U.S. workforce is unproductive, the approach has to start. First we inefficiency is unproductive but what we should be disuctiendo. On the other hand, depends on the type of approach that we give to understand why the discussion because they focus on market imperfections and the value chain approach in explaining unemployment or inefficiency.

@Jason,

Just think of this: "people don’t want a quarter-inch drill, they want a quarter-inch hole.” (Ted Levitt)

Your logic is like only producing drills have value, drilling is waste.

If Transport has no value, producing transport means (trucks, cars, trains, etc) has no value.

We had the logic you defend put in practice, and the result was production for the sake of production. We had factories paying wages in products as they were unable to sell them. However, we never had an electricity bill payable in products.

I remember a friend's father bringing home after a month's work a electric heater, a sound amplifier, two radio room antennas and a pile of electronic pieces. The reason for this situation? The distribution network of the factory has crashed during CAER fall.

Production by itself has no value, just costs. The value is determined by demand/offer relationship within a market economy, or by plan in a planned economy.

Bottom line... i don't get-it, sorry...

Jason, I wasn´t being sarcastic. I honestly think what I wrote. I am sorry if my points of view do not coincide with yours. In any case, your disrepecteful (and implicitly homophobic) 'ad hominem' attack reflects so much of yourself, that it is pointless to carry on.

I will stop following this post. Thanks to Stefan, Asad, Bradut, and the others I learned a lot. Will look into the authors that you all have suggested. Count with an academic contact here in Mexico, whenever you need it. (not you, Jason).

Dear all, according to the theory of marginality or productivad zero when the worker is not producing, and have to migrate, however in the U.S. the problem is the other way around, a good percentage of the mass of workers with zero productivity is the composing the unproductive sector of the U.S..

@Stefan Edwards:

I would suggest that both Naomi Klein and Milton Friedman are ideological activists. However, I find Naomi more persuasive. In ideological discussions, arguments do not carry much weight, since passions override them. Serious intellectual discussion would require an understanding of Karl Polanyi's book called The Great Transformation. This is quite complicated and has not been understood by many. Because of its crucial importance, I did prepare a summary for a Muslim audience, which is available in my publications uploaded on ResearchGate here:

https://www.researchgate.net/publication/232028416_the_Rise_and_Fall_of_the_Market_Economy

This article The Rise and Fall of the Market Economy was published in the Review of Islamic Economics.

Since you are from Mexico, I would strongly recommend that you should read Stavrianos: Global Rift. This presents historical information of great interest and extreme importance to nations which were colonized. As is trivially obvious, history is different from the point of view of the conquistadores and the mestizos. In neoclassical theory we learn economic history from the colonizers perspective, while Stavrianos gives the history from the point of view of the conquered and the colonized. Unfortunately, the book is out of print, but second hand copies are readily available.

Article the Rise and Fall of the Market Economy

@Juan: sorry to offend, this topic does arouse a fire in me...and when I hear from folks who simply write off arguments or suggestions as "cute" etc...it does bother me...all the same, thanks for your input.

Dear all, I would like to comment on the extent of the U.S. President as you drive to integrate the Latin American workforce, this of course means making this sector more productive, increasing the percentage of productivity from being a unproductive sector in official government statistics the U.S. to a highly productive.

I do think Polanyi's work is very useful - and I must say, in order to avoid some prejudices, Peter Drucker did respect him a lot -, and he recognises as a merit in Weber's work identificating market as a localized reality, not an universal phaenomenon.

Every kind of work contributes to the productivity of the sector, directly or indirectly. So defining the un-productive sector may not be justified.

It all depends on the pressupositions of the theory of value.

@Ricardo,By paying attention to Polanyi's conception of the tacit dimension we can begin to make sense of the place of intuition and hunches in informal education practice - and how we can come a better understanding of what might be going on in different situations. Significantly, his attention to passions and commitments throws fresh light on the praxis (informed, committed actions) that stand at the heart of informal education.

How to cite this article: Smith, M. K. (2003) 'Michael Polanyi and tacit knowledge', the encyclopedia of informal education, www.infed.org/thinkers/polanyi.htm.

Intuition and hunches act in self-education, for they can not be thought.

