Scarcity is the judgement decreed by our economy,” Marshall Sahlins writes in Stone Age Economics – a line that casts long shadows over our current age, where knowledge and productivity are increasingly interlinked, with knowledge now expected to convert material things into new assets of value and exchange, all presumably in pursuit of human progress.

This ambition is gaining fresh impetus through rapid advances in AI, which promises to supercharge efficiency and innovation. Yet the economist Robert Gordon once cautioned that even the Internet age, with all its bells and whistles, has barely moved the needle on productivity.

The concept of productivity should be understood from various dimensions. Sometimes, the picture of productivity requires a notion of ‘cultural economics’ (Shahlins’ main thesis), as modern economics seeks to present itself as being cultural. But it is hard to conceive of rational economics as anything but shaped by the prevailing culture – meaning that sentiments in the milieu, such as “greed is good”, will influence the type of primacy given to efficient allocation.

Thorstein Veblen, concerned with the misallocation of resources from industrial productivity, was astute to note that not all forms of productivity are useful – especially when it comes to vanity goods. These may well show up pleasantly on GDP dashboards, but the misallocation of resources amid a sea of poverty raises questions about the value of productivity, particularly if we are concerned about interlinkages with other types of statistics, such as the overall welfare of citizens, the health of the environment and intergenerational wealth transfers – both private and national capital accumulation.

Sahlins’ seminal work,Stone Age Economics, is a riposte to the idea that productivity is purely about the cold facts of efficiency. When viewed through the lens of reciprocity – designed to ensure long-standing social cohesion and stability – such facts lose their shine if the surpluses of productivity benefit only a few. In other words, economists’ metric of productivity measures only what they want to measure and excludes what they don’t want to measure.

The technical understanding of productivity as a concept in economics is the measure of the efficient allocation and use of resources to generate more with less. Industrial productivity is designed to match the gap between needs and the ability to satisfy those needs, and there is now a growing shift from labour to technology with the advent of AI.

Economists take into account the use of capital (the physical stock of plant and machinery) and technology – where machines, AI or robots augment or replace human labour – alongside labour itself.

Increasingly, interest in AI is growing in the areas of research and development and the development of new products. One such area is the excitement over scientific AI – where large language models can trawl millions of scientific documents and be trained to harness the best ideas and proximate solutions that would have taken scientists hundreds of years to accomplish.

A notable application is protein engineering – for unique medicines, enzymes for industrial purposes and other innovations powered by AI. On one hand, this is an efficient use of scientific AI, but it may still be some time before such feats of expediency translate into investable ideas and the production of higher- value goods. We are yet to see the returns in GDP statistics.

The supercharged AI machines packed with graphic processing units cost more than a penny. While they are organised as processing assembly lines, their output must ultimately translate new information into new value-add. Such value can be measured by how AI helps product innovation move up the complexity ladder. For the Marxists in the room, the question of productivity would dwell on the interlinkages between accumulation (who takes the surplus value) and the state of alienation of productive labour.

Karl Marx saw in productivity the shift in modern capitalism from use value to exchange value in his famous formulation, M-C-M. It posits that money is needed to produce a commodity, which has exchange value, but the commodity serves only one purpose: to generate more money.

Eva Illouz – an insightful social thinker – has paid close attention to the question of alienation and emotion. Mainstream economics assumes rational intent and, in doing so, detaches emotions from economic agency. It is in this context that we can understand the concept of alienation: the division of labour, driven by necessity (as there are no machines to replace human labour); it is raw muscle that is required. The labourer works for a wage and must evacuate any emotional sentiment towards the objects he or she produces.

Yet a paradox arises – while the worker is conditioned to be emotionally detached from his or her labour, no such detachment is expected of the consumer. This is especially clear in the case of Veblen’s vanity goods: your desires must be piqued, your emotions must be stirred, and in that moment of attachment you must let go of rational restraint over personal finances to experience pleasure in the object of desire.

I once read somewhere of the concept of the ‘half-life of knowledge’ – the idea that countries move up the productivity ladder, so to speak, when they adopt better techniques and technologies. The faster one can do more with less, the more one can produce. The more ideas introduced into the productive system, the more innovation accelerates both the speed and quality of production. The assumption is that more skills, more knowledge and more innovation improve the quantity and quality of what is produced.

Yet Sahlins reminds us that we need to take a more holistic view of productivity – to ensure that the gains from productivity improvements do not simply benefit a few but become prosocial outcomes that serve the whole of society.