What Makes Productivity Grow?

Abstract

'MAN cannot lcarn by index alonc' might bc a good motto for cconomists, sincc the purposc of any statistical mcasurc such as an indcx is to supprcss most of the original information on which it is based. The motive for preparing indices is, then, to replacc an unmanageably numerous set of data by a few succinct statemcnts which can bc rcadily appreciated; but the grcatest merit of an indcx is that it may stimulatc others to investigatc a phenomcnon, and the following notes reprcsent an cnginecr's rcaction to Profcssor Mclman's study of onc aspect of the British automobilc industry.' Two investigations arc reported in this study: the first is concerned with the growth of the usc of mcchanical-handling cquipmcnt, which is compared with changc in the rclativc costs of machinc-hours and man-hours; and the second is the changc in distribution of manpower betwcen production and a varicty of other activitics which arc given the collectivc titlc of administration. It is implied that administration is non-productivc, and thereforc that an incrcasc in the proportion of man-power devoted to administration is inimical to productivity. Sincc the indcx which Mclman uscs most frequently in the second investigation is the ratio of number of 'administrativc stagf' to number of 'production workers' (A/P ratio) onc first inquircs how thcsc classcs arc dcfined. Oncc upon a timc it would havc becn casy to dcefinc them: the productivc worker was identificd as the man or woman whosc wages werc reckoned on an hourly basis and costed as 'direct labour', and whosc cligibility for cmploymcnt depcnded cither on manual skill or on willingncss to do dirty or physically cxhausting work; and the staff employcc was identificd by a whitc collar, wveckly pay, being costed as an ovcrhcad and qualifying for his job by nonmanual skills. But to get as clcar-cut a distinction as this in practicc, onc would probably havc to go back to the cstablishmcnt of Boulton and Watt's Soho 'Manufactury' which housed a number of craftsmen in various trades who werc clcarly the productivc workers whilc the administrators or managemcnt provided working capital and lookced aftcr the sclling of the product. In a modern cnginecring cntcrprise