What is ‘Productive’?

When a society succumbs to the delusion that a currency-issuing government can somehow run out of what it alone creates at will – i.e. the currency – the provision of health care, education, infrastructure, and other key goods and services can fall far short not only of what is desirable but of what is possible with the current labor force, state of knowledge, and existing plant, equipment and raw materials. When a society doubly succumbs to delusion, believing activities initiated by anything other than the market to be unproductive, the trashing of education systems, media standards, other core social institutions and civilization itself is all but complete.

A government that is the issuer of its own currency can never be short of money. It is a topsy-turvy view of things to imagine that at a time of high unemployment and excess capacity it is unaffordable to employ available workers or put idle resources to work. To take just one of many possible examples, when people in need of medical treatment but without the means to pay for it are being left untreated at the same time as medical practitioners are either available or ready to be trained, how could it be unaffordable for the currency issuer to employ or train the medical practitioners to attend to the patients? Neoliberal mythology would suggest it is unaffordable – that the currency issuer is somehow “out of money”. But a currency-issuing government always has the capacity to purchase health services that are available for sale in its own currency.

Net financial assets held by non-government – equal, by accounting identity, to the sum of currency on issue, reserve balances, and outstanding government bonds – increase when the government undertakes such spending, meaning that new claims on society’s output are created. But the spending also results in an expansion of output. The spending creates income, just as any other spending on goods and services creates income, and the newly issued currency created through the act of government spending is exchanged for the output of productive activity, unless somebody wants to argue that attending to the sick is socially unproductive. Actually, that is what neoliberal logic suggests. It implies that the expenditure is unproductive because the source of demand was not private. The patients were too poor to pay, so meeting their needs was unproductive.

In a society of individuals, it is arbitrary to privilege private demand over public demand in this way and is simply a reflection of the ideological bias of neoliberalism and the class-interested motivations involved. What is productive? That question is answered socially. A market is a social institution (not to mention a creature of the state, dependent on the state for its very existence, including for the enforcement of property rights and the provision of the very currency used in final settlement of transactions). A market assessment of whether an activity is productive is merely one social construction of productiveness. Since the market assessment depends on individual preferences backed by capacity to pay, the market assessment will change with every alteration in the distribution of income and wealth. Unless somebody wants to argue that there is one “natural” distribution of income and wealth, and that the one we have right now happens to be it – just like the one we had yesterday used to be it! – there is little to commend such an assessment of productiveness over any other.

An alternative evaluator of productiveness is the democratic process. If, as a society, we deem caring for the sick to be a productive activity, we may vote or campaign for the government to spend on the training of more medical practitioners. Whether the assessment of productiveness is through a market, democracy or some other mechanism, it is always and everywhere a social construction. To attach an aura of “naturalness” to one mode of social construction – the market – is a superstitious act. It attaches god-like qualities to something that has – and could only ever have – been created by us. There is nothing natural about the current distribution of income and wealth, nor any measure of productiveness that hinges on that distribution.

Those who suggest that mass unemployment and idle capacity reflect a lack of productive uses for available resources may as well argue that we have run out of things to do with ourselves. No one with any imagination could think there is a lack of ways to improve our lives. No need for activities that help to preserve or regenerate the environment. No reason to develop alternative energy. No scope to invest in education, research and development, and technical innovation. No need to improve health care, public transport systems or other social infrastructure. No way to make our cities, towns and communities more livable. No benefit to providing more personalized care for the elderly, better childcare, services and facilities to enhance physical, mental and social well-being. No point in enhancing facilities for social, creative or sporting pursuits. No point using our brains to think of anything worthwhile to do at all.