Productivity and the future of technology

In this chapter excerpt from the forthcoming ESRA collection ‘Whose Futures?’ Shannon Walsh considers the New Zealand Productivity Commission’s recent inquiry into Technological change and the future of work. He examines the inquiry as a case study in the limitations of mainstream economic thought on the question of the future of technology and technological change. more

8 October 2020

This chapter considers the New Zealand Productivity Commission’s recent inquiry into Technological Change and the Future of Work.[1] The Commission states that the ‘inquiry was prompted by recent advances in specific technologies, such as artificial intelligence and robotics, that some believe are starting to replace human labour on a wide scale’.[2] The inquiry presents a case study in the limitations of mainstream economic thought on the question of the future of technology and technological change.

Productivity and the Productivity Commission

The Productivity Commission was established by the New Zealand Government in 2010 with the purpose of providing ‘advice to the Government on improving productivity in a way that is directed to supporting the overall well-being of New Zealanders, having regard to a wide range of communities of interest and population groups in New Zealand society’.[3] Over the last 10 years the Commission has been providing policy advice to the government through the lens of productivity. The Commission works from what it calls the ‘framework level’. This means that they focus on the impact laws, policies, regulations and institutions might have on productivity in Aotearoa New Zealand. In early 2019 the government asked the Commission to ‘examine how New Zealand can maximise the opportunities and manage the risks of disruptive technological change and its impact on the future of work and the workforce’.[4] Between September 2019 and March 2020 the commission released five reports dealing with different aspects of this task before releasing its final report in April 2020.[5]

Productivity is an economic measure that seeks to account for the efficiency of production processes. In simple terms, it measures the ratio of outputs to inputs within a given production process. There are many ways to measure productivity. The most common are measures of labour productivity, which measure the aggregate output of goods and services for a group of workers over a period of time. Although it is generally assumed that productivity improving changes are enacted at the level of the individual firm, productivity can be measured at industry, state, regional or indeed global levels. The Productivity Commission do not themselves measure productivity but, as I will show, provide policy advice based on a preconceived and simplistic notion that what is good for capital is good for productivity, and that what is good for productivity is good for the well-being of society. In this sense, they are little more than a government funded business lobby.

Productivity became an important aspect of national economic policies following the end of the Second World War and the rise of Gross National Product (GNP) and Gross Domestic Product (GDP) as key economic indicators. As Philipp Lepenies argues in his political history of GDP, this effectively enabled ‘governing by numbers’ through a feedback loop of data collection and macroeconomic policy.[6] Before long, governments, including our own, were looking to productivity as an important measure informing governance decisions. GDP is now an essential variable in productivity measures at the domestic level.

To increase productivity means to increase the ratio of outputs to inputs in a given production process. The aim is to do more with less and to make the production process more efficient. Capitalist firms generally have two ways to achieve this. The first is simply to force people to work harder through various forms of coercion, such as performance targets, threats of job loss, understaffing, or the threat of physical violence. Unsurprisingly, this can have disastrous results for workers, including stress and injury, and flies in the face of the idea that increases in productivity lead to improved well-being. In some industries and workplaces this is achieved in ‘softer’ ways, through the introduction of ‘games’ or other schemes to entice workers to do more work. Even six-hour working days or four-day working weeks have been justified on these terms. The important point is that these methods to increase productivity do not modify the technical production process itself but instead coerce or encourage workers, in one way or another, to do more work. The second way firms are able to increase productivity is through technological innovation, including the technical rationalisation of existing production processes and economies of scale. This second sense is the focus of the Productivity Commission’s inquiry.

The connection between improved productivity and improved well-being is usually explained by simple supply and demand. With technological innovation, more can be produced for less and products and services can be made much cheaper, which means there is more stuff for people to have at less cost. More stuff equals less scarcity and machines take over some of the work, freeing up time for other activities. According to the Commission, technological advancement has allowed ‘people to have longer, safer and healthier lives; enjoy more abundant and cheaper food; and reduced the prevalence of dangerous, back-breaking labour’.[7] The problem with this is that, since capital’s earliest interventions into the production process, technological innovation has been inextricably connected to capital’s efforts to gain domination over workers. The capitalist application of technology is geared towards producing a profit for capitalists, rather than toward improving the general well-being of society. These imperatives are in fact often at odds with each other, rather than being mutually inclusive as the Productivity Commission presents them.

