Woe is us - the UK's productivity is low. But high productivity tears through the planet's resources, says Adam Lent. So should we celebrate it?
By Adam Lent
Bemoaning the UK’s poor productivity is something of a national sport. At least among economists and policy makers. The latest piece of premier league hand-wringing came this week from The Resolution Foundation in the form of its Business Time report.
But maybe now is the time to ditch this obsession. Maybe we should be celebrating the UK’s low productivity rather than fretting over it. This may sound odd but when one considers the enormous damage done to the environment by the drive to ever higher levels of productivity, it has a clear logic.
Contrary to widespread opinion, improved productivity does not lead to less use of material resources in the production process, it leads to more — much more. The reason is simple. Higher productivity means products can be made more cheaply which allows more of them to be sold. Equally it means existing products can be enhanced with the use of more materials without a consequent rise in price.
This process also drives greater economic activity which increases wealth, raising demand and hence more production, consumption and material use overall. This was a phenomenon first noticed by the economist William Stanley Jevons way back in 1865 in relation, somewhat inauspiciously, to the growing efficiency, and consequent expansion, in the use of coal.
We can see this so-called ‘Jevons Paradox’ at work with mobile phones. Back in the 1980s, they were heavy, unwieldy objects with limited functionality. Today, they are lightweight, sleek things with multiple functions. Has this stellar leap in our ability to produce a phone more efficiently and with less material led to any reduction in the resources used to produce them?
Not at all. Quite the opposite — whereas mobile phone ownership was once reserved for the minority, the world is now awash with phones. As a result, the environmental scientist, Vaclav Smil, estimates that while the average weight of an individual phone may have fallen from 600g in 1990 to 118g in 2011, the overall weight of all mobile phones in use rose from 7,000 tonnes to 700,000 tonnes over the same time period.
This process of improved productive efficiency followed by expansion in use and thus an overall increase in the amount of the total material used in the production of goods has happened repeatedly. Think of any widely used household item — from cars to washing machines — and it has been through the same process. The overall result has been a growth of all the materials used in the economy from around 8 billion tons per year in 1900 to around 90 billion tons today — a figure that is still rising and accelerating rapidly.
It is this unceasing expansion of material use that is destroying the planet. Fossil fuels are a major part of that expansion but as scientists keep telling us, our overuse of a wide range of other materials — everything from timber to lithium — is altering our world in exceptionally damaging ways well beyond the effect of climate change.
Economists as Impatient Filmgoers
Why then are economists and policymakers so obsessed with raising productivity? The reason is that they are still in thrall to thinking that developed before the full scale of the environmental crisis became clear. This thinking observes the huge leaps in productivity that have occurred since the dawn of the industrial revolution and the striking increases in overall wealth and living standards that have resulted and sees it as a huge advance in human welfare.
But these economists and policymakers are like a filmgoer at a tear-jerking movie who leaves halfway through telling themselves the happy second act is the end of the story, ignorant of the third act in which tragedy strikes leaving the audience in tears.
If economists and policy-makers genuinely understood the damage done to our world by ever-growing material use, they would be asking themselves two very different questions rather than simply: how can we raise productivity?
First, they would ask whether it is possible to reduce the material inputs and costs of a production process without the consequent expansion of overall material use. If that is possible (a very open question), then productivity could genuinely be a driver of environmental benefit rather than loss.
The economists Mathis Wackernagel and William Rees have proposed, for example, that the cost benefits of productivity gains should be taxed with the proceeds invested in environmental rehabilitation efforts.
Second, they might ask whether their notion of human welfare (which pretty much underpins all economic thinking) can be revised to be focused on something other than the endless accumulation of material goods. This is a necessary focus if we are to give up on productivity or, at least, find a way of breaking its link to expansion of material use.
This could mean understanding human welfare as essentially non-material once all individuals can be guaranteed a level of material and physical well-being, beyond which a society could not sustainably pass. This sort of thinking has been going on for many years - but largely ignored by mainstream economists
So should we be celebrating rather than bemoaning the UK’s low productivity? Maybe so, given this means the country that has done so much to bring ecological destruction to the world is doing a bit less. But clearly such celebration only makes sense in the context of a profound rethink of how an economy can find new routes to human welfare, while also remaining environmentally sustainable.
Adam Lent is Chief Executive of New Local, writing here with a personal opinion. Originally on Medium