Re: Productive and Unproductive Labour

C. J. Arthur (
Mon, 26 Jan 1998 22:00:10 +0000

The prior question is what do we want the distinction for! What problem is
it supposed to address?
In Smith the problem was the wealth *of the nation*. He took services to be
evanescent so even if service industries develop it could not add to the
wealth of the nation only move it around and amounted to social prodigality
as wasteful as he deemed the individual employment of servants to be.
Commodities in his definition could be sold abroad and therefore add to our
wealth. This criterion is used by Paul when he wrote
>In country A 5% of national income is
> > spent on advertising. In country B, 1% of national income is spent
> > on advertising. Each country has the same labour force, and the
> > same initial technology available to it. Because country B saves
> > 4% of its income that country A spent on advertising, that value
> > is available for capital accumulation. Thus in country B capital
> > will accumulate faster than in country A, *its technology will advance
> > faster and its terms of trade with country A will improve.*
But what if there is a world market in advertising services? Would not the
expertise and resouces of country A lead to its grabbing a big market share
and hence improve ints terms of trade with B?
What if tourists flock to see our 'heritage'. What if Thatcher's equanimity
about deindustrialisation was well founded in the earnings from
Smith would surely revise his opinion. Should we?
Chris Arthur