While it is true that technologically induced improvements in productivity can cheapen consumer goods and services and replace manual labour, there is no guarantee that this leads to improved well-being. Capitalists have always used technological innovation as a way to gain power over workers, and as we will see below these changes have been widely and violently contested. To connect technological change and improved well-being without accounting for the realities of capitalist exploitation is to do a disservice to any socially meaningful idea of well-being, and is likely to offer a scientifically weak assessment of the social impacts of technological change.

In volume one of Capital, Marx comments on a remark made by John Stuart Mill questioning the idea that improved productivity leads to improved well-being:

John Stuart Mill says in his Principles of Political Economy: ‘It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being’. That is, however, by no means the aim of the application of machinery under capitalism. Like every other instrument for increasing the productivity of labour, machinery is intended to cheapen commodities and, by shortening the part of the working day in which the worker works for himself, to lengthen the other part, the part he gives to the capitalist for nothing. The machine is a means for producing surplus-value.[8]

For Marx, the working day was divided into two. During the first part the worker produces a value that is equal to the value contained in their wages. During the second part of the day the worker continues to produce value beyond that which is returned to them in wages. This is pocketed by the capitalist, who sees it as a just reward for their enterprise. This is the source of what Marx called ‘surplus-value’ and constitutes the core of what makes capitalism distinct from other modes of production. It also accounts for much of capitalism’s dynamism, as a part of this surplus will be reinvested into the business cycle with an eye toward growing the business, thus driving competition between firms.

It is in the capitalist’s interest to increase the unpaid part of the working day as much as possible. This is one of the main reasons why they are encouraged to improve productivity.[9] Marx recognised that capitalist firms have two main strategies to achieve this. The first is simply to extend the working day by making people do more work for the same pay, or by paying people less for the same work, which amounts to the same thing. Lowering wages has the same effect as lengthening the working day because it shortens the ‘paid’ part of the day, and is a common strategy where limitations on the working day have been established and are protected. This accounts for endless struggles over wages, the strategies of coercion mentioned above, as well as struggles over ostensibly trivial things like break times, clocking in and out, pro rata rates, and the general capitalist hysteria we witness every time a minimum wage increase is announced.

The second strategy capitalists have to increase the unpaid part of the working day is to use technology to reduce the amount of time it takes a worker to produce the value contained in their wages. As above, this is what is generally referred to in discussions of labour productivity: increasing the ratio of outputs to labour inputs by means of technology. This strategy takes precedence when options for the first strategy run out, and in particular when limitations on the working day are established in law.[10] It is a more costly option than simply forcing workers to do more work because it involves investment in technology. This is also the strategy best represented by ‘innovation’. Technology is used to increase worker productivity so that they can produce the value of their wages faster than before. Investments in technology are open to the risk of redundancy should an improved competing technology enter the market before a return is made on the investment.[11] This is known as ‘disruptive innovation’, although the Commission employs the term ‘disruption’ in a less specific sense across the six reports to refer to any sudden or unexpected change to an economy.[12]

Note that this second strategy only works if the capitalist remains vigilant with the first. So, for the capitalist, even if we are able to produce the value of our wages in less time, it is imperative to keep us working beyond this for as long and as hard as possible (within legal and social limits) because this is where they extract a surplus. The strategies therefore work together. This complicates any straightforward relationship between technologically improved productivity and improved well-being. The second strategy can provide impetus for the first, for example by introducing technology some firms will be able to replace expensive skilled labour with lower paid ‘unskilled’ labour. Moreover, competing firms who are unable to imitate the improved technology, whether due to legal reasons such as patents, or otherwise, will be forced to improve productivity through other means to remain competitive, which almost always means putting the screw on workers. As Marx remarks in an early draft of Capital: ‘One of the first effects of the introduction of new machinery, before it has become dominant in its branch of production, is to prolong the labour time of those workers who continue to work with the old, imperfect means of production’.[13]

Such technologically induced ‘adjustments’ are in fact central to the way the Productivity Commission understands technological change. The Commission’s focus on the ‘framework level’ recognises that decisions around technological change aren’t made in a vacuum but take into account the entire ‘business environment’ a firm operates within, which importantly includes such things as wage levels and employment legislation. Indeed, as we will see, many of the Commission’s final recommendations are focused on regulatory and policy changes around employment that are supposed to facilitate technology adoption by firms. What is striking to see in the pages of Technological Change and the Future of Work is how the Commission willingly fudges these well-known dynamics in their efforts to present productivity as something that improves well-being for all. There is no recognition that the interests of employer and employee might not be aligned, nor that their relation is, even if only in a technical sense, one of exploitation. This is not hyperbole, this is an established fact of the capitalist mode of production.

