Improving Productivity

In this episode of Debunking Economics, Steve Keen dismantles the mainstream economic obsession with "Total Factor Productivity" (TFP), labeling it a mythical construct that ignores the laws of physics. He argues that economists historically "fudged" data to credit an abstract idea of technology for growth, while in reality, productivity gains are almost entirely a function of increasing the energy throughput of machinery. Keen asserts that "labor without energy is a corpse" and "capital without energy is a sculpture," emphasizing that real output only rises when we design machines capable of converting more energy into useful work. The discussion concludes that as the global economy faces energy supply shocks and shifts from fragile "just-in-time" efficiency toward localized resilience, we must brace for a structural decline in traditional productivity, as "resilience" is effectively the physical price paid for security in a less stable world.

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