Abstract:
Productivity seems an obvious concept: output per unit of input. Yet, when contextualised within alternative views of production and distribution, challenges across attempts at measuring it are far from trivial. The aim of this paper is to present and discuss some foundational concepts for measuring productivity from a classical perspective, as opposed to a more traditional standpoint. A key distinction is made between measuring productivity from the expenditure (or physical quantities) side and quantifying profitability from the value added (or income) side. Productivity is opposed to productiveness and commodity reduction is contrasted to price aggregation. After critically discussing the traditional standpoint of total factor productivity growth, this paper conceptually discusses the method of (growing) subsystems and the computation of production prices as analytical and empirical devices for measuring productivity and profitability in a multisectoral economy.