While the Commission vaguely concludes that the ‘relationship between technology and inequality is unclear’, I hope to show in this chapter that there is in fact a clearly defined relationship between technology and inequality found in the subordination of technology to the dictates of capital.[14] Across the six reports, this subordination is marked by a clear dividing line between those that have the agency to enact technological change – capitalist firms – and those that must ‘adjust’ and ‘adapt’ to these changes; workers, the communities that support them, and everyone else tangled up in the machinery, somewhere on the margins of this great technological churn.

Whose technological future?

The Commission offer a measured reflection on the possibility of wide scale job loss due to automation in this country, which they see as unlikely. Although they argue that we should not ignore potential threats, according to their analysis worries about large-scale disruption ‘appear misplaced’.[15] Indeed, the report goes to great lengths to reassure its readers that there is nothing to fear and everything to gain from embracing change and overcoming what it sees as Aotearoa New Zealand’s ‘lukewarm attitude towards emerging technologies’.[16] Those resistant to change are repeatedly presented as misinformed and ignorant of the benefits of technology, which the Commission sees as being overwhelmingly positive. The Commission documents ‘a long history’ of fears around the emergence of technologies and ‘associated anxiety over its effects on the labour market’.[17] They argue that it is incredibly difficult to verify whether these anxieties are justified or not.

When it comes to considering the unequal distribution of the impacts of technological change, the Commission argues that the general relation between the introduction of technology and its impact on work and well-being is, in fact, complex. Emerging technologies can replace jobs and disrupt existing markets, but they can also create new jobs and new markets. Whether technology is good or bad for workers depends on a wide set of variables that are impossible to measure:

Attempts to measure the pace of technological change from the attributes of specific technologies suffer from an aggregation problem – it is impossible to measure the impacts of different technologies on the economy and society to compare their relative importance. Was the invention and diffusion of the smartphone, for example, more or less important for well-being than the invention of the washing machine?[18]

Unsurprisingly, after establishing that questions of well-being are impossible to measure, and therefore unreliable, the Commission argues that the ‘indirect’ measure of productivity is the most ‘useful’ method for accounting for the economic impacts of technological change.[19] The Commission then turns abruptly to the question of technological change at the level of the firm. This is because the Commission sees the capitalist application of technology as the only possible one, and the firm as the only agent capable of introducing new technologies. This is important because the firm is also the interface between capital and labour, and the basic organisational unit of capitalist economies.

The assumptions the inquiry makes around the distribution of agency in processes of technological change reveal whose vision of the future it subscribes to. While increased productivity is repeatedly presented as a universal good, throughout the six reports the capitalist firm is seen as the only entity with any real agency when it comes to implementing such changes. This is most explicit in the fifth and final draft report Technology Adoption by Firms, which states plainly that decisions about technology adoption are made ‘at the firm level’.[20] Firms occupy the privileged position of being the only entities capable of enacting change by adopting or not adopting new technologies. Everyone else tangled up in the machinery are left to adapt or adjust to firm driven change. The question of technological change is reduced to a binary of acceptance or denial of inevitable change that is largely out of the hands of ordinary people. Within the terms set out in the inquiry, the future of technology couldn’t be anything other than a capitalist one.

With the firm occupying the privileged position as the only agent capable of introducing technological change, the government is responsible for facilitating that change. The Productivity Commission calls this ‘protecting and extending business environment dynamism’.[21] Firms, it turns out, are fickle creatures. Easily frightened, the government apparently has a responsibility to make the world safe for them so that they are encouraged to ‘risk’ technological innovation. For example, in outlining the key areas of priority for government intervention to encourage the adoption of new technology, the Commission notes that:

Adoption of technology can be a complicated and high-risk undertaking for firms. Having the flexibility to easily reorganise production, can reduce these costs and risks. Policies that make it hard for a firm to reverse a decision (eg, laying off staff who were hired in expectation of growth that does not ultimately occur) can discourage firms taking the risk of adopting new technology.[22]

A world safe for capital is one in which firms have as little responsibility as possible to workers. In the reports this appears as ‘labour-market dynamism’. We know it by another name: precarity.[23] Being able to quickly hire and fire appears again and again as a key driver of capitalist innovation: ‘policies that increase job security can limit innovation, technology adoption and wider job creation’.[24] Everything hinges on the individual agency of the firm: ‘Firms are more likely to adopt technology if the adjustment costs they face, including labour-related costs, are low relative to the benefits they anticipate from technology adoption. Labour-market settings, particularly those that favour workers’ job security, can increase these costs’. [25]

