March 17, 2026

The Hidden Assumption About Productivity

If you can produce more stuff faster, have you increased your productivity?

Well... that all depends on how you define productivity.

Here’s a definition from Wikipedia:

Productivity is the ratio of output to input in the production of goods and services. Productivity is increased by lowering the amount of labor, capital, energy, or materials that go into producing any given amount of economic goods and services. Increases in productivity are largely responsible for the increase in per capita living standards.

Based on this definition, I think an economist would say yes, if you can produce more stuff faster, you have definitely increased your productivity.

But what if nobody wants the “more stuff” you’ve made?

Here’s the thing...

The economic definition of productivity assumes that someone is willing to buy the goods and services being produced.

Lemme give you a hypothetical...

Let’s say you’ve been making blinker fluid by hand.

It takes a long time to do manually, so you build a robot that can pump out ten times more blinker fluid per day than you could on your own.

Have you increased your productivity?

An economist would say yes.

The problem is this:

BLINKERS DON’T TAKE FLUID.

Therefore, nobody is going to buy it.

In which case, I would say that you have NOT increased your productivity.

You might say I’m conflating “value” with “productivity”, and that’s probably a reasonable argument.

But really, it’s a worldview thing...

In my view, making more stuff faster is only a productivity increase if the “stuff” you’re making is customer satisfaction.

Yours,

—J

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