The Value of Everything: Making and Taking in the Global Economy

by Mariana Mazzucato

As we have seen, classical thinkers differed in their definition of who was and was not productive. For Quesnay only farmers were productive; Smith put services in the ‘unproductive’ bracket; and even Marx defined productive workers as those who were working in capitalist production. In marginal thinking, however, such classification was swept aside. What replaced it was the notion that it is only whatever fetches a price in the market (legally) that can be termed productive activity. Moreover, productivity will fluctuate with prices, because prices determine value, not vice versa. The utility theory therefore completely changes the concept of productive and unproductive labour. In fact, the distinction effectively falls away, since every sector that produces for the market exchanges its products – which means there are now few definitively unproductive sectors. The only part of the economy which clearly lies outside the production boundary and is unproductive, as in Figure 7, consists of those who receive income simply as transfers, such as subsidies to companies or social security payments to citizens.