This is presented in completely apolitical terms as the only rational option: ‘Protecting and extending business environment dynamism should be a priority of any government seeking to encourage technology adoption’.[26] And, of course, technology adoption is good for everyone, and only firms can adopt technologies, so what is good for business is good for everyone, duh! Being the privileged medium through which the magic of technology is bestowed upon society, capital is excused from any other social responsibility. Indeed, aside from tending to the ‘national innovation system’ (read: funding industrial research and education) the key role given to the government across the five reports is that of facilitating business environment dynamism. The key priority outlined again and again in the reports is creating ‘favourable conditions’ for businesses to thrive. Couched firmly within a rubric of ‘relative prices, risks and rewards’ the vision of technological change presented in the reports is profoundly and completely subsumed by the imperatives of capital.


‘Whose futures?’ edited by Shannon Walsh and Anna-Maria Murtola, and published by ESRA, will be launched on the 11th of November.



[1] New Zealand Productivity Commission. Technological Change and the Future of Work. Final report. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, March 2020.

[2] Productivity Commission. Technological Change, p. ix.

[3] New Zealand Productivity Commission Act 2010, sect. 7.

[4] New Zealand Productivity Commission. ‘Our brief: Technological change and the future of work’, New Zealand Productivity Commission. Last accessed 21 August 2020.

[5] New Zealand Productivity Commission. New Zealand, Technology and Productivity. Technological change and the future of work, Draft report 1. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, September 2019.; New Zealand Productivity Commission. Employment, Labour Markets and Income. Technological change and the future of work, Draft report 2. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, September 2019.; New Zealand Productivity Commission. Training New Zealand’s Workforce. Technological change and the future of work, Draft report 3. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, December 2019.; New Zealand Productivity Commission. Educating New Zealand’s Future Workforce. Technological change and the future of work, Draft report 4. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, January 2020.; New Zealand Productivity Commission. Technology Adoption by Firms. Technological change and the future of work, Draft report 5. Te Whanganui-a-Tara Wellington: New Zealand Productivity Commission, January 2020.

[6] Philipp Lepenies. The Power of a Single Number: A Political History of GDP. Columbia: Columbia University Press, 2016, p. x.

[7] Productivity Commission. Technology and productivity, p. 1.

[8] Karl Marx. Capital: A Critique of Political Economy, Volume 1, trans. Ben Fowkes. London: Penguin, 1976, p. 492.

[9] ‘The objective of the development of the productivity of labour within the context of capitalist production is the shortening of that part of the working day in which the worker must work for himself, and the lengthening, thereby, of the other part of the day, in which he is free to work for nothing for the capitalist’. Marx. Capital, Volume 1, p. 438.

[10] See Marx. Capital, Volume 1, p. 533.

[11] Jerry Courvisanos. ‘Political aspects of innovation’, Research Policy, vol. 38, no. 7 (2009): 1117-1124; David Teece. ‘Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy’, Research Policy, vol. 15, no. 6 (1986): 285-305.

[12] The concept of disruptive innovation was introduced by Clayton Christensen in The Innovator’s Dilemma. Boston: Harvard Business Review Press, 1997.

[13] Karl Marx. ‘A contribution to the critique of political economy’, in Marx and Engels Collected Works, Volume 30. London: Lawrence and Wishart, 1987, pp. 327-328; See also Massimiliano Tomba. ‘On the capitalist and emancipatory use of asynchronies in formal subsumption’, Review (Fernand Braudel Center) vol. 38, no. 4 (2015): 291-293.

[14] Productivity Commission. New Zealand, technology and productivity, p.23.

[15] Productivity Commission. Technological change, p. ix.

[16] Productivity Commission. Technological change, p. x.

[17] Productivity Commission. Technological change, p. 13.

[18] Productivity Commission. Technological change, p. 17.

[19] Productivity Commission. Technological change, pp. 17-18.

[20] Productivity Commission. Technology Adoption, p. 7.

[21] Productivity Commission. Technology Adoption, p. 1.

[22] Productivity Commission. Technology Adoption, p. 1.

[23] Shiloh Groot, Clifford van Ommen, Bridgette Masters-Awatere and Natasha Tassell-Matamua. Precarity: Uncertain, Insecure and Unequal Lives in Aotearoa New Zealand. Tāmaki Makaurau Auckland: Massey University Press, 2017.

[24] Productivity Commission. Employment, labour markets, p. 1.

[25] Productivity Commission. Employment, labour markets, p. 2.

[26] Productivity Commission. Technology adoption, p. 1.