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Management history has long acknowledged the existence of unproductive labour. Despite becoming unfashionable in modern times, the growth of unproductive labour within the economic composition of Australia’s labour force, witnessed since the late 1980s, brings to the fore old debates with a modern resonance, debates as to how and when labour contributes to economic growth. Using Australia as a case study, this paper aims to explore the economic cost increasing rates of unproductive labour, typically associated with government-imposed regulation, may have upon an organisation, and more broadly society.

This paper explores the theoretical frameworks developed by classical and neoclassical economists on the subject of productive and unproductive labour and uses key elements to explain the economic consequences of the current labour economy and regulatory environment that exists within modern Australia.

It is the growth of unproductive roles within the Australian economy since the late 1980s that contributes not only to the rising cost of employing domestically and the rising cost of living, but furthermore, to the fragility of Australia’s long-term economic security.

Australia’s economy is bound by chains of regulation. No longer does productivity fuel a growing economy, but rather, economies are powered by the rein of unproductive labour – labour that does not produce value but rather, consumes it. Unproductive labour is not a “dusty museum piece”. Rather, it is a defining characteristic of modern Australia, one that impacts immensely the cost of domestic business, and ultimately, society and the cost of living.

The concept of productive/unproductive work is relevant for better understanding the current capitalist economy. As the contradiction between production and the appropriation of surplus value by financial capital becomes more pronounced as it expands, it exerts intense pressure on the appropriation and redistribution of the surplus value. It puts different factions of capital into growing conflict with each other and defines the boundaries of the current geopolitical map of power. The maximization of profits in the productive sector carries on until the possibilities of greater profits are exhausted and the rationale of the capitalist system of exploitation becomes virtually meaningless. The current level of technology with Artificial Intelligence eliminates at the same time any technical impediment to planning an economy. It also has the potential to create the objective conditions for making the move to the most democratic forms of participation in planning.

Since the time of Adam Smith, classical and Marxist economists have made a distinction between productive and unproductive labor. According to Smith, productive is that “labour which adds to the value of the subject upon which it is bestowed” (Smith, 1937, 314).

The major reason for the divergence of views regarding the definition of productive labour is the fact that the concept is viewed from different perspectives. For example, neoclassical economists see a world comprised of atomistic and selfish individuals. In this world, any kind of labour producing any good or service is considered productive if it creates utility for anybody. Marxists, on the other hand, do not reject this broad relationship between labour and utility, but deny that all activities creating utility are productive. Grouping individuals into social classes, Marxists insist that labour is productive only if it contributes to the historical development of the dominant mode of production. In this era, labour is productive only if it generates profits for the capitalist. The two viewpoints do not contradict one another, but actually complement each other. Economic concepts are concrete and thus conditional and relative.

To understand the logic that pushes capitalism to imperialism requires us to question one of the fundamental categories of capital: abstract labor. Often ignored by the Marxist tradition, abstract labor is, however, by Marx’s own admission, one of its greatest discoveries. However, the different interpretations that have marked out the twentieth century have, most of the time, failed to grasp the profound originality of this concept. However, a correct understanding of abstract labor makes it possible to understand the dynamics and contradictions of capital and what distinguishes it from other forms of social organization. By showing that abstract labor is much more than a neutral economic category and that it is the general social mediator, we question the category of labor within capitalist society. It then becomes possible to identify the dynamics and contradictions of capital and why imperialism is necessary to it.

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.

In theorizing the dynamics of social processes, dialectical thinking informs Marx's historical materialist inquiries and both – dialectics and historical materialist principles – inform his political–economic analysis. In conceptualizing empirical observations during this work, Marx (1973b, p. 101) assumes that the “concrete is concrete because it is the concentration of many determinations, hence unity of the diverse” and that “With the varying degree of development of productive power, social conditions and the laws governing them vary too” (Marx, 1992, p. 28). This methodological tack strives for the flexibility needed for analyzing patterns in long-term social development (the structure of history) as well as the logic of specific systems in their totality and flux (the history of structures).

The welfare of the society…should be measured…by its…condition…its total capital structure, including its human capital, not by its throughput of production and consumption, for the gross national product increasingly includes such unproductive and… ‘maintenance’ items as national defense, …the replacement of unnecessarily shoddy commodities, and so on[3, p. 45].

The paper published below was prepared by Taylor Ostrander for Frank Knight’s course, Economic Theory, Economics 301, during the Fall 1933 quarter.