@all, I give you a link where we can check items on the subject, I wonder if anyone has actually written or what percentage of the U.S. economy is unproductive http://ageconsearch.umn.edu/items-by-subject?subject=Labor+and+Human+Capital

Unproductive sector in my thinking is relative. If you look at such services from the exogenous point of view, then you will agree with me, that there is nothing like that.

what effect/ impact will we have on the economy if those services were not there.

AJAERO Christopher ECOWAS Commision

Liquor, tobacco and pornography are being valued under an ethical point of view, not economic. Economically, pornography industry can be called unproductive because it does not generate any aditional value. But tobacco and liquor do generate as much as any other industry based on agricultural products.

I think we should consider the famous theory of the classics when productivity refer Zero, from the margins of the labor force. In this type of social phenomena is important to consider the approach which involve Cobb Douglas production factors, and these factors depend on labor policy that countries implement to promote employment, thus adding to our comments suggest rate statistics unemployment by economic sectors and then assess the issue discussed in this forum.

In the realm of modern economics, value = utility increased, i.e., anything (services or goods) that increases someone's utilities has value, and anything (intermediate services or goods) that helps in delivering such utilities has value too. In this sense, porno, prostitution, liquor, tobacco etc. all have values (at least to certain groups of people). And services & goods must be used by people to have value (i.e. increasing utility), so trade, distribution and logistic stuff definitely have value too, for they are making stuff more accessible to people otherwise excluded. The simplest way to judge whether something has value in a market economy is to check whether somebody is doing it. If somebody is doing it, then it does have value, no matter how absurd it may occur to you, because someone else out there need it to feel satisfied.

So you would have to define “unproductiveness” more accurately to have a more meaningful conclusion. My guess is that you are really asking : whether we are delivering a given amount of value with least economic input and social, environmental cost? Or, whether with a given amount of economic input and social, environmental cost, we are delivering maximum value. Now, that's the relevant question in economics.

Of course, other disciplines ask this question differently. And that will be another venue of discussion.

Even strictly within economics, market price and social price are different. For example, if a firm produces goods and causes pollution (but does not pay for it), then it can be :productive: -- make profits -- but add zero or negative value because cost of production (figuring enviornemental costs) is greater than benefit of production.

This is a serious problem due to neglect of environmental damage. If a country takes ages old rainforest, which would take millions of years to re-create and therefore is infinitely costly to produce. The country chops up the forest and sells it for firewood. Now it has done productive labor because the profits from selling firewood count, but the cost of destruction of rainforest does not count.

In a similar way, one can look at liquor, pornography etc. These may produce private profits but social costs may be higher and then these would be of negative value added.

May be we should take time into acount; in your examples, benefits are short term, and costs are long term.

Firms economists take only short term costs and benefits into account. The best example may be nuclear power where long term costs go to society.

So, we should ? distinguish:

- short term costs and benefits,

- long term costs and benefits

- private costs and benefits

- social costs and benefits ...

@Henner Henri-F: surely "externalities" are important...but often not even considered by those at the helm of today's capitalist economies.

It would be nice if you explain it further "that this would be unsustainable in the long run as these jobs seem to have replaced productive jobs here in the U.S."

Secondly, a book there on the shelf of the printing press has no value unless it reaches to the reader either through a book shop or amazon, whatever, is the case distributor is there. However, the mode of distribution may change drastically going forward.go

I would like to add What instruments can be use to it so in the way to measure the percentage of the U.S. economy as composed of "un-productive labor"?

Please forgive me, but I find these answers to very much outside the mainstream of economic theory and practice. To be brief: Labor could only be "non-productive" if the value of labor marginal product is zero. See a vast trove of literature on "vmp".

Since vmp is driven by both consumer demand and technology there is likely very little possibility of unproductive labor unless there is absolute lack of labor mobility. Lack of labor mobility, now there is an issue that has some real meat to chew on.

The real "un-productive labor" is the unemployed labor, since the assumption it that all privately employed labor is productive to the employer. ... Now there may be some pubic/government labor that is being paid by the taxpayer, but is not being productive, these people are hard to ID since they will not come forward and admit they are un-productive. Then there are rule maker that write rules that almost no one read, no one enforces, and no one obeys, but they are on the books.