The chapter is organized into a number of sections, each of which deals, in an abbreviated fashion, with a particular set of developments. The sections examine productivity, wages, work time, and consumer spending, as well as saving. At the same time as giving a brief overview of developments in each of these areas, I consider various possible explanations for the overall pattern of the set of developments taken together.
- Productivity
Measuring productivity is a complex and technical matter, and there is much debate about methods and disagreement about exact numbers. Assessing changes in productivity over long stretches of historical time presents particular dificulties. Historical data on productivity get increasingly sketchy the further back in time we venture, and longer-term estimates of change in productivity by necessity involve creative extrapolation from often very imperfect indices. Constructing a picture of change over long periods of time usually also involves stitching together data from disparate and discontinuous archival sources. In addition, there are formidable conceptual problems with measuring productivity. While comparing quantities of material output per unit of input over time is, at least in theory, quite straightforward, it is very dificult when calculating productivity to take into account change in product quality.2 Furthermore the productivity of economic activity that does not produce a material output—knowledge production or the provision of services for example—is extremely hard to measure.
Despite these methodological and conceptual dificulties, it is clear that over the course of the twentieth century advanced capitalist economies experienced very steady improvements in productivity, which over the long term compounded into quite dramatic economic growth. For the United States, the rate of increase of multifactor productivity per year between 1929 and 2007 has recently been estimated to have been an adjusted average of 2.17 percent (Gordon 2010).3 The most significant increases in multifactor productivity took place between 1928 and 1950, described by economists as “one big wave” of productivity improvement (Gordon 1999). Labor output per hour increased by an average of well over 2 percent each year between 1900 and 2000, with a second big wave of improvement evident from 1940 to 1973 (Gullickson and Harper 1987). The trend of rising productivity meant that by 2007 each hour of labor produced 5.33 times more output than in 1929.4
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