Hodgson provides a very interesting fact when he reveals that in 1969 the average American motorcar assembler was five times more productive than his counterpart in Britain, despite the fact that they used identical tools and machinery. This is a clear indication that there is far more to production than simply a technology residual as neo-classical economics argues. There is a social nature to productivity that can affect output. Perhaps Americans are paid more, understand the processes better or are simply less lazy. Clearly labour is not only another cog in the capitalist system, it is a living part that can influence output when it is given decisions to make.
This leads on to the idea that perhaps technical efficiency can be achieved if decisions are removed from the worker. Taylorism advocates this idea and it is clearly seen in the fast food industry. McDonalds uses a series of machines to regulate cooking times, tills, ingredients and quantities to ensure that as little as possible is left to the worker to decide upon. They are able to pay lower wages because automation removes the need for any real skills. Clearly the productivity of a worker is transparent in these circumstances and can be regulated easily. However the downside to this system is labour turnover. The average length of employment for a McDonalds worker is 3 months. Technically this is inefficient as each time a new worker must be hired and trained. Even if this takes only one day it is a day lost. The productivity of that worker is reduced by the fact that their loyalty is replaced by automation and redundancy and their desire to perform is supplanted by the realisation that they are treated as simply another small part of the entity.
In Britain the capitalist system originated from class-divided society and essentially this has continued into industry. Management relies on hierarchy and the deference of those below it to perform its duty. In the face of this, labour has developed a well-organised but essentially defensive posture to ensure its own survival. There exists a deadlock that is difficult to overcome because of suspicion form both sides. Low productivity in Britain in the 1980s can be partially explained by this factor. Within capitalism it is clear that there lies the seed of its own demise. By attempting to achieve technical efficiency it does regard labour as simply another variable in the equation. By trying to maximise productivity through automation and management it is distancing labour from the tasks they perform. Rather than develop a relationship with their employment as happens in Japan, British employees become disenchanted and more eager to shift occupations. This in itself generates lost working hours through job seeking and embittered employees not willing to work to their potential.
Satisficing is another concept that may affect the firm’s ability to maximise technical efficiency. There mat be a point in the development of a business where profits are being generated year after year, bonuses are being paid and managers and workers are happy with the situation. This may not be the technically efficient point but all parties are satisfied with the business. Clearly labour does not have a maximum output point that is known and therefore it is difficult to judge whether they are satisficing or not.
b) Is technical efficiency desirable?
There is an argument that suggests that to achieve technical efficiency there will be a labour-leisure trade-off. For example someone may have to give up one hour’s sleep in order to work harder at his or her job. This may eventually mean that technical efficiency is achieved but it will be at the cost of the person’s health. Naturally this may mean that they are not doing their job as well as if they were healthy. Clearly technical efficiency is not always desirable with labour because they are not machines. They cannot run all day without rest and leisure time. This leisure time that they lose out on may actually improve their productivity rate. Evidently in this case trying to attain technical efficiency may result in the exhaustion of the labour force.
In the pursuit of technical efficiency the hired worker is now the most common form of employment in capitalist nations. In the 19th century 20% of U.S. labour was hired. Today 90% are. This process of managing hired labour has had a number of side effects that could be seen as detrimental to the many different industries. Labour selling is the process of giving potential labour power to an employer in exchange for a fixed price per annum. At its most basic form no bonuses are given. This can result in the worker realising that he does not benefit from the output he produces in any way other than his salaried wage. He may become disinterested in the process and increasingly alienated from the firm he works for. He is no longer seeking to maximise his output because whether he produces ten or twenty units he will be paid the same amount. Clearly from this perspective capitalism contains the seed to its own downfall. Workers lose the incentive to produce once they are employed.
Braverman argues that in every western nation, capitalism and management seek to control labour power. Essentially it is a power struggle between the decision makers and the decision takers. The reason for this is quite simple. Management in many cases appears aloof and unapproachable. They are not interested in the ideas of the hired labourer, simply in ensuring he is maximising his productivity. There is a gulf between the differing levels of hierarchy. As mentioned earlier, Japanese firms encourage togetherness by placing managers and workers on the same tables at lunch- time, ensuring they all wear the same uniform and developing exercises to create a group bond. Whereas in Britain many people perform their tasks for “faceless” corporations, Japan has embraced the ideal that people perform better when they feel included in the entire process, not simply the manufacturing area.
Braverman continues his dissection of technical efficiency when he criticises the division of labour. Whereas one skilled worker may produce eight units a day, two workers with one skill each may produce twenty units per day. This is an appealing result for many employers but it does not take into account the impact on society. Not only does the division of labour break up the construction process, it also dismembers the worker’s abilities. The result is the creation of a mass market for simple unskilled labour. This is clearly true in the U.S. and the U.K. and is the reason why there is now a shortage of plumbers, electricians and builders in Britain. Management is seen as the respectable profession when in reality there are too many managers and simple skilled workers and very few tradesmen. Clearly this is not an advertisement for a return to the past, but it is an indication that a balance is required. Statistically, for each NHS nurse and doctor there the government is employing more than one person to manage them. It is certainly not a technically efficient result, despite the attempts to achieve that end.
In conclusion, it is possible to strive to attain technical efficiency but it is always extremely difficult to know where that point is. There is a breaking point for every employee where each extra hour reduces his or her overall productivity. Similarly the system created to achieve technical efficiency can get absorbed with hierarchy and power rather than output and productivity. The problems of technical efficiency also develop the argument that technical efficiency is not important. So long as profits are made and the workforce is content there is no need to upset a stable economy for the sake of perhaps the “holy grail” of economics.
Bibliography
H. Liebenstein, 1966, Allocative efficiency versus X-efficiency
G.M. Hodgson, 1982, Theoretical and policy implications of variable productivity
H.Braverman, 1974, Labor and Monopoly Capital
